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It was adjourned for further hearing this afternoon because I was informed that the second respondent proposes to remove the applicant from Australia as an unlawful non citizen pursuant to s 198 of the Migration Act 1958 (Cth) (the Act) early tomorrow morning. The application to transfer him for treatment from the Baxter Centre in those circumstances seemed to be unimportant. 2 When the matter came on this afternoon the application was amended to restrain the second respondent from removing the applicant from Australia until he is deemed medically fit for removal from Australia, and an interlocutory order was sought restraining his removal from Australia until further order. 3 I have heard brief evidence from two psychiatrists, Dr Jureidini and Dr Frukacz. They are in agreement that the applicant suffers from a severe depressive disorder with significant anxiety symptoms and agitation and probably suffers from post traumatic stress disorder. Dr Jureidini thinks that he may also have an underlying psychotic illness but Dr Frukacz does not. I do not think the difference in diagnosis, for present purposes, is significant. Both agree that the removal of the applicant from Australia may cause his mental condition to deteriorate. Dr Jureidini is sufficiently concerned to say that his mental condition is likely to deteriorate to such an extent that he would not permit him to travel, notwithstanding the conditions upon which the proposed removal is to take place. 4 I have been told and I accept, that the second respondent proposes to remove the applicant from the Baxter Centre by charter aircraft to Sydney and then on a commercial international flight accompanied by or supervised by three police officers, one of whom speaks Turkish, an official of the Department of Immigration and Multicultural and Indigenous Affairs, and a male psychiatric nurse. It is also proposed that a significant part of the aircraft would be booked so that there would be significant space with no other passengers in the vicinity of the applicant on the international flight. 5 Dr Frukacz does not regard the risk of deterioration of the applicant's condition as likely, although he accepts it as possible, and he considers that those terms or conditions of removal are satisfactory provided further that upon the applicant's arrival in Istanbul arrangements are made for him to be met and given medical attention or psychiatric attention. Again, that is a different emphasis between the two medical practitioners. 6 For present purposes, in my view, there is a serious question to be tried, that notwithstanding the obviously significant and careful precautions which the second respondent proposes to take to secure the safety of the applicant and of others in the course of his removal from Australia, his removal from Australia at the present time will cause him significant mental deterioration to the extent that, at least on Dr Jureidini's views, he ought not to be permitted to travel at the present time. 7 That circumstance gives rise to some difficult questions of interpretation of s 198 of the Act. On an interlocutory application I am not called upon to finally determine them. Indeed, as I put to Dr Jureidini (but he declined to answer), the applicant's contention might give rise to the circumstance, as his mental condition is produced in large measure by his concern about being removed from Australia to Turkey, that he will never be in a condition where he can be safely removed from Australia. It then might follow that his removal from Australia might never be 'reasonably practicable', to use the relevant words in s 198. That is a matter for another day. 8 In my view, the authorities support the proposition that, in considering whether removal is reasonably practicable, physical considerations, such as the health of the person to be removed are relevant. So much appears from NATB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 292 ; (2003) 133 FCR 506 at [52] ( NATB ), Li v Minister for Immigration and Multicultural Affairs [2002] FCAFC 181 at [7] and albeit in perhaps quite circumscribed circumstances in the judgment of WAJZ v Minister for Immigration and Multicultural and Indigenous Affairs (No.2) [2004] FCA 1332 at [86] . Of course, I do not take into account any consequences which may be inflicted upon the applicant upon his return to Turkey in the light of the decision which has been made about his protection visa application. To do so would fly in the face of NATB and M38/2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 131 ; (2003) 131 FCR 146. That itself introduces a somewhat difficult perspective in the present matter because, unlike other cases in which the health of the person being removed has been considered, the damage to the health of this applicant by the process of removal is related to his fears of what may happen to him if he were to return to Turkey. Such matters are more appropriately considered in final determination of the claim. 9 At present, in my view, it is reasonably arguable that it is not reasonably practicable for the applicant to be removed from Australia tomorrow as proposed, because it is likely that his mental condition will very seriously deteriorate by reason of the fact and process of his removal. Consistently with the cases to which I have referred, therefore, in my view, there is a serious question to be tried that the proposed removal at present would be contrary to s 198 and should be restrained. 10 As I have said that is not to indicate a firm view about the meaning of s 198 or a firm view about its application to the circumstances of this applicant. It is simply to recognise that there are serious questions to be tried on those matters on the material presently before the Court and in the light of s 198 as it has been discussed in the cases thus far. 11 Neither counsel for the applicant or for the respondent has made specific submissions regarding the balance of convenience. I think that is sensible given that it is self-evident that his removal from Australia may, depending upon the accuracy of Dr Jureidini's prediction, have consequences which arguably ought not to be visited on the applicant because of his removal being reasonably impracticable. Moreover, once removed from Australia, such entitlements as he has, if any, within Australia, would no longer be available to him. 12 I therefore propose to make an order restraining the second respondent from removing the applicant from Australia until further order. Although that is until further order, it is not intended to operate indefinitely. This is a matter where the proper construction of s 198 , and findings of fact as to the applicant's physical condition and the potential consequences to him of the process of being removed, ought to be determined as promptly as possible. If he is to be removed from Australia notwithstanding his mental condition, that removal should take place promptly. 13 The second respondent is therefore given liberty to apply to vary or discharge this order on reasonable notice. I will hear the parties as to how they wish the principal issue to proceed. The Court will endeavour to have it determined consistent with their wishes as quickly as possible. I will otherwise adjourn the interlocutory application insofar as it seeks an order that the applicant be removed from the Baxter Centre to an appropriate treatment facility to a date to be fixed, and give the applicant liberty to apply to have that application restored for further hearing on not less than 3 days notice. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | removal from australia of illegal non-citizen under s 198(6) interlocutory application whether serious question to be tried that removal not reasonably practicable claim that removal itself would lead to serious worsening of applicant's mental condition migration |
Most garnet mined in the world is alluvial. Some other garnet is known as "hard rock" garnet. Alluvial garnet is most commonly used as both an industrial abrasive in the preparation of surfaces and as an abrasive in water jet cutting. It is also used in other applications including anti-slip coatings, denim blasting, water purification, glass preparation and electronic component surfacing. Hard rock garnet is generally more angular and sharper than alluvial garnet and is sold for different applications at significantly higher prices. Garnet International Resources Pty Ltd (GIRL), the second applicant in these proceedings, owns an alluvial garnet mine at Port Gregory, near Geraldton, Western Australia (the mine), which is operated by GMA Garnet Pty Ltd (GMA Garnet), the first applicant, of which GIRL is the parent corporation. GMA Garnet and Indian producers of alluvial garnet are the largest producers of garnet in the world. In early 2005, and at material times, Barton Mines Corporation was a corporation incorporated in the State of Pennsylvania, United States of America (USA), which traded, as it still trades today, under the name, The Barton Group. Barton Mines Company LLC (BMC) is and was at material times a corporation incorporated in the USA and a wholly owned subsidiary of Barton Mines Corporation. Barton International Inc (Barton International), the respondent in these proceedings, is and was at material times a corporation incorporated in the USA and registered in Australia as a foreign registered company and a wholly owned subsidiary of Barton Mines Corporation. Barton International (Australia) Pty Ltd (BIA) is and was at material times a company incorporated in Australia and a wholly owned subsidiary of Barton International. Barton Mines Corporation is a family owned company. In 1878 it commenced the business of mining, processing, selling and distributing garnet for industrial abrasive uses. From 1988, several wholly owned subsidiaries of Barton Mines Corporation (including Barton International and BMC) were established to conduct the various divisions of its business. In particular: For some time, BMC has purchased garnet from various sources, including from GMA Garnet and from a supplier in India, V.V. Mineral of India (VVM). At material times, BMC maintained stocks of garnet at 19 warehouses in the USA. Four of those warehouses were known as mega-centres and operated as import centres. They are located at Reserve (Louisiana), Chesapeake (Virginia), San Diego (California) and Olympia (Washington State). In early 2002, GIRL acquired the other 50% shareholding in GMA Garnet. From that time, together with Barton International, it effectively owned and controlled GMA Garnet. During 2003 and into 2004, significant differences arose between Barton International and GIRL and their respective representatives in relation to the operation of the mine at Port Gregory. Attempts were made, unsuccessfully, to resolve those differences. In the course of doing so, GIRL approached the Australian Competition and Consumer Commission (ACCC) and explained what it regarded as a contravention of the Trade Practices Act 1974 (Cth). The alleged contraventions related to an agreement known as the Perth Agreement, under which garnet was to be sold to the partners in the garnet mine at cost and the partners would sell that garnet for profit into defined territories. On 23 August 2004, GIRL commenced proceedings in the Federal Court of Australia (the dissolution proceedings) against Barton International and GMA Garnet in which it claimed, amongst other things, an order dissolving the partnership in respect of the garnet mine and the winding up of GMA Garnet. GIRL contended, amongst other things, that there were irreconcilable differences between it and Barton International in relation to the partnership and GMA Garnet, and the management of both were deadlocked. Those proceedings were eventually set down for trial in February 2005. In the result, the dissolution proceedings were compromised and settled without trial. Negotiations that led to the compromise and settlement had a false start in October 2004, and were then recommenced in December 2004. They were ultimately successfully concluded by the execution of a deed called the Principal Agreement, on 21 February 2005. The Principal Agreement, which was the subject of a number of conditions that were subsequently satisfied, provided for the resolution of differences between the parties by GIRL purchasing all of the interests of Barton International in the mine and its shareholding in GMA Garnet. The consideration for these transactions included a substantial cash payment and the execution of a long term supply agreement in respect of garnet from Port Gregory, as well as other aspects provided for in the deed. The Principal Agreement provided that the parties to these proceedings should execute a Garnet Supply Agreement in the form annexed to the Principal Agreement. On 31 March 2005, GMA Garnet, Barton International and GIRL executed the Garnet Supply Agreement (GSA). The GSA provided for the supply by GMA Garnet (as Seller) to Barton International (as Buyer) of garnet from the mine and included responsibilities, which are now disputed, with respect to the branding (or labelling) and the distribution and sale of GMA garnet by Barton International. Thereafter, Barton International had no interest in the mine or the garnet it produced, save that, under the GSA, Barton International had contractual rights to a supply of GMA garnet for a period of just over 12 years. The GSA provided for Barton International to order a certain quantity per year of GMA garnet in either packaged or loose bulk form, on the terms set out in the GSA. The GSA continues to govern the garnet supply arrangements between the parties. Clause 4.2 of the GSA and cl 2.3 of the Principal Agreement record the acknowledgment of the parties to each Agreement that GMA Garnet "wishes to promote distribution" of GMA garnet within the USA and Canada (North America). Clause 4.2 then goes on to note that, "Accordingly" (in the circumstances provided for by cl 4.2), Barton International is entitled to a "concessional rate" in respect of certain quantities of Product which it "ships and discharges" into North America. By cl 2.5 of the GSA, the Buyer undertakes certain branding obligations with respect to the distribution and sale of the GMA garnet, "which is 100% Product", purchased under the GSA. On the face of it, generally speaking the Buyer must ensure such garnet is labelled with the GMA Garnet name and logo (with no less prominence than that which applied during the 2004 calendar year); although it can also be co-branded with "the Buyer's own branding". The Buyer must also ensure the GMA Garnet name and logo is not used in relation to product which is not 100% Product. Following execution of the GSA, GMA Garnet filled orders lodged by Barton International under the GSA and shipped GMA garnet to Barton International in the United States, both in packaged form and (mostly) in loose bulk shipments, where it was discharged and taken delivery of by BMC. The first bulk shipments of loose bulk garnet were made in about August 2005. In the second half of 2005, Mr Aaron Williams who had been involved in the negotiation of the GSA on behalf of GIRL, and by then had become the Group General Manager within the GMA group of companies including GMA Garnet, made some reconnaissance trips to the USA. In August 2005, Mr Williams visited a garnet distributor's warehouse in Houston, Texas where he inspected several pallets of paper bags which were labelled as "GMA Garnet 80 mesh". On inspecting the contents of several of these bags he discovered the garnet in them was of a different appearance to GMA garnet, which is of a distinctively pink colour. He then noticed that the words "80 mesh" had been struck out by ballpoint pen and the words "16A" substituted. However, the GMA logo had not been altered or obscured in any way. In the warehouse Mr Williams also discovered another bag not labelled as GMA Garnet, but located amongst a collection of GMA Garnet bags. This led him to conclude that, while unlabelled, the bag in fact contained GMA garnet. As a result of his warehouse inspection, Mr Williams was concerned that garnet supplied by GMA Garnet to Barton International pursuant to the GSA was being distributed or sold contrary to the branding obligations set out in cl 2.5 of the GSA. As a result, on Friday 9 September 2005, Mr Williams, who was also GMA Garnet's authorised officer for the purposes of the GSA, emailed Mr Clifford (Cliff) Summers, who was Barton International's authorised officer for the purposes of the GSA, setting out what he had seen in the Houston warehouse, expressing his concerns and requesting an investigation and explanation from Barton International. Mr Summers replied by email dated 15 September 2005---an email which had been settled by Barton International's lawyers---assuring Mr Williams of Barton International's adherence to its obligations and taking offence at the tone of the allegations made. Mr Williams was quite unsatisfied with this response. By further email dated Friday, 16 September 2005 he required that Barton International conduct an urgent investigation into both incidents, withdraw the offending bags and advise GMA Garnet of the measures that Barton International would put in place to avoid a repeat of such an occurrence. Eventually, following a reminder, Mr Williams received a letter informing him that, due to Hurricane Katrina (in late August 2005), Barton had lost all records at their New Orleans warehouse and were unable to determine what had happened. Mr Williams then let the matter drop. A little later, in about February 2006, Mr Williams relocated to the United States when GMA Garnet (USA) Corp (GMA USA), a United States corporation of which GIRL is the parent, commenced operations in the United States. By then he had also become President and a director of GMA USA. Later in the year he began visiting customers, or potential customers, on behalf of GMA USA. On two occasions in October/November 2006, he noticed bulk bags containing what appeared to be GMA garnet, on which the GMA Garnet logo was, he considered, smaller than the logo used prior to the GSA and less prominently displayed, contrary he believed to the requirements of cl 2.5 of the GSA. These bags were also prominently marked "Barton". During September 2006, at a water jet job shop in Florida, Mr Williams inspected bags of garnet that were not branded with GMA Garnet's name, but which appeared predominantly to contain the distinctive pink colour of GMA garnet. Mr Williams took a sample of the garnet and arranged for it to be analysed. (He was later advised that it contained a mixture of GMA garnet and Indian garnet. This notice constitutes a notice in writing given for the purposes of clause 8.1 (c) of the Supply Agreement. Mr Ketelsen provided further information to Mr Summers by letter dated 15 December 2006. By letter dated 19 December 2006, sent by fax, Richard G Jenks, Jr, from Barton International responded substantively to the GMA Garnet notice advising that while Barton International did not agree that it had breached the GSA, Barton International had taken action and "implemented systems, designed to address any future concerns, and to give assurance to all parties of continuing contractual compliance". Despite Barton International's assurance, it seems GMA Garnet remained concerned about the extent to which Barton International was meeting its obligations under the GSA. In early March 2007, Mr Aaron Williams received information from a Barton customer to the effect that "Barton were now mixing GMA 30/60 mesh with Indian 30/40 mesh to extend the availability of blast grade material". Soon after, on 23 April 2007, the applicants commenced these proceedings seeking clarification of their rights under the GSA, confirmation of their right to terminate the GSA for breach of material terms, and damages. On 20 December 2007, during the pre-trial stage of these proceedings, GMA Garnet having regard to the re-amended defence filed by Barton International, considered that Barton International effectively admitted it had sold to BMC all bulk shipments of GMA garnet supplied under the GSA without branding it as GMA garnet. It therefore issued the first breach notice. GMA Garnet issued a second breach notice on 13 May 2008 and a third breach notice on 30 July 2008 in respect of subsequent bulk shipments it considered had been on-sold by Barton International to BMC without meeting the branding obligations in cl 2.5 of the GSA. The issues of branding, or labelling, particularly in respect of loose bulk supplies and promotion of distribution, or marketing, of GMA garnet under the GSA and the Principal Agreement remain unresolved and in issue between the parties. Whether Barton International was obliged to do anything, or refrain from doing anything to assist in the promotion of the discounted garnet supplied to it under the GSA. The Schedule to the Principal Agreement, earlier referred to, provides as follows: The Partnership is governed by an agreement dated 4 June 1998 between Barton Joint Venture Corporation (BJVC), B-L (Australia), Inc (BLAI), Garnet Millers Australia Pty Ltd (GMAPL) and Garnet Producers NL ( GPNL). ( Partnership Agreement ). The relationship of the shareholders of GMA Garnet is governed by its constitution and by an Agreement dated 24 February 1999 between BJVC, BLAI, GPNL and GMA Garnet ( Shareholders Agreement ). By an Agreement dated 25 June 1998 between GMAPL, GPNL, BJVC and BLAI, GMAPL transferred its interest in the Partnership to GPNL. By a Sale Deed dated 6 December 2001 between GMAPL, GPNL, GIRL and Messrs Ketelsen, Jebsen, Putzier and Jessen, GIRL acquired a 50% interest in the Partnership and 50% of the issued shares in GMA Garnet (2001 Sale Deed). GIRL became bound by the terms of the Partnership Agreement by a Partnership Assumption Deed dated 26 March 2002 between GIRL, GMAPL, GPNL, BJVC and BLAI. By a Shareholders Assumption Deed also dated 26 March 2002 and made between the same parties, GIRL became bound by the Shareholders Agreement. Pursuant to an Exclusive Distributorship Agreement dated 24 February 1999 between BJVC, BLAI, GPNL and GMA Garnet, GMA Garnet was appointed the exclusive distributor of garnet for the Partnership. Pursuant to a Mining and Processing Services Agreement dated 24 February 1999 between BJVC, BLAI, GPNL and GMA Garnet, GMA Garnet was appointed to provide various mining and processing services to the Partnership. The expression 30/60 Mesh is further defined to mean 30/60 Mesh garnet or 60 Mesh garnet produced from the Mine. 80 Mesh is defined to mean 80 Mesh garnet or 100/120 Mesh garnet produced from the Mine. (Mesh is a reference to the grade the garnet ore is crushed to following mining, 30 Mesh being the finest grade). Clause 2.1(b) of the GSA expressly provides that the quantity of the Product to be sold and delivered in each "Contract Year" shall not comprise more than 50% of 30/60 Mesh unless the Seller agrees otherwise. Clause 2.2 sets out a non accumulation limitation so that if the Buyer does not purchase and take delivery of its full entitlement of Product in any Contract Year the quantity not taken shall not be carried forward. The "Term" of the GSA Agreement is defined by cl 1.1 to mean the period commencing on the "Commencement Date", namely 31 March 2005 when the GSA was executed, and ending on 30 June 2017, or such earlier date if the Agreement is terminated pursuant to cl 8. In other words the GSA has an expected period of operation of just over 12 years. The Buyer must not use the GMA Garnet name or logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product or hold out in any way that garnet which is not 100% Product, is Product. Clause 2.6 provides, in effect, that nothing in the GSA is intended to limit the quantity of Product, or prescribe the terms of supply of Product to which the Seller and the Buyer may agree from time to time in addition to the 50,000 tonnes of Product in effect guaranteed by cl 2.1. Clause 4 deals with "Price". Clause 4.1 sets out a price which applies generally and in effect has regard to the type, quantity and price that GMA Garnet usually offers to its "prime customers (other than related entities)". However, this price does not apply where clauses 4.2 and 4.3 operate. Clause 4.2 of the GSA in some respects reflects the terms of 2.3(b) of the Principal Agreement referred to above. In this context, the expressions "sell and deliver" in cl 2.1(a) and "ships and discharges" in cl 4.2 are terms of art. The point is that the concessional rate referred to in cl 4.2 of the GSA is not available to Barton International unless the Product it has purchased and takes delivery of under cl 2.1, is shipped and discharged into the territory of the USA or Canada. How the GSA came to be in these terms and what the parties commonly understood at material times at and before the Principal Agreement and GSA were executed, is part of the contractual narrative that the parties contend, variously, helps to define the rights and obligations of the parties under the GSA as properly interpreted or construed and, so far as the applicants are concerned, helps to inform the representations they say were made to them. Further, the applicants say that Barton International is obliged by the GSA and Principal Agreement to encourage the marketing of GMA garnet in North America both by itself and through BMC, and must ensure that neither does anything that would diminish its distribution and reputation in North America. The applicants claim that representations conveyed by the GSA when read with representations made by Barton International during the negotiations in early 2005, are to similar effect. The applicants say that Barton International has failed to satisfy these obligations or representations. So far as branding is concerned, the applicants say the acts of sale or distribution by Barton International to its related entity, BMC, of loose bulk 100% GMA garnet acquired from GMA Garnet under the GSA, without first branding the garnet, constitute breaches of cl 2.5 of the GSA. They also point to acts of sale to BMC of packaged GMA garnet in the USA, which they say breached the name and logo branding requirement of cl 2.5. Additionally, the applicants say the subsequent blending by BMC of the loose bulk 100% GMA garnet with garnet acquired from elsewhere, which occurred with the knowledge of Barton International, is in breach of both the branding and marketing obligations imposed on Barton International by the GSA. This is because 100% GMA garnet was not branded when it went to consumers as GMA garnet, and because its distribution as GMA garnet was diminished. Indeed, the applicants say that the evidence shows that Barton International always intended to blend GMA garnet from the time the agreements were negotiated and so ignore the branding obligations, and for similar reasons never had any intention to meet the distribution or marketing obligations imposed on it, or to satisfy the representations it made in that regard. In consequence of the pleaded breaches of the contract and representations, the applicants claim they are entitled to a declaration that they may terminate the GSA for the identified contractual breaches, as well as to damages for breach of contract and by reason of loss and damage flowing from the dishonoured representations. As to damages, the applicants contend the proper measure is equal to the whole of the amount of any loose bulk garnet sold by Barton International to BMC which BMC could potentially blend, an amount of $9,353,123. Alternatively, the applicants say the measure is the amount of the discount received by Barton International for the quantity of loose bulk garnet which BMC has in fact blended, an amount of $4,869,433. Barton International denies the applicants' claims; although it agrees some rectification of the GSA is required, but only in acknowledgement of the agreed role of BMC in sales and distribution of 100% GMA garnet to ultimate consumers. Otherwise, Barton International says no obligations arise under the Principal Agreement or the GSA in respect of the marketing of GMA garnet, and so far as cl 2.5 of the GSA is concerned, Barton International and BMC are only obliged to brand GMA garnet which they sell or distribute to end consumers (customers) in a packaged form. In effect, Barton International contends that nothing in the Principal Agreement or GSA constricts their right to market GMA garnet supplied under the GSA to customers in any form that they choose, for example, following blending - whether in packaging or in loose bulk. Barton International says that nothing in the agreements prevents them from mixing or blending GMA garnet supplied under the GSA with garnet they source from other suppliers. Barton International accepts, however, that if GMA garnet supplied under the GSA is distributed or sold to customers in a packaged, unblended form (ie "100% Product"), then it must be branded as provided for by cl 2.5 of the GSA. As to the applicants' claim that Barton International always intended to blend GMA garnet supplied under the GSA to avoid its branding and marketing obligation, Barton International says this raises a false issue in the proceedings and, in any event, is false as a matter of fact. Barton International contends that its position is vindicated on the proper interpretation or construction of the Principal Agreement and GSA, taking into account certain facts commonly known to the parties at the time of execution of the Principal Agreement and GSA. In the alternative, Barton International claims that the position it contends for is made apparent if cl 2.5 of the GSA is rectified in the manner it proposes. Barton International deny any representations were made that go beyond the terms of the Agreements. As to the applicants' claim for damages, the respondent contends that because the concessional price has nothing to do with a breach of cl 2.5 dealing with branding, assuming the applicants make out their case, damages should not be assessed by reference to a difference between the concessional price and the prime customer price, or the benefit of the discount obtained. The respondent says no facts are pleaded which are capable of supplying a causal connection between the absence of branding bulk product sold to BMC and the giving of concessional pricing to Barton International. Accordingly, no damage has been proved as regards the first breach allegation. As regards the other breach allegations, although these seek to relate the entitlement to concessional prices to an absence of blending and distribution in North America, both ignore the fact that concessional prices were readily made available by GIRL as part of the overall consideration for the settlement effected by the Principal Agreement. As a result the benefits obtained by GIRL cannot be ignored in any calculation of damages. The respondent says no attempt has been made to prove such losses or to quantify the value of these benefits for the purpose of assessing damages. Finally, it should be noted that each of the applicants and Barton International rejects the rectification of the GSA proposed by the other. This only serves to emphasise there are no obviously correct literal meanings of the contentious clauses under consideration. The Court is now called upon to adjudicate and state, in effect, which meanings it prefers. In relation to the "objective framework of facts within which the contract came into existence", as Mason J put it in Codelfa [1982] HCA 24 ; 149 CLR 337 , it is commonly understood that the proper construction of a contract should reflect what reasonable people in the position of the contracting parties would have understood by the relevant clauses, considering not only their text, but also the surrounding the circumstances and the purpose and object of the entire transaction and its elements: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 , 461 --- 462 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 , 179 [40]; International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3 ; (2008) 234 CLR 151 , [8], [53]. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction (footnote omitted). See also Seddon NC and Ellinghaus MP, Cheshire and Fifoot's Law of Contract (9 th Australian ed, Lexis Nexis Butterworths, 2008) at [10.12], and authorities there referred to. In other words, as stated in Toll , the construction task to be undertaken by the Court requires consideration of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. In a commercial setting, the business objectives should be accounted for and, as other authorities have suggested, the relevant provisions given a "business commonsense" or a "business-like" construction. See, for example, Investors Compensation Scheme v West Bromich Building Society [1988] 1 WLR 896 , Lord Hoffman at 912 --- 913. Nonetheless, this process of construction is not intended to be a "free-wheeling" exercise. The Court does not, once it has found the commonly known factual context and purpose, then look at the words of the contract and, if they do not readily accommodate the context and purpose so found, force them to do so by a process of interpretation. But the Court is alive to the possibility that what seems clear by reference only to the words on the printed page may not be so clear when one takes into account as well what was known to both parties but does not appear in the document. When that is taken into account, the words in the contract may legitimately have one or more of a number of possible meanings. It is then the Court's task to identify which of the possible meanings represents the parties' contractual intention. As Gleeson CJ, Gummow and Hayne JJ observed in Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70 ; (2001) 210 CLR 181 at [43] what "business commonsense" is may itself be a topic upon which minds may differ and in respect of which an imputed consensus is impossible. Writing extra-judicially, Chief Justice Spigelman has noted that, while the "business commonsense" constraint on contractual interpretation is acceptable, "The only difficulty is that, at least when the matter comes to the level of litigation, each party remains convinced that a 'businesslike' interpretation or 'business commonsense' happens to coincide with its own commercial interests. This is not always easy to resolve": Spigelman JJ, "From text to context: Contemporary contractual interpretation" (2007) 81 ALJ 322 at 330. Such issues 'are the very lifeblood of commercial law'. Nevertheless, on the basis of the countless decided cases that I read, they also tend to be the most intractable. The outcome of interpretation litigation is notoriously difficult to predict. This is partly because questions of interpretation are often seen as 'matters of impression' or intuition, and inevitably the way in which judges mentally process language and apply it to the facts will vary according to their background and experience. Even so, the division of opinion that one finds in the cases is remarkable. Time and again judges will disagree on such elementary questions as whether particular words have a plain meaning and what is the 'commonsense' or 'commercially realistic' interpretation. " (2009) 31 Syd LR 5. With that guidance and those admonitions in mind I turn to the tasks at hand. Of that there is no doubt on the evidence and the Court so finds. At the time the dispute broke out, GIRL and Barton International as partners owned the mine and were equal shareholders in GMA Garnet, which company conducted, and still conducts, garnet mining at the mine and garnet distribution operations. In the dissolution proceedings in the Federal Court of Australia --- which were due to go to trial in February 2005 --- GIRL wanted the partnership dissolved and GMA Garnet wound up because of the breakdown of the relationship between the parties. The breakdown of the relationship between the Barton International and related companies and GIRL was no doubt contributed to or exacerbated by GIRL's conduct in complaining to the ACCC about the Perth Agreement, by which Barton International and GMA Garnet had an arrangement concerning the marketing of GMA garnet in Australia (and elsewhere), as a result of which the ACCC commenced an investigation into the circumstances of the Perth Agreement. In general terms, in settling the litigation, the parties agreed that Barton International would sell all its various interests to GIRL for a consideration which comprised cash and a long term supply contract enabling Barton International to buy from GMA Garnet 35,000 tonnes of garnet per annum at prices which effectively represented cost of production and a further 15,000 tonnes per annum at those prices plus 15%. The matter of the Perth Agreement investigation was later resolved by consent order of The Federal Court of Australia on the application of the ACCC in September 2006, by which Barton Mines Corporation and Barton International were declared to have engaged in conduct contrary to the Trade Practices Act 1974 and pecuniary penalties were imposed: see Australian Competition and Consumer Commission v Barton Mines Corporation & Ors [2006] FCA 1264. In this overall context, the GSA was a supply agreement made in circumstances to be contrasted with those where the seller is more or less free, having regard to the market conditions, to impose such terms as it desires on the sale of its product. Rather, it represents part of a total consideration provided to the former joint owner of the mine and mining distribution operations for selling its interests to the other joint owner and otherwise resolving their differences. This much is made clear by cl 2.3(a) of the Principal Agreement. Having regard to the ACCC investigation, competition law issues also loomed large for the parties when the Agreements were struck. One essential term of the Principal Agreement insisted on by GIRL from the outset of negotiations was that the Agreement had to pass ACCC scrutiny. For example, an agreement which positively required discounted product only to be sold in North America, which would have the effect of preventing Barton International from selling product in Australia in competition with GIRL/GMA Garnet, might well have offended s 47 of the Trade Practices Act 1974 , given the selling position in the Australian garnet market. In the negotiations leading up to the execution of the GSA, as explained below in more detail, GIRL proposed that Barton International's related entity BMC should act as GMA Garnet's exclusive distributor, and failing that, for Barton International to become GMA Garnet's non-exclusive distributor in the North American market. GIRL was obviously concerned to ensure that, with the changed arrangements, GMA garnet would still be appropriately marketed in the USA and Canadian markets. However, Barton International---or BMC---was unwilling to accept these proposals, or to undertake the achievement of key performance indicators (KPIs) and negotiated for an open supply agreement between it and GMA Garnet. Ultimately, the agreement that was reached was that a concessional, or discounted rate for GMA garnet would apply to garnet which Barton International "ships and discharges" into North America, as provided for by cl 4.2 of the GSA. This produces a commercial disincentive for Barton International --- because of the double freight charges that would be involved --- to consider reshipping GMA garnet out of North America once it had been discharged there. But the GSA does not go so far as to impose an express obligation on Barton International to distribute or sell such GMA garnet only in North America. It is not so limited by the GSA. However, cl 4.2 of the GSA, in the first sentence, states that the "purpose" for the concessional rate in respect of garnet shipped and discharged into North America is the wish of GMA Garnet, acknowledged by the parties, "to promote distribution of Product" in North America. It is also important to note, at this point, that in the negotiations leading up to the GSA, GIRL specifically proposed that all GMA garnet purchased by Barton International should be labelled with the GMA Garnet name and logo. Clause 2.5 is the final outcome of the negotiations in relation to this proposal. How cl 2.5 came to be in this form is discussed in detail below. Accordingly, on the one hand, at material times following the execution of the GSA, the applicants appear to have held the belief that, under the GSA, Barton International had assumed the obligation to brand, as GMA garnet, all GMA garnet supplied under the GSA and to promote, and not to diminish, distribution of discounted Product in North America. As a consequence they later formed the view, when they discovered loose bulk GMA garnet was being blended by BMC with other non-GMA garnet, to the knowledge of Barton International, that such conduct contravened the branding and marketing obligations imposed on Barton International. What, if anything, the applicants knew of the practices of Barton International or Barton International interests in relation to the blending of GMA garnet with other garnet at times leading up to the conclusion of the GSA, or of Barton International's future plans for blending in that regard, is the subject of dispute between the parties and is the subject of findings below. On the other hand, it appears that Barton International and related entities believed, that under the GSA, there was no impediment to them mixing or blending GMA garnet with garnet sourced from elsewhere, if they so chose --- something they say was brought to the applicants' attention during the negotiations leading up to the conclusion of the agreements - and that the obligation to brand garnet in accordance with cl 2.5 of the GSA only arose when garnet, that was in fact 100% GMA garnet, was sold in packaging to an end consumer. Against this background, for the purposes of their claims of breach of the pleaded terms of the Principal Agreement and GSA, the applicants plead (in para 12A of the substituted further re-amended statement of claim --- hereafter simply referred to as the "statement of claim") a number of surrounding facts and circumstances they say were mutually known to the parties over the period that the GSA and the Principal Agreement were being negotiated and then concluded in late 2004 and early 2005, as set out in the following summary. Barton International accepts a number of these in its substituted defence (hereafter simply referred to as the "defence"), but adds others of its own or qualifies those pleaded by the applicants. Barton International admits GMA garnet sold by BMC prior to February 2005 had been of good quality, but otherwise denies these allegations (para 15(i) and (j) defence). For the purpose of pleading the proper interpretation or construction of the agreements, Barton International pleads (para 5 defence) that, when negotiating, concluding and executing the Principal Agreement and GSA, each of the parties knew a number of things at all material times before the GSA and Principal Agreement were made, as set out in the following summary. The applicants in their substituted reply (hereafter simply referred to as the "reply") accept some of these facts but deny or do not admit others. (d) Barton International says (para 5(d) defence) that Barton International did not itself carry on business as a seller or distributor of garnet other than to BMC. Mr Steven Cole, the lawyer who acted as the agent for Barton International in the negotiations leading up to the conclusion of the Principal Agreement and GSA, had acted for some years as solicitor for Barton International and related companies and appears to have become well acquainted with the corporate structure and familiar, at least to an extent, with the nature and organisation of the business. In evidence at the trial, Mr Charles (Chuck) Bracken Jnr, Chairman of the Board of Directors of Barton Mines Corporation, Barton International, BIA and BMC, and other executives from Barton entities outlined in some detail the corporate structure. However, the applicants deny that they were fully conversant with, and had a strict legal and operational understanding of, that corporate structure. Mr David Williams, who was the solicitor appointed by the applicants to negotiate the compromise and settlement with Mr Cole, had not had a long involvement, it appears, with the operations of the applicants and certainly not with the operations of Barton International or related companies. In his evidence he said he did not recall having any real understanding of the entities within The Barton Group. As far as he was concerned he was acting for GIRL and Mr Cole was acting for "the other side". He accepted that from the correspondence that passed between him and Mr Cole, and from information he received from his instructors, particularly Mr Ketelsen, he knew there was more than "one Barton" corporate entity. But he was not told by Mr Cole and was not instructed about what role each Barton entity played within the Barton group of companies. Nonetheless, he acknowledged that in the letter to Mr Cole he wrote dated 10 January 2005, he expressly referred to Barton Mines Company LLC (BMC). Nonetheless, he does not recall being informed by Mr Cole or ever being instructed about the role BMC performed, or how it differed from the role performed by Barton International. Mr Ketelsen, a director of GIRL, had had a much longer involvement in the Port Gregory mine as a representative of the interests of GIRL. He plainly was aware of the existence of BMC. He was also aware of BIA, as it purchased Barton International's share of the GMA garnet produced from the mine. As he explained in his testimony at trial, he knew this because from time to time he saw invoices issued by GMA Garnet to BIA for Barton International's proportion of the GMA garnet produced at the mine. As far as Mr Ketelsen was concerned, no Barton entity appeared to distinguish its own separate business from the core Barton business. Instead every Barton entity appeared to be pursuing the one core Barton business seamlessly. Mr Ketelsen says that, accordingly, he knew that Barton International, BIA and BMC were part of the Barton group. Mr Ketelsen assumed during the negotiations that in order for BMC to distribute GMA garnet in the USA, warehouses were used; although he did not profess any knowledge as to which entity in the Barton group was responsible for those warehouses. Mr Ketelsen also knew that BMC sold garnet to third party customers in the USA. He assumed that all GMA garnet sold by BMC was sold in bags and was branded with the "Barton" logo as well as the "GMA Garnet" name and logo. Mr Ketelsen also said in evidence that he assumed at the time of the negotiations that GMA garnet sold by the Barton group other than in the USA was sold by either Barton International or BIA. He assumed this simply on the basis that the names of the companies suggested this to be the case. He also thought that Barton International and/or BIA sold GMA garnet in Australia and in Asia. Mr Ketelsen also says he knew at material times that GMA garnet was purchased by BIA from GMA Garnet and sent in bags or in bulk shipments to the USA, but says he did not know what internal transactions were then undertaken within The Barton Group to enable BMC to distribute that garnet in the USA. Mr Aaron Williams also gave evidence on the extent of his knowledge of the Barton company arrangements. He is qualified as an accountant and was engaged as General Manager of GMA Garnet in June 2002. In early 2004 he resigned from that position. Since September 2004, he has been the Company Secretary of GIRL. Since October 2005, he has been a director of GMA Garnet (amongst other GMA Garnet positions he now holds). Mr Aaron Williams says that in late 2004 and early 2005, he knew that Barton International was a member of a group of companies known as The Barton Group, sometimes referred to by Jim Nash, a Barton representative, and Mr Bracken, as "TBG" --- that is "The Barton Group", but he had very little knowledge of the actual corporate structure of The Barton Group or the roles played by each entity within it. He had assumed, although he did not know, that TBG somehow referenced the entire Barton group of companies including BIA, Barton International and BMC. He made this assumption because in his experience one would normally refer to a group of companies that share common ownership as a group and it was his understanding that the entities were all 100% owned by the Barton Mines Corporation parent. Mr Williams was plainly aware of Barton International, BIA and of the existence of BMC, because that was the name which he knew GMA Garnet affixed on some of the bags of GMA garnet sold to BIA. He assumed BMC was a Barton group entity which sold GMA garnet in the USA. He also understood The Barton Group to be the largest distributor of garnet in the USA and Canada, as he was told this by Mr Robert Brand of BIA, Mr Bracken and/or Mr Jim Nash on various occasions after he joined GMA Garnet as General Manager. Nonetheless, Mr Aaron Williams says he did not know that: On the pleadings, as supplemented by the evidence, there is much that the parties agree they commonly knew or understood. Accordingly, having regard to the whole of the evidence before the Court and the agreement of the parties on the pleadings --- but presently leaving to one side what the applicants did not know of certain matters relating to the structure and operation of the entities related to Barton International - the Court finds the following facts were commonly known by the parties in the period of the negotiations leading up to the conclusion of the Principal Agreement and GSA: Having regard to the evidence of Mr David Williams, Mr Ketelsen and Mr Aaron Williams, I find that the applicants did not have a detailed legal or accounting understanding of all the entities that may have been within the Barton group, or the roles they played. However, Mr Ketelsen and Aaron Williams were in a position to make certain assumptions about that, and did so. Mr Ketelsen, for example, instructed Mr David Williams to propose that BMC undertake distribution responsibilities for the applicants in early negotiations in January 2005. Accordingly, I find, on the knowledge they possessed, the applicants understood that, before the GSA, Barton International's share of garnet from the mine at Port Gregory found its way, through BIA, to BMC in the United States, where it was usually sold or distributed in packages containing both the GMA name and logo and BMC's branding, by BMC in the North American region. However, I am not prepared to find that the applicants knew that Barton International did not itself carry on business as a seller or distributor of garnet other than to BMC. The facts as outlined in evidence rather leave it open to suggestion, from the applicants' point of view, that outside North America, entities such as Barton International and BIA possibly engaged in trading, for example, in the Australian and Asian regions. I find that the applicants did not know, before the GSA, that BMC or any related entity sold or distributed loose bulk GMA garnet to any of its customers. Rather, it believed all GMA garnet was sold or distributed to BMC customers in packaging. (I also find in passing, that BMC did in fact distribute or sell loose bulk garnet to some of its customers in the period before the GSA. ) As to what the parties commonly knew about the extent of Barton group entities' activities in North America, including as to blending of GMA garnet with other garnet, is dealt with further below. But, on the face of it, the applicants knew nothing of this practice prior to the negotiations in early 2005, to which I now turn. (The Discussion Paper and other negotiating documents referred to below were all issued on a "without prejudice" or "without prejudice subject to contract" basis. ) Mr Cole and Mr David Williams respectively were appointed by the Barton International interests and GIRL to represent them not only as lawyers but also as agents with a view to settling the disputes between the parties and compromising the dissolution proceedings in the Federal Court of Australia. The reason for this, which apparently emanated from a suggestion made by Mr Cole to his client, was that the respective parties otherwise would have difficulty in communicating civilly. Mr Cole and Mr Williams did not suffer from that difficulty. In the course of the trial of these proceedings, objection was taken on the part of the respondent to the applicants adducing evidence of what had passed between the applicants' representative, Mr Torsten Ketelsen and Mr Aaron Williams outside the formal negotiations between Mr Cole and Mr David Williams --- which the applicants sought to adduce on the basis that it was reliable evidence that would assist the Court in determining what in fact passed between and was concluded by Mr Cole and Mr David Williams. In circumstances in which Mr Cole and Mr David Williams were not merely engaged by the respective clients as lawyers to draft the terms of an agreed settlement and compromise, but were charged with the primary responsibility of acting as agents for their clients for the purpose of negotiating a settlement as well as drafting the terms of the compromise, the Court upheld the respondent's objections to this evidence and ruled in the following terms. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract. If it transpires that the parties have refused to include in the contract a provision which would give effect to the presumed intention of persons in their position it may be proper to receive evidence of that refusal. After all, the court is interpreting the contract which the parties have made and in that exercise the court takes into account what reasonable men in that situation would have intended to convey by the words chosen. But is it right to carry that exercise to the point of placing on the words of the contract a meaning which the parties have united in rejecting? It is possible that evidence of mutual intention, if amounting to concurrence, is receivable so as to negative an inference sought to be drawn from surrounding circumstances. In my view, mutual intention of the parties, if any, must be found in the intentions, however expressed, of the lawyer/negotiators in their communications (whether verbal or non-verbal; as to which see discussion of what is required to prove common continuing intention for the purposes of granting rectification, which may be considered generally relevant to proving intention in this context, in Ryledar Pty Ltd v Euphoric Pty Ltd 69 NSWLR 603, Campbell JA (with whom Mason P agreed especially at [281]), not from what may or may not have lain behind the communications in the minds of the parties themselves, or more correctly their officers who did not directly participate in the negotiations. To engage in an analysis of the latter would, in my view, be to take into account the intentions, aspirations and expectations of those who instructed their lawyer/negotiator --- and would simply constitute the internal communications of the applicants. In other words, as Mason J said in relation to the primary rule excluding parol evidence, to do this would be time consuming and unrewarding and give too much weight to those factors at the expense of determining the consequences of the actual communications of the parties' agents appointed for the purpose of concluding the agreement. That ruling had the consequential effect, as acknowledged by the counsel for the parties, of excluding a number of other paragraphs of witness statements of Mr Ketelsen and Mr Aaron Williams and other evidence that the applicants had proposed to lead. Focussing then on what evidence was received of what passed between Mr Cole and Mr David Williams in the course of their negotiations on behalf of the parties, the following events are of particular relevance to what, if any, understanding or agreement the parties commonly formed concerning the issues of blending by "Barton" of GMA garnet and marketing of GMA garnet by "Barton" in North America, and/or any representations in respect thereof. Mr Cole's Discussion Paper of 10 December 2004, outlined prospective litigation outcomes, and prospective settlement outcomes. In the light of these, the paper noted (para 3.1) there was only one "remaining prospectively viable settlement outcome", namely, the prospect of Barton International selling 100% of its partnership interest and GMA Garnet shareholding to GIRL. The paper further noted (para 3.2) that Barton International was "a continuing player in the global garnet abrasives business, albeit with a different business strategic approach to that of GIRL". The paper then addressed (para 3.4) questions of price, sales terms and a long term supply contract. In relation to the proposed long term supply contract, the paper specified that the contract must address Barton International's requirement for a very long term commitment, "at least commensurate with the projected life of mine", an obligatory minimum annual tonnage - in the region of 50,000 tonnes divided equally between 30/60 mesh and 80 mesh - the price per tonne of product, security of an ongoing supply with "a first ranking charge over the mine and related assets", and other miscellaneous terms. Under the heading "Other Miscellaneous Terms" the paper noted as follows: Barton is an independent agent and not a GIRL/GMA "distributor". Therefore there are no performance KPI's applicable to Barton's sale of product. There are no market or territory allocations or restraints applicable. Barton will be granted a non-exclusive licence to use GMA product branding. Mr Williams recalled however, that at the time of the first meeting on or about 10 December 2004 he had no involvement in the then current dissolution proceedings. His partner, Mr David Stone, was preparing those proceedings for trial on the assumption that the matter would not settle. Mr Williams' only real knowledge of the litigation was that he knew there was a trial commencing in early February 2005 and that if the settlement was to occur it needed to do so before then. As explained above, Mr Williams did not recall having any real understanding of the entities within the Barton group during the negotiations. However, he acknowledged that he knew from certain correspondence there was more than one "Barton" corporate entity. However, he was not told by Mr Cole and was not instructed about what role each Barton entity played within the Barton group of companies. He was also aware that Barton International was a 50% owner of GMA Garnet. He does not recall being informed by Mr Cole or ever being instructed about the role that BMC performed or how it differed from the role performed by Barton International, although he plainly was aware of the existence of BMC. He was not informed by Mr Cole and was not instructed as to which Barton entity was a distributor of garnet within the Barton group of companies. In particular he does not recall ever being told by Mr Cole about or instructed that Barton International did not itself carry on businesses as seller or distributor of garnet or that Barton International onsold to BMC all of the GMA garnet which it acquired. Nor was he ever told by Mr Cole or instructed as to how the GMA garnet purchased under the GSA would be dealt with. Mr Williams knew however, that "Barton" took its share of GMA garnet in both bags and loose bulk shipments and also knew in general terms that GMA garnet as taken was labelled with both the GMA Garnet and Barton logos, although he did not know the details of that arrangement. In the course of negotiations, Mr David Williams learnt from Mr Cole's letter dated 15 February 2005 that an entity in the Barton group used warehouses in the United States. But he did not know which entity did so, nor did he know which Barton entity distributed garnet to Canada, within the USA or elsewhere, nor any of the logistics by which the garnet was labelled. Mr David Williams' recollection is that in all his discussions with Mr Cole he referred to Mr Cole's clients as "Barton". By letter dated 10 January 2005, Mr David Williams sent a letter by email to Mr Cole responding to the Discussion Paper, noting that the paper "has now been considered by GIRL". He noted the preferred outcome from the GIRL viewpoint of acquiring 100% of Barton International's partnership interest in the GMA Garnet shareholding. He also noted that a sale of Barton International's interests not coupled with a long term supply contract was evidently not commercially attractive to Barton International. He noted Barton International's desire to have a long term supply obligation of GMA product to Barton International. At present Barton is the sole supplier of GMA product in the USA. The essential terms of acquisition were stated to be: GIRL purchases Barton's partnership interest and Barton's GMA shares, including the Barton held promissory notes from GMA and including all unappropriated stockpiles of product, on a going concern and walk in/walk out basis. No adjustments and no profits/cash distributions are to be made at completion. To the extent that any third party guarantees had been given by Barton to support the partnership or GMA which are unable to be released at completion, GIRL will provide an indemnity to Barton. The terms of acquisition are subject to all necessary regulatory approvals and both parties being reasonably satisfied that the transaction does not give rise to a breach of any of the provisions of Australian Trade Practices legislation or US Antitrust legislation. The parties must be satisfied that any terms do not result in an inadvertent contravention of Sections 45 and 47 TPA; obviously there must be no breach of Section 46 TPA (ie. there must be a level playing field (in terms of price and other conditions of acquisitions) for all purchasers who supply the Australian market) and the ACCC will need to be satisfied that there are no Section 50 issues. GIRL proposes to give a copy of any final settlement proposal to ACCC, and settlement will be subject to ACCC not voicing any objection or concern about the terms. For any market other than the USA, GMA product may be taken by any other Barton company, if available, at a price commensurate with the price offered by the mine to its other distributors and customers. It is apparent from the terms of this letter from Mr David Williams to Mr Cole dated 10 January 2005, that a number of the essential terms of the GSA as ultimately executed on 31 March 2005, were expressed from the outset, although a number of others went through an evolutionary process before finding final expression in the GSA. For example, the proposal by Mr David Williams on behalf of GIRL in (a) that BMC be appointed the "exclusive distributor" of GMA product in the USA by GMA Garnet, and in (f) that the terms specified "are for supply of GMA product to Barton Mines USA market", did not survive. It should also be noted that, the proposal in (k), that Barton Mines will not be entitled to maintain stockpiles/warehousing rights at the processing plant was, however, developed. The questions of stockpiling at Geraldton and possible blending issues in the stockpile were raised later in negotiations. The proposal that Barton Mines will be "granted a non-exclusive licence to use GMA product branding" developed along the way, into cl 2.5. By "Without Prejudice Memorandum of Proposal (Subject To Contract)" (Memorandum of Proposal) emailed by Mr Cole to Mr David Williams on 25 January 2005, Mr Cole provided Barton International's response to the invitation of GIRL to propose terms of settlement and compromise. The Memorandum of Proposal noted there was "common appetite" for an outcome whereby GIRL acquired Barton International's interests in the partnership, and GMA Garnet and Barton International and GIRL entered into a long term supply contract for GMA garnet. In relation to the sale and purchase of the partnership, and GMA Garnet interest of Barton International, the Memorandum of Proposal specified a price. If an exclusive distribution arrangement is a critical requirement of GIRL then please let us have details of the proposed terms, so that Barton can give further consideration to this aspect. This should also facilitate ACCC (and related) clearances. Some comfort may be gained for GIRL from the first bullet point at the end of paragraph 4.2(b)(i) above [to the effect that the tonnages required of up to 50,000 tonnes primary product and up to 15,000 tonnes secondary product 'are Barton's estimates of its needs for the Americas']. Mr David Williams then emailed to Mr Cole a letter on 2 February 2005 putting a firm proposal for GIRL's acquisition of Barton International's GMA Garnet interests. First, it specified a price and then set out terms of acquisition including those referred to initially, that the terms of acquisition were subject to all necessary regulatory approvals particularly under competition law. 4.3 Barton Mines will be granted a non-exclusive licence to use GMA product branding. 4.4 The exclusive distribution rights and production entitlement granted to Barton Mines will be personal to Barton Mines and not capable of assignment. Mr Williams made a note of that conversation without reference to which he would not have had a clear recollection of the fact, or the content of the conversation. However, the note enabled him to refresh his memory in recalling some, but not all of the matters in the note. He was satisfied however, that the matters contained in the note were an accurate and reliable record of events at the time. The Court has no difficulty accepting that the note should be accepted as an accurate and reliable record of events at the time. It is a carefully written note of the telephone conversation with Mr Cole. Amongst matters dealt with in the conversation on 3 February 2005 were the following: By letter sent by email to Mr Cole on 9 February 2005, Mr David Williams referred to his discussions with Mr Cole "over Thursday and Friday of last week" in respect of which he then had instructions to respond to. In respect of cl 1 dealing with the sale and purchase of Barton International's interests, much was agreed. 2.3 GIRL would be uneasy with any distribution agreement which gives one distributor a significant price advantage over others in Australia by, in effect, being able to take product at cost or near cost. GIRL wishes to maintain a level playing field for all of the distributors/customers and is concerned that the ACCC may not authorise a settlement which gives Barton the potential to create/maintain a monopoly in the Australian market. If Barton is concerned that the structure of its distribution arrangements may be in breach of the Trade Practices Act then we are prepared to write to the ACCC on the issue now and seek its views. This proposal was a reference to the existing stockpile of product at Geraldton, Western Australia. By letter dated 10 February 2005 and sent by email that day, Mr Cole responded to Mr David Williams' letter of 9 February 2005. In para 1 of his letter, Mr Cole indicated that Barton International was prepared to proceed to the negotiation of formal documents within the parameters of the principles therein set out. In para 2, Mr Cole noted that Barton International had noted the distribution arrangements now proposed by GIRL "are designed in the context of the mutual desire of both Barton and GIRL to structure arrangements to minimise the prospect of adverse response from competition law regulators". Barton International however perceived that aspects of the proposed structure in para 2.2 may unnecessarily over complicate matters. Mr Cole then set out in para 3 the simplified approach to which Barton International was prepared to commit. (b) noted. (c) the pricing of the product within the threshold tonnage levels must be by way of a net discount at the time of payment of the primary price rather than as an after the event rebate back to Barton. Further, Barton is prepared to accept an undertaking that the discount is offered as an incentivisation with respect to the market in the relevant territory (but without performance and market growth obligations) and that the product acquired at a discount must only be distributed into that market. Further, the relevant market must not be confined to North America, but also must extend to Central America and South America. (d) the provision is superfluous --- Barton's right is an absolute right at its discretion. (e) GIRL's intention is noted. Barton does not wish to contractually constrain or oblige GIRL in any respect whatsoever as to the price and the terms upon which it can offer product to any of its other distributors. (f) the provision is superfluous --- refer paragraph (e) above. (b) The first 35,000 tonnes is priced as per paragraph 3.1 of your letter of 2 February 2005 (i.e. not by payment and rebate back). (c) The next 15,000 tonnes is priced as per paragraph 3.3 of your letter of 2 February 2005 (i.e. not be paid and rebate back). (d) GMA product other than for that 50,000 tonnes, is subject to contract on commercially negotiated terms. (e) The concessionally priced product under (b) and (c) above may only be sold/distributed by Barton into North/Central or South America (' Americas ') --- as incentivisation and development of that market. Barton will so undertake. GIRL can also gain comfort of this through the shipping bills of lading etc at the time of delivery. (f) Subject to force majeure/non performance of deliveries by GIRL, annual tonnage discount entitlement is non cumulative. (g) Barton has no restraint undertaking in its favour to restrict GMA or other GMA Distributors from entering into any market, including the Americas. (h) Barton is also not subject to any market restraint undertaking other than in (e) above to the extent of the price discounted product (b) and (c). (i) Barton accepts that its orders for GMA Product under (b) and (c) above must be for no more than 50% 30/60 Mesh (compared with 80 Mesh), although a greater than 50% order for 80 Mesh is acceptable to GIRL. Barton International was prepared to "so undertake". To that letter, Mr David Williams responded by letter dated 11 February 2005 sent by email and enclosing a document entitled "Principles of Proposed Settlement GIRL/Barton" (Principles of Proposed Settlement). Clause 1 of the Principles of Settlement dealt with sale and purchase on terms that had more or less been negotiated to that point. 2.2 The proportion of 30/60 Mesh and 80 Mesh of GMA product taken by Barton shall be as Barton elects in each year provided that 30/60 Mesh constitutes no more than 50% of total GMA product taken in any year. 2.3 Barton will not be subject to any market restraint undertaking. 2.5 To derive the benefit of the discount Barton must demonstrate the delivery of the GMA product to North America to the reasonable satisfaction of GMA, including producing the relevant bills of lading. 2.6 Barton's annual entitlement to the 50,000 tonnes of GMA product does not accumulate except where Barton has been unable to take its required tonnage through the default of GMA or an event of force majeure. 2.7 GMA, GIRL and other GMA distributors will not be restricted from distributing GMA product in any market, including North America. 2.8 Barton shall pay for all GMA product by irrevocable and confirmed letter of credit payable at sight. 2.9 Barton may deal with GMA product as it wishes and will not be restricted from assigning its above rights to acquire GMA product. To this note I will return). Clause 6 confirmed that the formal contracts would be subject to all regulatory approvals including any authorisations that may be necessary for the purposes of Australian Trade Practices Legislation or US Anti-Trust Legislation. On 11 February 2005, Mr David Williams had a number of separate telephone conversations with Mr Aaron Williams and Mr Ketelsen, and also with Mr Cole. He made a note of some of those conversations. But for the note he would not have a clear recollection of the fact or content of the conversations. He refreshed his memory from the note and was thereby able to recall some, but not all of the matters recorded in the note. He had no reason to doubt that the matters contained in the note are not an accurate and reliable record of events at the time. On the right hand side in the top two thirds of the note, Mr David Williams recorded the "what ifs" which Mr Ketelsen or Mr Aaron Williams instructed him to raise with Mr Cole. They are headed "For SC". On the left hand side of the file note Mr Williams made provision for Mr Cole's responses to those "what ifs". Following the noting of the points for discussion with Mr Cole, Mr David Williams spoke to Mr Cole about the issues noted in the top two-thirds of the page and made notes. This was a continuing issue that had been referred to in the earlier negotiations. Apparently, the concern was that GMA garnet not subject to the GSA might be mixed up with GMA Garnet product provided under the GSA, and cause GSA compliance difficulties later. The second and third points concerning product quality and operations speak for themselves. The last issue is, however, critical. Mr David Williams says to the best of his recollection Mr Cole did not specify the nature of the blending to which he referred. The product cannot be labelled as GMA product otherwise. By the weekend of 12 and 13 February it seems the question had arisen for GIRL as to whether Barton seriously wished to conclude a compromise and settlement in relation to the existing dissolution proceedings due to what it considered a prolonged negotiating process. By email from Mr Cole to Mr Williams on Sunday 13 February, Mr Cole advised that he had been able to "speak to my people overnight" and "confirm I have instructions to proceed with formal documentation as soon as is practicable". I look forward to receiving drafts for prompt consideration. These related to the Principal Agreement, of which the GSA was expected to be an attachment. At this point Mr Cole indicated he had not provided his clients with these initial draft documents as he intended to refine them to the next draft stage before doing so. In this context, and as part of further discussions I have been having with my client in connection with the mechanical logistics and difficulties of stock piling the USA/Canada discounted priced GMA garnet without risk of co-mingling with other GMA product (either existing stock piles of Barton or new fully priced product), a number of practical difficulties have been identified. As a proposed solution to these practical difficulties that have been identified, and without resiling from the principle that up to 50,000 tonnes per annum of the special contractually priced GMA Garnet must be delivered into and distributed/sold within USA/Canada, I attach a proposal for your consideration. I believe it would be beneficial if I could meet with you to talk through and work with you in explaining the various formulae proposed in order to satisfy constraint 2. The expressed concern here was that the discounted garnet to be so sold or distributed may become "co-mingled" with stockpiled GMA garnet which was not subject to the GSA obligations. Attached to that email was Mr Cole's document entitled "Barton/GIRL Settlement Proposal" (Settlement Proposal). It appears that Mr David Williams did not respond to the stockpiling and risk of co-mingling issue raised by Mr Cole in his emailed letter. A question arises, of course, whether this logistical "co-mingling" and "compliance" issue is the issue to which Mr Cole drew attention and Mr Williams noted on 11 February. For reasons given later, it appears not to have been. On 16 February 2005, Mr David Williams sent to Mr Cole by email a draft GSA for his review, noting that it remained subject to his client's instructions as various aspects were still being considered. On 17 February 2005, Mr Cole by email returned a marked up revised GSA, noting that his client was yet to comment on the document and that he reserved the right to suggest amendments. On his copy of Mr Cole's marked up "DRAFT " of 17 February 2005 (produced as Attachment DJW 17 to witness statement of Mr Williams, exhibit I), Mr David Williams made handwritten notations. ● The concept of the Buyer taking "delivery" in relation to certain rights and entitlements was introduced, for example in cl 2.2 dealing with non-accumulation rights. The Buyer must not use the GMA Garnet name and logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product or hold out in any way that garnet which is not 100% Product, is Product . That is why he was instructed to replace the word "delivers" with the word "discharges" so as to avoid this possibility. Good faith dealing under the GSA plainly could not be relied upon. Mr David Williams also says that in relation to the contracting Barton entity being only Barton International, and not also BIA, he did not know at the time what particular role it performed. He treated the Barton entities as a uniformly controlled corporate group. He says there was never any discussion between him and Mr Cole as to the parties or as to what Barton International or any other Barton entity would do with the GMA garnet once it was discharged into North America. On 17 February 2005, Mr Williams sent by email his further revised and marked up draft of the GSA. The Buyer must not use the GMA Garnet name and logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product or hold out in any way that garnet which is not 100% Product, is Product. On 18 February 2005 Mr Cole sent an email to Mr Williams, together with attachments described as "final draft documents acceptable to Barton", including the Principal Agreement and the GSA. In relation to the Principal Agreement Mr Cole relevantly noted that cl 2.3(b) "picks up the opening sentence that you previously had included in cl 4.2 of the Supply Agreement (but which I am now proposing be deleted from the Supply Agreement and included in the Principal Agreement)". Mr Williams says there was no discussion between him and Mr Cole concerning the proposed changes resulting in cl 2.3 of the Principal Agreement, or to cl 4.2 of the GSA as he had previously drafted it. On 19 February 2005, without further discussion between Mr Williams and Mr Cole, Mr Williams sent a number of draft agreements by email to Mr Cole including marked up drafts of the Principal Agreement and the GSA. On 19 February 2005, Mr Cole forwarded to Mr David Williams an email he had sent to Mr Brand of Barton International setting out changes Mr Cole proposed to the last version of the draft agreements. In relation to cl 2.3(b) of the Principal Agreement, Mr Cole proposed that the words "maintain and provide" be replaced with the word "promote". Mr Cole did not propose any further amendment to cl 4.2 of the draft GSA. There were a number of other, not presently relevant amendments also proposed to the Principal Agreement, the GSA and some other related agreements. Mr Williams accepted the proposed change to cl 2.3 of the Principal Agreement and the consequential change to cl 4.2 of the GSA and removed the words "maintain and", with the consequence that the acknowledged wish of the Seller that then appeared in each of cl 2.3(b) of the Principal Agreement and cl 4.2 of the GSA was to "promote distribution of Product". At that point, each of cl 2.3 of the Principal Agreement, and cl 4.2 of the GSA, and cl 2.5 of the GSA, found the form in which they appeared in the GSA annexed to the Principal Agreement at the time of its execution on 21 February 2005.  Barton International is an independent agent and not a GIRL/GMA "distributor". Therefore there are no performance KPIs applicable to Barton International's sale of product.  There are no market or territorial allocations or restraints applicable.  Barton International will be granted a non-exclusive licence to use GMA product branding.  Barton International will be granted reasonable continuing stockpile/warehouse rights at the processing plant (this being a reference to the plant at Geraldton, Western Australia).  There would be no territorial benefits and constraints. "This should also facilitate ACCC (and related) clearances". "Some comfort may be gained for GIRL from the first bullet point at the end of paragraph 4.2(b)(i) above", namely, that the tonnages referred to are "Barton's estimates of its needs for the Americas", and that Barton International will provide annual and quarterly forward estimates in budgeted timetables for shipment requirements.  in para 4.3, Barton Mines be granted a non-exclusive licence to use GMA product branding. GIRL indicated it wished to maintain a level field and was "concerned that the ACCC may not authorise a settlement which gives Barton the potential to create/maintain a monopoly in the Australia market". GIRL emphasised that "ACCC authorisation is fundamental to any agreement".  In relation to para 2.2(a) of Williams' letter of the previous day, Barton International notes this "on the assumption that distribution rights will not be tied to performance obligations and also that Barton will not be restricted in any way from distributing other than GMA product".  As to para 2.2(b) this was "noted".  In relation to the proposal in para 2.2(c) "to incentivise" the North American market, Barton International noted that "the pricing of the product within the threshold tonnage levels must be by way of a net discount at the time of payment of the primary price rather than as an after the event rebate back to Barton. Further, Barton is prepared to accept an undertaking that the discount is offered as an incentivisation with respect to the market in the relevant territory (but without performance and market growth obligations) and that the product acquired at a discount must only be distributed into that market". Barton International noted that the market must be the Americas, not just North America.  In para 3(e), Barton International stated that its "simplified approach" to the ongoing product supply agreement included that "the concessionally priced product ... may only be sold/distributed by Barton in North/Central or South America ... - as incentivisation and development of that market. Barton will so undertake. GIRL can also gain comfort of this through the shipping bills of lading etc at the time of delivery".  In para 2.5, the principle that "To derive the benefit of the discount Barton must demonstrate the delivery of the GMA product to North America to the reasonable satisfaction of GMA, including producing the relevant bills of lading".  In relation to product branding, para 5 proposed that "Barton must label all product purchased from GMA as GMA product and will be granted a non-exclusive licence to use GMA product branding for that purpose". On 11 February 2005, whether before or after the circulation of the Principles of Proposed Settlement by Mr Williams the discussion between Mr Williams and Mr Cole. This followed discussions Mr Williams had had with Mr Ketelsen and Mr Aaron Williams. The handwritten notes made by Mr Williams (which are attachment DJW12 to his witness statement, exhibit I) do not make any obvious references to the paragraph number of the Principles of Proposed Settlement. This might suggest that the discussion between Mr Williams and Mr Cole was before Mr Cole received the Principles of Proposed Settlement document. However, having regard to the particular issues raised by Mr Cole as noted in the handwritten notes, it is more probable the discussion related to the terms of the Principles document which each then had before them.  In relation to "S/Pile" --- clearly a reference to the Existing Stockpiles para 4 of the Principles document, which had been the subject of earlier exchanges between Mr Cole and Mr Williams - the notes indicate "Removal --- may be issue of blending". That reference is clearly a reference to a concern that Product to be supplied under the GSA may in some way be blended or mixed up with GMA garnet to which Barton International was currently entitled and which was in existing stockpiles at the Geraldton processing plant. This is rather confirmed by the fact that on Mr Williams' copy of the Principles document (as it appears at attachment DJW11, to exhibit I) adjacent to cl 4 dealing with the existing stockpile issue, Mr Williams has written the words "possible blending issue".  Under what appears to be a comment in respect to the topic of "S/Pile", but which may well be a separate notation altogether, Mr Williams wrote: "- Issue --- do not wish to be compelled to label as GMA --- may be blending". As explained above, this is accepted by Mr Williams to be a note of an issue raised by Mr Cole in their conversation. In the bottom left hand corner notes, Mr Williams also wrote: "TK: if labelled GMA must be 100% GMA Not to be labelled o/wise". Mr Williams explained that he made this note after putting to Mr Ketelsen the labelling issue raised with him by Mr Cole. On 15 February 2005, the email in which Mr Cole set out a proposed solution to practical difficulties that Barton International had identified in respect of stockpiling, and "without resiling from the principle that up to 50,000 tonnes per annum of the special contractually priced GMA Garnet must be delivered into and distributed/sold within USA/Canada". In the "Settlement Proposal" attached to the email, Cole proposed two constraints, the first of which provided that "all shipments of contractually priced GMA Garnet must be for delivery, and be delivered, to USA/Canada". The Buyer must not use the GMA Garnet name or logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product. The Buyer must not use the GMA Garnet name or logo, or in connection with, the distribution or sale of any garnet which is not 100% Product. The advice of Mr Ketelsen to Mr Williams in relation to this was, "If labelled GMA must be 100% GMA Not to be labelled so otherwise". The advice of Mr Ketelsen to Mr David Williams finds clear reflection in the changes made to para 5 of the Principles document and the way cl 2.5 was expressed in the first draft of the GSA. No longer was Barton International required to "label all product purchased from GMA as GMA product", but rather, "All garnet distributed or sold by the Buyer which is 100% Product must be branded". The obligation to label now only arose at the point of distribution or sale by the Buyer and only in respect of garnet "which is 100% Product". The expression "100% Product" is a particularly significant change in wording and it seems, on the face of it, to have been suggested by Mr Ketelsen to Mr Williams. On the face of it, when told that Mr Cole had advised that Barton International did not wish to be "compelled" to label as GMA garnet because there "may be blending", the response by Mr Ketelsen to Mr Williams simply was to confirm that if the GMA Garnet label was to be used, then the product must be 100% GMA garnet and should not be labelled so otherwise. The advice Mr Cole gave to Mr Williams makes it clear enough that the blending being spoken of was not in relation to stockpiling, but arose because of the labelling issue. Paragraph 5 of the Principles document plainly proposed mandatory labelling of all GMA product purchased under the GSA. Mr Ketelsen's recorded advice was also in respect of labelling. Again, on the face of it, GIRL, without inquiring as to the nature or extent of any blending of GMA Garnet product that Barton International might have had in mind, was apparently more concerned to ensure that its product reputation be fully protected by ensuring that only garnet distributed or sold by Barton International which contained 100% GMA garnet be so labelled and that Barton International not be entitled to represent product that was not 100% GMA garnet as such. This, again on the face of it, suggests that Mr David Williams and Mr Ketelsen too, fully understood what they had been advised by Mr Cole - that there may be blending of garnet obtained from GMA Garnet under the GSA, so that Barton International might produce something less than 100% GMA garnet --- even if they did not further explore or fully appreciate the potential implications of that advice. Mr Williams did not have any close recollections of what otherwise was said by Mr Cole in this discussion on 11 February concerning blending. He is simply left with his note. Mr Torsten Ketelsen gave evidence in connection with the instructions he gave to Mr David Williams leading up to the conclusion of the Principal Agreement and the GSA. His statement of evidence (exhibit H) became his evidence in chief. In relation to Mr Williams' file note to the effect that "Barton have an issue, they do not wish to be compelled to label all product as GMA as there may be blending", he stated he had no recollection of a conversation with Mr Williams along those lines. Mr Ketelsen held the firm position that GMA garnet was the premium garnet product in the world garnet market. At all material times in the negotiating period he did not know or even suspect that Barton International would order discounted GMA garnet if that garnet, as received, was not going to be labelled and then sold in North America as GMA garnet. He says he would have expected that Barton International would have told GMA Garnet if in fact that was to occur. Senior Counsel for Barton International did not cross-examine Mr Ketelsen concerning his communications with Mr David Williams about the file note. This is not surprising given that Mr Ketelsen in his evidence in chief had no recollection of the matter having been raised with him by Mr Williams. Senior Counsel for Barton International also chose not to cross-examine Mr David Williams further concerning this evidence on the topic. Given his lack of detailed recollection, that too is not surprising. In the result, the evidence bearing upon the communications between the parties about the "issues" concerning "blending", in relation to the labelling requirement, emanates from the lawyer/negotiators Mr Cole and Mr David Williams. Each agrees that the issue was raised. Mr Williams confirms that he took the issue to Mr Ketelsen who made the comment he noted at the bottom left of his file note. It is then relevant to turn to Mr Cole's evidence about his discussion on the blending issue with Mr Williams and in relation to the discounted supply provisions. Mr Cole gave evidence in chief by adopting a witness statement that he had prepared for the purpose of the proceedings (exhibit AA) as well as by adopting a supplementary witness statement prepared for the proceedings (exhibit BB). He explained that from 2003 he had been the lead partner in the law firm, Arthur Robinson Hedderwick, acting for Barton International and related entities including BIA in connection with business transactions that ultimately led to these proceedings, and that he retained overall client contact and responsibility. Mr Cole concluded that, as a result of what he considered to be the complete breakdown in the relationship between the parties in the course of their commercial disputes, it would be best if negotiations for any settlement were conducted between solicitors if there was to be a reasonable prospect of a commercial settlement. Mr Cole says in his evidence in chief that when he received the Principles document on 11 February 2005, he perused it and made handwritten notes on it (see attachment SC22 to exhibit AA, which is a copy of the document with his handwriting on it). For example, next to para 4 dealing with existing stockpiles, he wrote the words "comparable". Then next to para 5, dealing with product branding, he circled the words "must label all", and wrote the word "issues" in the margin with much emphasis above and beneath that word. Mr Cole in his evidence in chief further says that he had a telephone conversation with Mr David Williams on Friday 11 February 2005, at a time at which he believes he had the Principles document in front of him, and that he referred to various paragraphs of it during the conversation. Mr Cole also says that he has refreshed his memory of the fact and content of this conversation from perusing a copy of the handwritten file note that Mr David Williams made of this conversation with him on 11 February 2005. Mr Cole said that without reference to the handwritten notes he made on the Principles document and without consulting Mr Williams' handwritten note of the conversation on 11 February 2005, he would have some recollection of the conversation although not a recollection of all that was discussed. Mr Cole then says that during the conversation he said to Mr Williams among other things statements about para 4 dealing with the existing stockpiles, the need for the garnet purchased under the GSA to be of a quality consistent with that supplied to other prime customers of GMA Garnet, that mining and processing operations should continue as present pending completion of any settlement and (importantly for present purposes) that there was an issue concerning para 5 relating to the branding of GMA Garnet product. He said that Barton International did not wish to be compelled to label all garnet purchased from GMA Garnet as GMA garnet because there may be blending of the GMA Garnet product with garnet sourced from elsewhere. Mr Cole says Mr Williams said he would take instructions on those issues. Mr Cole says that he believes that on Saturday 12 February and Sunday 13 February 2005, he had one or more telephone conversations with Mr David Williams who indicated that unless Barton International could give prompt affirmation of its intent to progress the negotiations towards an agreement, GIRL would withdraw from negotiations. In light of that advice, on Monday 13 February 2005, Mr Cole sent an email to Mr Williams confirming that he had instructions to proceed with formal documentation as soon as practicable. Mr Cole says that by Wednesday 15 February 2005, the position was reached such that, if it was ultimately agreed that discounted product could only be distributed in a defined territory, there would be significant logistical problems for Barton International due to the nature of its distribution and warehouse operations in America, the fact that it had existing supplies of GMA garnet in America, it had a stockpile of GMA Garnet product in Geraldton and the proposed GSA would enable it to buy both discounted GMA Garnet product and other GMA Garnet product. If there was an obligation to distribute discounted product only in a particular territory there was a material risk that Barton International in a practical logistical sense may not be able to assure compliance with that obligation, or demonstrate that it had only distributed particular product in that territory and that may lead to GMA Garnet/GIRL disputing Barton International's entitlement to the concessional pricing, asserting default and seeking to terminate the GSA. To overcome that risk, Mr Cole said he proposed in his email of 15 February 2005, that the principle of discounted product being distributed in North America could be given effect to in a practical manner by the observance of certain inventory accounting protocols, and he explained that in a meeting with Mr David Williams. He understood that Mr David Williams would take instruction on his proposal following their meeting on 15 February 2005, but did not receive a full response to that letter, nor does he recall any later negotiations concerning progressing that proposal. Rather, on 16 February 2005 he received from Mr Williams the first draft of the GSA. Mr Cole says that when he read the first draft of the GSA, he noted, amongst other things, that it contained a provision to the effect that the discount only applied if product was distributed in North America and it contained no provisions dealing with the practical problems he had explained in the conversation with Mr David Williams of 15 February. Accordingly, on 17 February 2005 he sent a revised draft of the GSA in which he had deleted the reference to discounted product being distributed in North America, and replaced it with a reference to the product being "shipped and delivered" in that territory. Mr Cole says he recalls a telephone conversation with Mr David Williams either before or after he sent the revised draft in which he said words to the effect that without the practical issues of Barton International's inventory management and control being addressed, the risk of termination of the GSA and the consequent loss of benefit of discounted long term product supply was too great, and so Barton International would not accept an obligation to distribute discounted garnet only in North America or a contractual constraint or prohibition on selling discounted garnet outside North America, but that Barton International was prepared to accept that discounted garnet must be shipped to North America and it should be able to satisfy GMA Garnet and GIRL that it had delivered that garnet into North America by producing shipping documents including bills of lading. This would act as a commercial disincentive to ship the garnet to North America and to trans-ship that same garnet to other countries, and that should satisfy his client's concerns. Mr Cole says that Mr Williams indicated he would take further instructions. Mr Cole says that when he received the further draft of the GSA in which a new first sentence had been included in cl 4.2 expressing the wish of the seller to promote distribution in North America, he asked Mr Williams to explain the rationale for this. Mr Cole says Mr Williams said words to the effect that it related to competition law concerns that GIRL had with justifying the discount to which Barton International would be entitled under the GSA. In cross-examination Mr Cole was pressed about his ability to recall independently the events just referred to. Mr Cole responded by saying that he recalled most of the fundamental terms of the negotiations because they consumed a very important part of his life at the particular time, and that he had a "reasonable recollection" of some fundamental aspects. When further pressed that he might have difficulty recalling the contents of particular documents or conversations, Mr Cole said he recalled contents of discussions that he had over that period. Indeed he could recall them without reference to the notes. He accepted however that the documents to which he had referred, did jolt his memory of things. He rejected the suggestion that any of his statements constituted reconstruction of events. Mr Cole was pressed as to his recollection of his discussion with Mr Williams about his concerns arising out of the Principles document. He was pressed about his "blending" concern in respect of the existing stockpile and explained that to be supplied under the GSA, which might lead to claims by GIRL that Barton International had distributed the discounted garnet contrary to the GSA he perceived there was a real risk of mixing the existing stockpile in the shed with the new discounted garnet. Mr Cole was also pressed in cross-examination as to why he did not make some file note about the points raised in this conversation on that day and the fact there did not seem to be any other documentation relating to the points raised at the meeting subsequently. As to his file keeping practices, Mr Cole said that it would not necessarily tend to suggest that nothing terribly significant was said in the conversation because he had not kept a note. He said it could have been poor practice on his part, particularly as it had been a very intense time. He also said that he often verbally communicated matters to his clients and did not always reduce them to writing. He agreed that "quality best practice" might suggest that important matters be reduced to writing. However, he suggested that while one might have "aspirations" in that regard, "practical issues come through", and one does not always have time to prepare notes on the number of conversations that one has over a period. He agreed that he would have conveyed at the least the significant matters to his clients in discussions with them. In relation to his evidence concerning para 5 of the Principles document concerning product branding, and the fact that he had referred to it in the context of "blending", Mr Cole was challenged that para 5 was not about blending at all but was substantively concerned with the use of a trademark. Mr Cole said his concern was "the potential for a breach of contract on the part of Barton". He was concerned that there might be intentional blending which might run contrary to the obligation to ensure that all garnet purchased from GMA Garnet was labelled as GMA garnet when sold. Mr Cole agreed that the prospect of intentional blending had not been raised in correspondence between the parties at any time prior to February. He was challenged to point out where it had ever been expressly mentioned after 11 February 2005 up until when the agreements were signed. Mr Cole implicitly accepted that it had not been so mentioned, but said this was "because the next pass of the documents resolved that issue". From Mr Cole's point of view, when the next pass of the draft documents came back it was no longer an issue because of the manner in which cl 2.5 of the first draft of the GSA dealt with the issue. He accepted, however, that the issue of intentional blending was not an item of discussion after 11 February 2005. Mr Cole was further challenged on this view by reference to the fact that, when he received the next pass of documents, the requirement in cl 2.5 was that the GMA garnet "must be branded" and he had, in his subsequent revision, changed that to "may be branded". He was asked whether the change to "may" was intended to reflect the idea that it was at the option of Barton International or any member of the Barton group whether or not 100% Product was branded. Mr Cole indicated that it was, and he was seeking to minimise any obligations of Barton International on a continuing basis: "may" was permissive. Counsel further challenged Mr Cole by suggesting that what the note made by Mr David Williams concerning blending really referred to was unintentional blending of product, not intentional blending. Mr Cole rejected this. I don't recall it specifically at that particular conversation. --- I wasn't seeking permission on behalf of Barton for that purpose. I was outlining a practice which became an issue because of a trademarking provision sought to be included in the document. But what I am suggesting to you is that the words you used, if you did have that concern yourself, didn't convey to them, to Mr Williams, in any way, shape or form, that what Barton was proposing was to blend 100 per cent product intentionally and thereby not be subject to a branding obligation? --- The communication wasn't concerning Barton's intent. It was concerning Barton's practice and industry practice, as I understood it, having regard to niche applications of the product, and therefore the risk that may arise in very long-term contract that product could become blended, and therefore potential for a breach which would trigger a potential termination of the supply contract. --- The practice --- I suppose I --- lawyers take pride in understanding their client's business. I did understand, from prior instructions that I had with Robert Brand, and from my dealings with my client over a period of time, and from discussions I'd had with Jim Nash in the past, that some of the different qualities of garnet - alluvial garnet compared with hard rock garnet, some being smoother ridged, some being sharper ridged, different - the size of the particles, and special applications that they have from time to time to meet particular requirements. --- Yes, and I communicated that issue to David Williams. --- The issue that in this industry, that there is blending of garnet, intentional blending, for niche applications from time to time, and therefore we did not wish to have a provision that obliged it to be branded GMA garnet on every piece of garnet that came through. --- I didn't have instructions or an understanding as to exactly what Barton was going to do with this particular garnet, no. It is hard to walk away from the note Mr David Williams made of the discussion. As noted above it plainly is about the substance of para 5 of the Principles document to do with the branding of GMA garnet supplied under the GSA, not GMA garnet stockpiled at Geraldton or in the USA. Counsel for the applicants submits that the evidence of Mr Cole should not be considered reliable. The reasons put forward for adopting this view include the fact that no other note of such an apparently significant conversation was made at the time or immediately afterwards by Mr Cole himself. I am satisfied with the explanations given by Mr Cole as to why that was so. I accept, as Mr Cole has explained, that para 5 of the Principles document related to a trademark issue, but that incidentally the question of its breach was provoked by his awareness of Barton International practice and industry practice concerning the blending of garnet for niche operations. I am also satisfied that once Mr Cole saw the terms of cl 2.5 of the first draft of the GSA prepared by Mr Williams on about 16 February 2005, he was satisfied, as he said he was, that that issue had been removed by the changed wording. I do not consider that Mr Cole's subsequent attempt to further revise the terms of that draft of cl 2.5 by removing the "must" and replacing it with the discretionary "may" materially bears on the issue. His intent then was to obtain as much discretion on the part of his client as possible in respect of all obligations. He did not resist the subsequent reinsertion of the "must" by Mr Williams. In the course of the trial, when the applicants pressed for access to certain documents of the respondent, for which legal client privilege had been claimed, senior counsel for the respondent recorded on the transcript that there were no privileged documents which recorded or shed light upon the fact, content or terms as to what was said on 11 February 2005. While the applicants submit this fact is surprising I do not consider the absence of a note about the issue to be determinative in the light of all the evidence I have recounted above. In so finding, I also accept that the question of intentional blending of GMA garnet by Barton International was not the subject of the framework discussions either before or after 11 February 2005, and during the course of the negotiations leading up to the execution of the Principal Agreement and the GSA. But there is no particular reason why that should have been so. The issue as it occurred to Mr Cole was raised incidentally, by reason of his awareness of blending as a possible concern. I am satisfied that how cl 2.5 ultimately came to be drafted in the form that it currently exists, is directly as a result of the discussions between Mr Cole and Mr David Williams over the issue of labelling and blending raised by Mr Cole. That issue plainly was raised in respect of the substance of para 5 of the Principles document. It matters not in these circumstances whether Mr Williams made his note on 11 February 2005 before or after the circulation of the Principles document. The conversation was about the substance of that paragraph. Nonetheless, I think on balance, having regard to the whole of the note and the other matters referred to in it, and the level of detail in the other comments made in the note, that both Mr Cole and Mr Williams must have had the Principles document in front of them at the time of their conversation. Further, I consider it to be the case having regard to the evidence of Mr Williams himself, that following the raising of the labelling and blending issue by Mr Cole, Mr Williams took further instructions from Mr Ketelsen, which instructions in cryptic form appear at the bottom left of the page of handwritten notes he made. As explained above, those notes and the instructions strongly suggest how cl 2.5, in its first draft by Mr Williams, came to be. It seems reasonably plain, in these circumstances, that the parties through this process of negotiations between Mr Cole and Mr David Williams shared a common understanding that there may indeed be some intentional blending of GMA Garnet product by Barton International or entities associated with it, including of GMA garnet acquired under the terms of the proposed GSA. Mr Cole raised the prospect and Mr Williams ultimately accepted it was so, or assumed it was so for the purposes of drafting cl 2.5. Clause 2.5 of the GSA was ultimately negotiated and agreed upon in light of that common understanding or acceptance. It is not to the point, though I consider on the basis of the evidence of Mr Ketelsen and Mr Aaron Williams which I accept in this regard, that it is the case that, at the time Mr Cole pointed out to Mr David Williams that there may be blending such that Barton International did not wish to be subject to an all encompassing obligation to label all GMA garnet purchased as GMA garnet, the applicants themselves had no detailed or other appreciation of the nature or extent to which Barton International engaged in the practice of intentional blending. What appears to have happened, having regard to the applicants then understanding of Barton International's practices, is that at material times when the Principal Agreement and GSA were negotiated, and in the years leading up to that time, the applicants believed (incorrectly) that not only was GMA garnet supplied to Barton International's entities already packaged with both the GMA Garnet name and logo and the relevant BMC name and logo, but that loose bulk garnet which was shipped to the USA and packaged in the USA by BMC with the GMA Garnet name and logo, accompanied by the BMC brandings, was only provided to customers in packaged form. As a result, persons such as Mr Ketelsen and Mr Aaron Williams had no appreciation that blending of GMA garnet was something that was or might ordinarily be undertaken. It was not something that GIRL was aware of in relation to its own areas of garnet sales. GMA Garnet product was at that time very favourably mentioned in trade literature in North America. It had a good reputation in the market. Mr Ketelsen indeed considered it to be the superior garnet in the world market. It probably ran counter to marketing intuition, or at least that of GIRL, that Barton International would, in these circumstances, ever consider blending superior quality GMA garnet with inferior quality garnet from elsewhere and then put to market a fused product that would, by definition, be inferior to GMA garnet. Be that as it may, the Court has little hesitation in concluding that cl 2.5 was drafted on the understanding or acceptance by GIRL that, however few and whatever the occasions might be, blending might possibly occur intentionally and that Barton International would not wish to be subject to an obligation that required it to brand all GMA garnet purchased by Barton International under the GSA. Given the acrimonious relationship between the parties, and Mr Cole's realisation that the terms of the GSA would need to be carefully considered to avoid creating opportunities for the premature termination, the point he raised during negotiations is not to be considered surprising. It will be recalled Mr Ketelsen took a not dissimilar attitude when he instructed Mr Williams to use the word "discharges" rather than "delivers" in cl 4.2. Each side seems to have been fully aware that if an occasion should arise in the future for a breach or avoidance point to be taken, it surely would. The next issue arising from those negotiations is whether the parties arrived at a common agreement or understanding that Barton International (or BMC or any other related entity) would not assume the role of a distributor of Product on behalf of the applicants in North America. In my view, the closest that the parties got to any concept of marketing Product in North America was in their negotiations, was the recognition in Mr Cole's letter dated 10 February 2005, that the proposed concessionally priced product may only be sold or distributed into the Americas --- "as incentivisation and development of that market". As to exactly what "incentivisation and development of that market" meant in this context is problematic. One would have expected to see its meaning translated in clear words in to any subsequent contract, if it were the subject of agreement. It could for example have resulted in a contractual term that required Barton International only to sell the concessionally priced product in a stipulated territorial area. By achieving such an outcome, conceivably the GMA Garnet product would become better known in that territory. Even if there were such a provision in the contract, it would on its face fall short of an obligation positively to distribute or sell the GMA Garnet product in that market. Rather the contract would depend for its practical efficacy, on the desire of Barton International to make a profit and its ability to do so. If GIRL and GMA Garnet were to provide discounted garnet that could only be sold in the Americas, or North America, then there would be an incentive provided for Barton International to sell the product in that territory in order to maximise its profits. In so doing, GIRL and GMA Garnet would acquire exposure (whether guaranteed or not) in that particular territorial market. The point is that the "incentivisation" spoken of is a practical economic incentive, rather than a legal obligation to effect distribution or sale. This makes sense, particularly when one also takes into account the express desire of the parties to avoid any competition law problems that exclusive distributorship or nonexclusive distributorship, or binding sales or distributor obligations, might bring with them. However, following the evolution of the terms of the GSA then being negotiated, the position finally arrived at was that the discount for Product supplied under cl 4.2 of the GSA would only be provided where relevant product was shipped and discharged into North America --- not when sold or distributed into the Americas. No express distribution or marketing obligations---sale or distribution---were undertaken under the provision of cl 4.2. As to whether or not on the proper construction of the GSA an obligation on Barton International to develop the North American market for the applicants or some relevant representation to similar effect can be identified, in this light, is dealt with below. What can be said now is that in the course of negotiations Mr Cole was adamant that neither BMC nor Barton International would not undertake the obligations of distributor of GMA garnet supplied under the GSA, and GIRL understood that. The question remains whether, nonetheless, the terms of the GSA, as properly construed and taking into account the surrounding circumstances and commonly understood positions of the parties, including that Barton International and BMC would not undertake the obligations of a distributor of GMA garnet supplied under the GSA, Barton International assumed market development responsibilities in respect of GMA Garnet Product in North America in any event. The evidence also establishes that blending of 80 Mesh garnet commenced in June 2006 and blending of 30/60 Mesh garnet commenced in February 2007. The issue of blending in a very practical sense has caused the disputation the subject of these proceedings and helps to define the principal issues for determination. Because of the blending undertaken by the BMC, Product has been put to market by BMC in North America without being branded with the GMA Garnet name or logo. This has meant in turn that the "wish" of GMA Garnet to "promote distribution of Product" --- or more particularly to have Barton International assist it in such promotion --- has largely been dashed. The applicants say that the plan for blending was conceived by Barton International and associated interests much earlier than when it actually commenced, and also say that the blending was for the purpose of hindering promotion of GMA garnet in North America. The respondent denies these allegations on both counts. While Barton International says this further allegation raises a false issue, to which I will return, it also denies the allegation. I should deal with these factual matters and allegations and make findings in respect of them at this point and then consider whether the allegations raise a false issue in any event. The applicants refer to testimony that at a sales meeting on 2 March 2005, where Mr Bracken addressed sales staff and informed them of matters concerning settlement of the litigation with GIRL, he also believed that Barton International had the ability to blend, if it wanted to (transcript 4.5). The applicant says it would be incredible if he came to this understanding after negotiations were complete. The only reasonable inference is that this was something expressly contemplated by Mr Bracken during negotiations. The applicants accept that certain events in the United States in August 2005 (a warehouse fire, a flood and roof collapses) affected production, but they say simply contributed to a delay in implementing the blending strategy. The applicants say that "the contribution of these events is necessarily reflected in the timing and manner of implementing the blending strategy. Also it was obviously vital to test and achieve a minimum of quality blended product. But none of that gainsays that there was an initial blending plan and that the plan existed from the outset". The applicants therefore reject the explanation of Barton International that the blending strategy grew out of events after August 2005 because this is negated if the evidence of Mr Borgh, about what Mr Bracken said at the sales staff meeting, is accepted. It is also implausible in the light of the early ordering of large quantities of loose bulk VVM garnet. The applicants also say that if Barton International forthrightly considered it could blend GMA garnet there was no reason why it should not have disclosed that strategy immediately upon its implementation to the applicants. However, instead Barton International and the Barton group went to some lengths to not state that its strategy was to blend GMA garnet. The applicants say the only explicable reason for this is that Barton International was implementing a previously conceived secret strategy. The applicants also point to internal emails discovered by Barton International, which they say demonstrate the purpose of the blending strategy, which was to prevent GMA Garnet Product being promoted in North America. Barton International accepts that the question of blending was raised early, because it expressly relies on the evidence of Mr Cole that he indicated to Mr Williams, the solicitor and agent for the applicants during the negotiations, on 11 February 2005, that "there may be blending". Barton International says that cl 2.5 as ultimately agreed, differed from the earlier term proposed by Mr Williams whereby unequivocally all garnet supplied under the GSA would have to be branded with the GMA Garnet name and logo. So far as the applicants' emphasis on the purpose of the blending undertaken by or within the Barton group is concerned, the respondent notes that the applicants plead an alleged term of the GSA in para 15 of the statement of claim to the effect that Barton International is not entitled to concessionally priced product if it intended to undermine or diminish the reputation of GMA Garnet. The respondent says, however, it is not pleaded that Barton International ever acted with such an intention. All that is pleaded is that, in effect, by not selling 100% GMA garnet, Barton International caused GMA Garnet's established product reputation to be diminished (see statement of claim para 16A.3(b)). But there is no evidence to that effect in the event. The respondent says that the only reference in the applicants' statement of claim to the purpose of blending is in the allegation of breach of terms of the GSA in para 16A.3(c). The gravamen of that alleged breach is Barton International's on-sale of concessionally priced GMA garnet to BMC, knowing that BMC intended to blend it. The breach allegation ends with the words, "even in circumstances where there was no commercial purpose served by such blending". The respondent says that is a superfluous embellishment of the breach allegation, which stands or falls on the scope of the alleged terms, which do not refer to the purpose of blending. The respondent says that, accordingly, the evidentiary issue which is being raised concerning the reasons for blending of product by BMC, is not a real issue. Nonetheless, Barton International says there is no foundation for concluding that BMC instituted blending for no commercial purpose, but to the contrary, instituted blending for commercial reasons which have been explained, which arose principally from supply chain difficulties and the problems of conducting business across a very large market in North America, from a multitude of locations, with multiple products, individual stocks of which could not readily be maintained. Barton International says that attempts to impugn that purpose ignore the commercial reality of BMC's extensive operations and the course of decision-making that occurred in the multitude of contemporaneous records provided in the evidence. As noted above, the applicants plead an alleged term of the GSA to the effect that Barton International is not entitled to concessionally priced product if it intended to undermine or diminish the reputation of GMA Garnet (para 15.2 statement of claim). I accept the respondent's contention that it is not pleaded, however, that Barton International ever acted with such intention. All that is pleaded is that, in effect, by not selling 100% GMA garnet, Barton International caused GMA Garnet's established product reputation to be diminished (para 16A.3(b) statement of claim). I accept the submission of the respondent that there is no evidence of such intention in any event. I therefore accept the submission made on behalf of Barton International that the evidentiary issue which has been raised as to the reason for blending of product by BMC is not a pleaded issue. I also accept the submission of Barton International that there is in any event no foundation for concluding that BMC instituted blending for no commercial purpose. I am satisfied on the evidence of Mr Bracken (exhibit O para 33 --- 42, 46 --- 60 and transcript 341, 342, 343, 344 and 345), the evidence of Mr Summers (exhibit S para 78 --- 155, transcript 393, 408, 431 and 432) and Mr Rapple (exhibit Z para 38 --- 65, transcript 464, 473, 484) that, in short, BMC instituted blending involving GMA garnet supplied under the GSA for commercial reasons which arose principally from supply chain difficulties, and the problems of conducting business from across a very large market in North America, from a multitude of locations, with multiple products, individual stocks of which could not readily be maintained. I am simply not satisfied on the whole of the evidence that Barton International or BMC or other entities within the Barton group, from the time of negotiations for a Principal Agreement and GSA set out on a plan to avoid the obligations proposed to be created by those Agreements. Rather, the evidence demonstrates that the genesis of the blending proposal lay in concerns about difficulties of maintaining consistent supplies of multiple products throughout BMC's extensive North American operations. The two principal factors which led to consideration of blending were the increasing demand that BMC experienced over the course of 2005/2006 and natural disasters which severely disrupted supplies in some areas in the USA. BMC operated four mega-centres and some 18 warehouses across North America. I accept that commercial prudence dictated that it had to plan in advance to ensure that it had product available across the entire North American market at all times. Mr Rapple provided evidence of increases in demand which the business experienced in the period up to mid-2005 (see exhibit Z, annexure RR1). In May 2005 there was a meeting between Mr Summers, Rapple, Jenks and Ahrberg regarding the possibility of blending Indian garnet with GMA Garnet 80 Mesh to overcome supply issues (see exhibit S para 81). On 13 July 2005, Mr Summers wrote an email to Rappel, Jenks and Ahrberg proposing a meeting to discuss producing a blended 80 Mesh product. There followed an email exchange between Summers and Jenks discussing packaging of the blended product. ● On 19 and 20 July, there was an email exchange between Rapple, Jenks and Summers, primarily concerning the importance of creating a truly homogenous blend of product and the possibility of marketing separate discrete products (ie Australian, Indian, Chinese) rather than blending. ● On 20 July, Mr Ahrberg sent an email in which he emphasised the importance of ensuring a quality and homogenous product from a marketing perspective. ● On 20 July, Mr Ahrberg sent an email in which he emphasised the importance of ensuring a quality and homogenous product from a marketing perspective. ● Mr Summers responded on 20 July noting in effect that continuity of supply from each source were the primary issues, and that over time as the percentage of Indian material increased and demand for garnet increased, the percentage of GMA 80 Mesh garnet in the blended 80 Mesh product would continue to decrease. ● On 21 July 2005, Mr Jenks responded to Mr Summers' email saying that this final point was very important and that it may argue for discrete products rather than blending. Sometime in late July, Mr Ahrberg and Mr Rapple met to discuss the pros and cons of blending as opposed to selling multiple product lines. By 25 August 2005, Mr Summers, Jenks, Ahrberg and Rapple had agreed to develop specifications, trials, blending ratios, labelling and in-product testing for blending purposes. Mr Rapple wrote in an email circulated on 25 August that "this is the most important thing we are working on at the moment". On 26 August 2005, BMC entered into an asset purchase agreement with Flow International Corporation and its related companies regarding acquisition of a garnet distribution business. In late August, Hurricane Katrina devastated the BMC garnet warehouses in New Orleans, Louisiana. In September, Hurricane Rita further damaged the BMC garnet warehouse in New Orleans. Also by September, testing protocol were prepared for the University of Missouri in respect of the blending investigation. By the end of September there was an email exchange concerning the labelling of prospective blended product. On 22 October 2005, Mr Summers circulated an email verging completion of the specifications before a foreshadowed meeting with VVM (the Indian garnet producer) within two weeks, with a view to discussing quality issues with VVM. He also wrote that BMC would have the necessary packaging materials on about 1 January 2006 and expressed the opinion that BMC should be blending "sooner rather than later". Mr Rapple expressed a similar view in an email of 1 November 2005 relating to the testing of Indian garnet and adding that "we would like to see blending at Reserve and ERT begin as soon as possible" at a lower ratio which can be increased as the quality of Indian garnet improves. Mr Summers responded the next day indicating that full scale blending could commence at Virginia on 1 January 2006 with Louisiana to follow some time thereafter. The plan to blend garnet was by this stage well advanced. On 3 November 2005, Mr Bracken wrote to the Board of The Barton Group seeking approval for the purchase of an OMAX machine and indicated "within the next several months we will begin blending garnet at Reserve and ERT" and that "this will allow us to put Australian, Indian or even Chinese garnet in the blend which will allow us to better control our costs and supply chain". The Board subsequently approved that purchase. In early November, Mr Summers, Bracken and Rapple travelled to India to meet with VVM. On 19 or 20 November 2005, there was a fire at the marine terminal warehouse, Virginia, causing the collapse of the fibreglass roof. On 23 November, Mr Summers sent an email that blending would not be in until at least 1 February 2006 in Virginia and 1 March 2006 at Louisiana. In late December, early January, VVM advised of delays in garnet caused by heavy rains and flooding. Between 25 and 27 January 2006, at Hidden Valley, Pennsylvania, there was a meeting at which the prospect of blending 30/60 and 60HPA products and the testing of the blended product were considered. In February 2006, Mr Summers travelled to India to discuss quality issues and delays with VVM. Later, sometime between February and June 2006, Mr Ahrberg informed Mr Summers of the results of performance testing of GMA product of 60 Mesh and 80 Mesh product. Mr Bracken was told of the test results and gave the go ahead for the commencement of blending in around February 2006. On 13 March 2006, the roof collapsed at the Virginia mega-centre. In April 2006, a shipment of 4,000 tonnes of 80 Mesh was made by VVM and the improvement in the quality of that product was noted by Mr Summers. Between 17 April and 20 April, there was an email exchange concerning the blending of HPA (Australian garnet) and HPX (hard rock BMC garnet) and the possible blend ratio. By 6 June 2006, blending of 80 Mesh garnet commenced at Louisiana. On 11 July 2006, blending of 80 Mesh garnet commenced at Virginia. On 29 November 2006, Mr Summers circulated an email expressing his concern about "the continuity of supply and the possibility of stock outs" and attaching an analysis of BMC's inventory position. He also sent an email that day concerning start dates for blending of 30/60 product at Louisiana. 60 HPA at Louisiana and both 60 HPA and 30/60 at Virginia. These all proposed start dates in early 2007. On 31 January 2007, blending of 30/60 and 60 HPA commenced at Virginia. On about 5 March 2007, blending of 30/60 garnet commenced at Reserve. On about 13 April 2007, blending of 60 HPA garnet commenced at Louisiana. When the applicants discovered that GMA garnet was being blended by BMC, apparently they were surprised. As noted above, at the time of the negotiations and execution of the GSA and Principal Agreement, Mr Ketelsen and Mr Aaron Williams had no knowledge of blending practices by BMC. Nor were they familiar with the practice in the operations of GIRL or GMA Garnet and subsidiaries. The applicants subsequently took the view that BMC, with the knowledge of Barton International, had undertaken any earlier blending covertly and were at pains not to let them, or their customers know that they were blending. This is pointed to on behalf of the applicants as an additional reason why Barton International knew from the time of negotiations for the Principal Agreement and GSA that general blending of GMA garnet was a real possibility, if not then an active plan. There is little doubt that BMC and companies within the Barton group maintained a degree of secrecy in respect of their blending proposals. One can understand that from their commercial point of view it might be important to do so. To that point they used their own HPX hard rock garnet. They also imported GMA garnet, which had an excellent reputation in the market, and additionally they were importing Indian and Chinese garnet. Any sudden change of supplies to established customers might well produce a negative reaction. Indeed, that much is established by the evidence of Mr Borgh, because when some blended garnet was put to market there was some adverse reaction to it. But none of that is to suggest that at the time of the negotiations the evidence shows that Barton International or entities within the Barton group of companies had decided to blend. Nonetheless there is no doubt that between May 2005 and December 2005, the idea that BMC might blend various supplies of garnet developed apace. The internal communications at BMC also show that, given the relationship between the Barton group of companies and the applicants, some officers of BMC were particularly enthusiastic about the idea. Undoubtedly it was appreciated generally within BMC and Barton International that if GMA garnet were blended, it would be a much less visible product in the North American market and that garnet carrying the BMC brand only would have an increased visibility. There is also little doubt, by that time that BMC and other entities within the Barton group of companies believed there was no contractual impediment to blending of GMA garnet in accordance with this proposal. Indeed, Mr Bracken said he held this view from when the GSA was executed. The evidence suggests that, while there was enthusiasm within the Barton group of companies and BMC to pursue the blending plan, the blending plan was primarily driven by commercial reasons to do with demand and supply of garnet, not some plan conceived at the time when the GSA was being negotiated, as the applicants submit suggesting that Barton International engaged in the negotiations in this respect with less than good faith --- something not pleaded against Barton International in any event. The applicants also point to the fact that Mr Cole says that he proposed the possibility of intentional blending at his meeting with Mr David Williams on 11 February 2005. Whilst suggesting that Mr Coles' evidence in this regard should not be considered reliable by the Court, the applicants say it nonetheless indicates that the possibility of blending was on the mind of representatives of Barton International from the period of the negotiations. However, in my view the evidence of Mr Cole fully and adequately explains how he, at that point, came to raise the question of intentional blending. He says, and I have accepted his evidence, that he understood from his familiarity with the business of The Barton Group that intentional blending did occur from time to time in niche markets. That evidence does not support a finding that, by the time of or during the negotiations, Barton International or other entities within the Barton group had hatched a plan to blend GMA garnet as soon as they received quantities of it under the GSA. The applicants also point to the evidence of Mr Borgh, who at material times on 2 March 2005 was employed in sales with BMC. He says that at a sales meeting on 2 March 2005, Mr Bracken addressed the sales staff and informed them that the litigation with GIRL had settled and that Barton International would now be blending the GMA Garnet product that it sells. He considered that Mr Bracken presented the blending proposal in a manner that indicated that a final decision to blend had already been made. He says that within a few months of March 2005, the sales strategy was explained to the sales staff and no differentiation was made between the various grades and no timeframes for its introduction were stipulated. The evidence of Mr Borgh as to what Mr Bracken said was not accepted by Mr Bracken. He could not recall exactly what he had said at the meeting, but emphasised that the question of blending was not developed until later that year. In light of all the evidence I have recounted, it should be said that it is improbable, although not impossible, that the prospect of blending would have been mentioned as early as 2 March 2005 by Mr Bracken. In May 2005, Mr Summers, Rapple, Jenks and Ahrberg met concerning the possibility of blending Indian garnet with GMA 80 Mesh garnet to deal with supply issues. Obviously, the question of blending had been raised generally within BMC before that, at least for the purpose of discussing the topic. However, the evidence of Mr Borgh is such as to suggest that a very definite decision had been taken by Mr Bracken in early March, and that at the sales meeting he was at pains to explain that blending would occur. It seems to me on the balance of probabilities that it is unlikely that Mr Bracken made any such statement as of March 2005. The evidence of Mr Summers, that he and others met in May concerning the possibility of blending Indian garnet and GMA garnet to overcome supply issues, is not, to my mind, consistent with BMC or Mr Bracken having decided or announced that blending of GMA garnet, as a general practice, was something that BMC had already committed to. Therefore, in the context of all the evidence concerning the process by which BMC developed and implemented its blending plan, I remain unconvinced that Mr Bracken made any firm statements concerning blending as Mr Borgh has recalled in his evidence, at least as of 2 March 2005. However, given the state of the evidence, it would not be at all surprising if, in the period leading up to May 2005, the possibility of blending was mentioned in various quarters within BMC, given that Summers, Rapple, Jenks and Ahrberg then entered upon a discussion of that possibility. Mr Rapple estimated that the BMC policy decision to proceed with blending was circulated to sales staff in June 2006. I accept that this was probably so. The fact that BMC had in the past blended GMA garnet with HPX garnet in a covert fashion, that is to say, without informing its customers or anyone else that it had done so, and the fact that it developed its blending plans from about May 2005 without advising the applicants, does not to my mind suggest that Barton International or BMC had something approaching a "guilty mind", as implied by the applicants in their submissions, such that they were aware that they were acting contrary to the terms of the GSA. I reject therefore the submissions of the applicants that the plan for such blending was conceived at the time the GSA was being negotiated and before it was executed, and that the blending was for the purpose of hindering promotion of GMA Garnet in North America. I accept, however, that once the blending plan was developed and implemented, for commercial reasons, BMC and Barton International both also appreciated that blending of GMA garnet supplied under the GSA would have the effect of hindering promotion of GMA Garnet in North America. As noted above, in any event I consider that the allegation of breach of the terms of the GSA made in para 16A.3(c) of the statement of claim, that ends with the words "even in circumstances where there was no commercial purpose served by such blending", is a superfluous embellishment of the breach allegation, which stands or falls on the scope of the alleged terms, which do not themselves refer to the purpose of blending. To that extent, the evidentiary issue raised concerning the reasons for blending of product by BMC is not a real issue. Nonetheless, as stated above, I find there is no foundation for concluding that BMC instituted blending for no commercial purpose. Nor does the evidence support a finding that Barton International or other entities within the Barton group had already decided, at the time of the negotiations for the GSA, that BMC or other entities within the Barton group would blend GMA garnet supplied under the proposed GSA. The Buyer must not use the GMA Garnet name or logo on, or in connection with, the distribution or sale of any garnet which is not 100% Product or hold out in any way that garnet which is not 100% Product, is Product. The applicants contend that, by reason of cl 2.5, Barton International was required to label all discounted garnet purchased by it and then onsold to BMC, whether it was in packaged form or loose bulk. By the first strand of its construction argument, Barton International contends by contrast that, on its proper construction, the branding obligation in cl 2.5 relates to GMA garnet distributed or sold in packaging, but does not impose an obligation on it to package garnet, particularly loose bulk garnet, supplied under the GSA. The applicants say that the respondent's construction involves substantially reading down crystal clear words of a blanket branding obligation carefully and deliberately imposed on Barton International. The applicants say the parties can be seen to have attached pivotal importance to securing, over a 12 year period, a faithful adherence to the branding obligation. The applicants also say that the branding obligation on Barton International is directly relevant to the purpose of the product discount afforded by cl 4.2, as the purpose of the discount is expressly stated to be to enable GMA Garnet to promote distribution of Product in North America. As a result the applicants say that Barton International's unqualified branding obligation can be seen as a pragmatic mechanism, carefully crafted by the parties (who know the garnet industry) to securely identify what then becomes a discrete visible product and so thereby to enable the promoting of the distribution of GMA garnet as a "Product" in North America. In order for GMA Garnet as such to be promoted, consumers need to know of it and be able to find it, as that Product. The applicants further argue that the obvious link between the proper labelling of GMA garnet and promoting distribution is legally and commercially founded upon the fact that the source of goodwill for the GMA garnet is, in the circumstances of the case, wholly generated by proper labelling of the GMA garnet. GMA Garnet had no presence in North America at the time the GSA was made and so through the distribution of the network of the Barton group. Hence, if GMA garnet is properly labelled this would inevitably have the effect for building GMA Garnet's goodwill in North America. As goodwill builds, this will cause further custom to be attracted for GMA Garnet, thus promoting distribution of GMA garnet in North America. The applicants say commonly known pre-contractual circumstances can be used to assist in construing the meaning of contractual terms, but not in the end to overturn a term's plain meaning. Otherwise, the construction exercise alters to resemble a rectification argument. The applicants say if Barton International's construction were to be accepted, limiting the branding requirement to packaged garnet, then all that Barton International is ever obliged to do, in return for the substantial price discount which it took on the 50,000 tonnes of GMA garnet that it may purchase annually under the GSA for 12 years, is to ship and discharge that discounted garnet into North America and (possibly) not to remove any pre-shipment GMA Garnet branding on a relatively small amount of GMA garnet shipped in pre-packed and branded bags. The applicants say, in effect the construction advanced by Barton International approaches a defacto attempt at rectification of cl 2.5 designed to delimit the tangible obligation which Barton International accepted in exchange for a significant discount on price and which it could potentially obtain over 12 years of the GSA. Barton International says it is important to recognise that the setting here is a commercial one. It has particular features which are explained in the recitals and terms of the Principal Agreement. It relates to the supply of an industrial product to a buyer in a corporate group, whose related company markets such products in North America. The respondent places particular emphasis on the fact that the GSA was entered into by virtue of the terms of the Principal Agreement and says that the principal purpose of the GSA was to provide to Barton International part of the total consideration it was to receive for the sale to GIRL of its various property interests and rights as provided for by cl 2.2 and cl 2.3 of the Principal Agreement. The respondent says GMA Garnet and GIRL did not enter the GSA as the result of an independent commercial decision. On the contrary, both Barton International and GIRL agreed to cause GMA Garnet to enter the GSA: see cl 4.1(d) of the Principal Agreement. Garnet supplied under the GSA is owned by GIRL, not GMA Garnet. GMA Garnet is paid a sum representing its costs of production, but the benefit accorded to Barton International by 12 years of supply of garnet at concessional pricing, moves from GIRL. The respondent says that by virtue of the genesis and principal objects of the Principal Agreement and the GSA, and the nature of the GSA as a supply agreement - not a distribution agreement - there is no foundation for imposing restrictions on the Buyer's freedom to deal with purchased product beyond those restrictions which are provided for expressly. Barton International also says that neither cl 2.3 of the Principal Agreement nor cl 4.2 of the GSA imposes any promotion or marketing obligations on it. The respondent says it is also important to note that garnet is used for specialist industrial uses it is not intended for general public use. Barton International submits that the interpretation or construction of the obligation to brand garnet imposed on Barton International by cl 2.5 contended for by the applicants effectively amounts to an obligation on Barton International to package all 100% GMA garnet acquired under the GSA and to sell it and distribute it in packaging, even when Barton International sells it to a related entity such as BMC, which was known to operate the Barton International garnet distribution business in North America. The respondent says that cl 2.5 contains no words which convey such an intention. Rather, Barton International says, the purpose of cl 2.5 is to control the use of the GMA Garnet name and logo, not to constrain the way in which a customer's requirements as to delivery of product may be satisfied. Barton International also says it is not in dispute that garnet itself --- in the sense of "particles" of garnet - cannot be branded. Accordingly, Barton International contends that it is not possible to accord cl 2.5 a literal meaning and that it would be a nonsense to suggest that the thing which must be branded is garnet or garnet "particles". With a product such as garnet the concept of branding necessarily relates to packaging (if any) in which the garnet may be distributed or sold. Only packaging can be branded. The respondent says so much is confirmed by the words in parenthesis in cl 2.5, which provide that the prominence accorded to the GMA Garnet name and logo must not be less than that which applied during the 2004 calendar year. That is a reference to the prominence of the GMA name and logo as then used on packaging , not on garnet itself. Barton International also points out that the GSA expressly contemplates that product may be supplied to the Buyer "packaged" (ie in "packaging") or in bulk: see cll 5.1, 6.1 and 6.6, Annexure A, definition Consignment Type in cl 1.1. The respondent says that this recognises that the Buyer has the right to buy garnet in bulk and thereby take advantage of cheaper prices, which reflects the avoidance of packaging costs otherwise charged by the Seller. The respondent says that there is no express provision which requires the product which has been bought in bulk to be branded before any distribution or sale of it. The respondent says that specifically providing for supply of product in loose bulk, the parties contemplated that loose bulk garnet can be distributed and sold anywhere in the world. This is an added reason for not attributing to cl 2.5 an intention to impose an onerous packaging requirement where no such intention is expressed. Accordingly, Barton International contends, on its proper construction the branding obligation in cl 2.5 relates to garnet distributed or sold in packaging. It does not impose an obligation, in effect, to package garnet. On that construction, the respondent says it is unnecessary to consider the issue whether cl 2.5 applies to a sale by Barton International to BMC, as it is not alleged that any sale of packaged product by Barton International to BMC was made in breach of cl 2.5. The applicants, in response to the consideration argument mentioned above, say that to the extent Barton International contends that, because the GSA was a mechanism for delivering to Barton International part of the value which it exchanged for the sale of Barton International's partnership interest to GIRL there is a special principle of construction, namely that the obligations contained in the GSA should generally be construed in its favour so as to avoid imposing upon it onerous requirements that would entitle GMA Garnet to terminated the GSA and thereby deprive Barton International of a significant part of the consideration which it bargained for; that argument should be rejected for at least three reasons. First, the agreed terms of the GSA were reached after lengthy negotiations. There is no special principle or presumption of contractual interpretation which means that the GSA should not be interpreted objectively as in the case of any other contract. Secondly, neither the GSA nor the Principal Agreement expressly state that, commercially speaking, the purpose of the GSA is to deliver Barton International part of the consideration for the sale of its partnership interest to GIRL. On the other hand, they do expressly state a contractual purpose for the GSA, namely, that GMA Garnet wishes to promote distribution of Product in North America for which it allows a concessional rate. Thirdly, it is doubtful whether the GSA was in fact ever intended to deliver to Barton International significant part of the value exchanged for Barton International's partnership interest. That is because of the significant business risks that could lead to the GSA failing to deliver any value. I should say immediately that I do not consider that there is any special principle of construction that applies in a case such as the present. The GSA should be interpreted and construed according to ordinary principles. The fact that it was borne of the Principal Agreement does not, in present circumstances, alter the position. The first construction issue is then whether the cl 2.5 branding obligation is properly restricted to packaged garnet, as the respondent contends, so that the on-sale of loose bulk GMA garnet supplied under the GSA by Barton International to its related entity, BMC, is unaffected by cl 2.5. I consider, broadly for the reasons advanced on behalf of Barton International, that the construction of cl 2.5 contended for by the respondent supplies a meaning to cl 2.5 that accords with business commonsense. This is particularly so when one has regard to the surrounding circumstances and the commonly understood facts, as I have found them, including the circumstance I have found from the course of negotiations between the parties, that cl 2.5 was drafted by Mr David Williams (for GIRL) having regard to the issue of concern raised by Mr Cole (on behalf of Barton International), that an earlier proposal which provided that all GMA garnet purchased under the GSA must be branded, was objectionable to the Barton International interests because blending of garnet may occur. Whether one views the latter finding as something commonly understood by the parties, or a concurrence that negatives a particular construction of cl 2.5, it is in my view a fact that must necessarily be taken into account together with all others when interpreting or construing the GSA. The construction advanced on behalf of the applicants that all garnet, whether packaged or loose bulk, must be labelled by Barton International, even at the point of on-sale to a related entity such as BMC, produces an outcome that is not practical and, in my view, contradicts business commonsense. Apart from any other factor, as the respondent argues, a sale may occur on paper at any point following the point at which Barton International takes possession of that property. There may, for example, be a "paper sale" at some point in transit of a shipment between Western Australia and the USA. In this regard, it is important to note, as plainly is the case, that the branding obligation in cl 2.5 does not apply only to garnet shipped and discharged into the USA and Canada that attracts the discount provided for in cl 4.2. Rather, cl 2.5 imposes a branding obligation in respect of all garnet that is sold or distributed by the Buyer that is 100% Product. There is, in my view, no proper reason to link the wishes of the Seller expressed in cl 4.2 to promote distribution of Product in North America, with the branding obligation expressed in cl 2.5, as the applicants contend. It makes perfect business sense that the Seller wants to see all of its relevant product branded under cl 2.5, wherever it may be sold or distributed and at whatever price the Buyer has paid for it. There is, in my view, little doubt, as the respondent contends, if one is to adopt the construction of cl 2.5 the applicants contend for, then in substance Barton International would be required to package all GMA garnet it receives under the GSA, including that which it receives in loose bulk form. In submissions, the applicants do not in substance reject that outcome. Rather, they simply suggest that, if that is the contractual effect, then so be it. If it was intended that loose bulk garnet could only be sold in a packaged form, in order to be branded, this is something that could easily and would have been specified in the contract. The words in parenthesis in the first sentence of cl 2.5 concerning the use of the GMA Garnet name and logo with a prominence that was used during the 2004 year, also strongly suggest that the trading obligation only applies to packaged product. This prominence rule owes itself directly to the pre-existing 2004 practice, well known to the parties prior to the GSA, of branding packaging with the GMA Garnet name and logo at the point of sale to BIA. The second sentence of cl 2.5, authorising the use of the GMA Garnet name and logo, also tends to emphasise that it is the sale of GMA garnet in packaging to third party customers that is intended to be affected by the branding obligation in cl 2.5. The fact that the applicants also believed at the time of negotiations leading to the GSA, that BMC only distributed or sold GMA garnet to third party customers in packaging, and never loose bulk, also tends to confirm the intention of the parties was to brand packaged GMA garnet only. On the face of it, the parties did not turn their minds to the particular question of branding loose bulk GMA garnet, even though the GSA provided for GMA garnet to be supplied in loose bulk. It is correct to find, in my view, that it is not possible, in any strict sense, to label loose bulk garnet, or garnet particles. That product is not amenable to labelling or branding. While loose bulk might be supplied or transported in containers, to speak of branding the GMA garnet so supplied in this way makes little practical sense. Given also my findings above, that the parties understood Barton International was adamant that the GSA should not constitute a distribution agreement, and my findings below rectifying the applicants' construction of cl 4.2, I do not consider the cl 2.5 branding obligation is to be construed with any marketing obligations in mind, as the applicants contend. The Buyer purchases GMA garnet. It may receive it in a packaged form or as loose bulk. There is a branding obligation in respect of the distribution or sale of 100% Product. There is no obligation to package. A branding obligation is only apposite, in my view and on the evidence received, where the election is made by the Buyer to package the product. Clause 2.5 does not speak to the circumstance in which the Buyer distributes or sells GMA garnet in a loose bulk form. I therefore conclude that on its proper construction, cl 2.5 only imposes the specified branding obligation in respect of packaged, not loose bulk, GMA garnet supplied under the GSA. Second strand of the construction argument: does cl 2.5 apply to an internal Barton transaction? By the second strand of its construction argument, Barton International contends that cl 2.5 does not apply, in any event, to sales by Barton International to BMC, that is to say, to distribution or sales to a related entity. It will be appreciated immediately that unless cl 2.5 applies in respect of an act of distribution or sale by Barton International to BMC, there can have been no breach of cl 2.5, as alleged by the applicants, when Barton International onsold loose bulk garnet purchased under the GSA to BMC. Accordingly, even if the first strand of the construction argument raised by the respondent, that only packaged garnet need be branded, Barton International would have an immediate defence to the claim of breach of cl 2.5 if there is no contractual impediment to Barton International on-selling Product to BMC without branding. In this regard, Barton International says the very concepts of branding, together with that of the grant of the non-exclusive licence, and the corollary which restricts use of the GMA Garnet name or logo and holding out of GMA garnet which is not sold as 100% Product, are all concepts concerned with the presentation of product in the market in which it is marketed and sold to third party customers. The respondent says these concepts have no significance as regards industrial product when it is transported, handled and stored prior to such marketing and sale. Barton International says the concept of branding and its significance in the presentation of product are quite inapposite if sought to be applied to product which, while in storage, is subject to a private dealing between Barton International and a related entity. Put another way, the practical concepts are devoid of utility in relation to a legal transaction which does not involve presentation of product to a customer. The respondent points out that when the GSA was entered into, the applicants knew that BMC operated a warehouse, distribution and sales network for garnet within North America and was the company within the Barton group which distributed garnet in that region. The Court has found, it should be noted in passing that GIRL knew that BMC probably did do all these things. As a result, the respondent argues that the obvious inference to be drawn was that this would continue. For that purpose, rights conferred under clause 2.5 may be exercised by BMC. Barton International say that evidence of this intention is that no distinction was drawn between individual companies in the Barton group during the course of the negotiations and that it was obvious that, by one means or another, BMC would acquire that garnet (or the right to sell it) and distribute it to customers. Accordingly, Barton International say cl 2.5 must be construed in harmony with the term inserted by way of rectification. That proposed term reflects an obvious focus on 100% Product when distributed or sold in packaging to customers. The intention which lies at the heart of this term is an intention that the branding requirement should apply when there is a distribution or sale to ultimate consumers by BMC, a related entity of Barton International. The respondent says the existence of that (undisputed) intention is inconsistent with the notion that a prior sale between Barton International and a related entity should also attract a branding obligation. The respondent says the concept of distribution or sale by Barton International or a related entity does not encompass successive sales. Distribution or sale is a reference to a single event, as regards particular product. Further, the GSA does not require bulk garnet shipped by Barton International to be labelled before it is distributed or sold. Barton International can transport, process and store such garnet in bulk without breaching cl 2.5. Barton International says this demonstrates that cl 2.5 is not directed at garnet being held in inventory, but garnet when marketed and sold to customers. Thus, both sentences of cl 2.5 refer to distribution or sale. Plainly both references bear the same meaning. Barton International says the restriction imposed by the second sentence of cl 2.5 reflects intention to limit the use of the GMA Garnet name and logo in marketing activities (for example, brochures, advertisements) as well as on packaging. This confirms that the references to distribution are intended to refer to marketing. The respondent further argues that it is common ground between the parties that the reference to garnet "distributed or sold by the Buyer" in cl 2.5 encompasses sales to ultimate consumers; this having regard to para 13.2, para 15.1A and para 15.2 of the statement of claim. Accordingly, the respondent says that on its proper construction, cl 2.5 refers to distribution or sale to customers. Senior counsel for Barton International put this construction of cl 2.5, concerning an application of the branding requirement at the point of distribution or sale to a third party customer, on the basis that that is the proper construction of cl 2.5 both, before and after rectification. In my view, if the rectification pleaded in the cross claim by Barton International is allowed, then there is considerable additional textual reason to accede to the respondent's argument. However, it is appropriate first to consider the construction argument put by the respondent without regard to the claimed rectification of the GSA. In my view, the arguments for such a construction of cl 2.5, so that the branding obligation only applies at the point of which 100% Product is distributed or sold to a third party customer, are compelling. When one has regard to the fact that it is not "all garnet purchased" under the GSA that must be branded, but "all garnet purchased ... and distributed or sold by the Buyer which is 100% Product", where the Seller grants to the Buyer a non-exclusive right to use the GMA Garnet name and logo on product for the purpose, the textual argument for concluding that the act of distribution or sale which attracts the branding obligation is the act of distribution or sale to a third party customers becomes, in my view, compelling. The textual argument is supported by the fact that the second sentence of cl 2.5 prohibits the Buyer from using the GMA Garnet name on, or in connection with, the distribution or sale of any garnet which is not 100% Product, or hold out in any way that garnet which is not 100% Product, is Product. That sentence, in my view, plainly has to do with the presentation of Product to the market --- that is to say, to third party customers. The reference to prominence is a reference to the relative significance accorded to the two brands which had previously been used together. The words in parenthesis were plainly designed to allow the continued use of BMC's branding. The inclusion of this portion of cl 2.5 serves to emphasise that the obligation to brand is intended to arise at the point of marketing to customers. In my view, there can be little doubt that, textually an act of distribution or sale by Barton International to a related entity such as BMC is not intended to be, and is not caught by the branding obligation created by cl 2.5. When one has regard to the broader context in which this commercial agreement was struck, particularly the understanding by the parties that BMC was engaged in the distribution and sale of GMA garnet in North America, and that distribution and sale depended upon its activities, it can be readily understood that while the expression "Buyer" was used in the singular in cl 2.5 --- and so on the face of it, applies only to Barton International --- it was not the intention of the parties that an internal transaction between Barton International and BMC should attract the branding obligation. The co-branding provision in cl 2.5 just mentioned serves also to emphasise this. The next related issue is whether, in the circumstances, the contract should be rectified by inserting the term pleaded by the respondent in the cross-claim and set out in para 28(e) of the defence, as set out above. In this regard, it is well understood there must be clear and convincing proof that parties had a common understanding about the terms, which were recorded erroneously, before rectification will be permitted: Ryledar Pty Ltd t/as Volume Plus v Euphoric Pty Ltd, 629 -33 at [22] --- [143]; 655 --- 67 at [258] --- [315]. Once it is appreciated that the proper construction of cl 2.5 is that the branding obligation only applies in respect of distribution and sale at the point of which product is marketed to a third party customer, and having regard to the surrounding circumstances as outlined above, I am satisfied the parties commonly understood and indeed had the continuing intention that BMC would be and should be engaged in the process of distribution and sale of GMA garnet in the marketplace, particularly the North American market in which GIRL had expressed its wish to encourage the marketing of GMA garnet. I also accept that, having regard to the process of negotiation leading up to the Principal Agreement and GSA outlined in some detail above, that while the parties took some care to stipulate exactly who the contracting parties should be, in practical terms, when it came to the expected distribution and sale of GMA garnet (particularly in North America), the parties did not discriminate between one entity within the Barton group and another. While Mr David Williams initially proposed that BMC should be a party to the GSA, this was not accepted and ultimately Barton International became the contracting party. The reason BMC fell out of the proposed GSA as a contracting party had nothing to do with its commonly understood role in North America, but rather because the Barton group did not wish the GSA to become a distributorship agreement. For that reason, BMC plainly was left out of contention and the document primarily became a product supply agreement. In seeking rectification of the GSA, the respondent also relies on the basis of the applicants' plea for rectification to the effect that Barton International "must ensure BMC abides by" the marketing obligations imposed on it by the GSA, while otherwise opposing the substance of the rectification sought. The applicants oppose the rectification proposed by Barton International and say it is without merit for a number of reasons. First, that there is a fundamental obstacle in the way of the proposed rectification in that there is no evidence about a common continuing intention of the parties concerning the operation of cl 2.5 in respect of blended product. The applicants say that the respondent opposed evidence being adduced from the applicants' witnesses about this and never cross examined those witnesses about it. Yet, Barton International now seeks to rectify a small part of cl 2.5 in order to provide the basis for a (speculative) inference about the common intention of the parties concerning the operation of cl 2.5 in respect of blending product. The applicants say this is an attempt to make the "tail wag the dog". Secondly, the pleaded basis for the rectification is unsupported by the evidence. Paragraph 28(b) of the defence alleges that the common continuing intention of the parties to the GSA was that rights conferred on Barton International which were connected with the fulfilment of obligations regarding the sale or distribution of garnet acquired under the GSA would be exercisable by BMC. However, there was no evidence from any witness, particularly Mr Bracken, of any particular intention that the terms of the GSA meant that BMC could apply the GMA Garnet name or logo for the purposes of cl 2.5 of the GSA. Thirdly, not only is the proposed rectification unsupported by the evidence, it is practically inconsistent with Barton International's pleading in para 9(a) of the defence that when the GSA and the Principal Agreement were executed, the parties were united in rejecting any term to the effect that BMC would be bound by the GSA. If BMC is not bound by the GSA, but can exercise rights under the GSA, this would constitute a substantial rewriting of the bargain struck by the GSA and would fail to give effect to any common understanding at the time the GSA was entered. Fourthly, BMC is not a party to the GSA or the Principal Agreement, and the proposed rectification does not seek that BMC be made a party to the GSA. Hence, there is no contractual privity between GMA Garnet and BMC. As a result, GMA Garnet would be unable directly to enforce the negative stipulation in the last sentence in cl 2.5 against BMC, even though BMC would be entitled to exercise the right to use GMA Garnet's licence. The applicants say that apart from being highly unlikely that GMA Garnet ever intended to lose the ability to contractually enforce the terms of its licence, there might be another significant consequence. The contractual stipulation in cl 2.5 is governed by Western Australian law and the parties submit to the non-exclusive jurisdiction of the courts of Western Australia (cl 15 GSA). If GMA Garnet has no contractual right to enforce the terms of its licence against BMC, it might be forced to take proceedings against BMC in North America, rather than in Western Australia, to enforce its licence. That would be a practically undesirable outcome and potentially costly result for GMA Garnet. Fifthly, the proposed rectification takes no account of cl 8.1(c) which confers an important right upon GMA Garnet to terminate the GSA for persistent breach of cl 2.5 by Barton International. If the proposed rectification occurred, it would be unclear whether persistent branding of other than 100% Product by BMC would necessarily always be a persistent breach of Barton International's obligation to ensure that BMC abided by cl 2.5. For example, if Barton International had taken reasonable steps to ensure that BMC abided by cl 2.5, but nonetheless BMC still failed to do so. Sixthly, the proposed rectification is inconsistent with the evidence of how the parties actually dealt with alleged breaches. Barton International did not respond to allegations of alleged branding breaches of the GSA by saying that BMC had fulfilled the relevant obligations. Instead, the parties acted as if Barton International was bound to brand the GMA garnet. This action conventionally stops Barton International from claiming the proposed rectification ( Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd [1986] HCA 14 ; (1986) 160 CLR 226) and is also a good indication of Barton International's intention at the time of signing the GSA. The applicants also say that the rectification proposed by the applicants is different to that proposed by Barton International. The applicants proposed that Barton International should ensure that BMC abide by the GSA in addition to Barton International remaining bound. That means that Barton International is obliged to brand 100% Product upon internal sales to BMC and that BMC is obliged to ensure that such product remains branded when externally sold or distributed. The applicants say their proposed rectification makes commercial sense because it holds Barton International accountable for branding. While it is commercially unlikely that BMC would remove any branding applied by Barton International, the proposed rectification legally prevents this. The applicants further say that there should be no argument about the applicants' proposed rectification, as it is now accepted by Barton International that there was a common continuing intention that Barton International would be obliged to cause BMC to abide by any provision of the GSA which imposed obligations as regards the sale or distribution of garnet acquired under the GSA: see para 28(a) of the defence. As to the first objection of the applicants, which they say is a critical issue bearing upon the proposed rectification of Barton International, whether there is any evidence of a common continuing contention of the parties concerning the operation of cl 2.5 in respect of blended product, it should be noted the respondent does not expressly rely on this issue to properly construe cl 2.5 in relation to the point at which the branding obligation arises. The respondent does, however, expressly rely on this blending issue in relation to the final construction point --- the effect of the words "which is 100% Product". In any event, the Court has found above that cl 2.5 found its form in the GSA directly as a result of the communications between Mr Cole, on the part of Barton International, and Mr David Williams, on the part of the applicants on 11 February 2005. While the Court recognises the force of a number of the other objections to the rectification taken by the applicants, particularly the fact that the parties through negotiations and settlement of the agreements were represented by experienced lawyers who understood the importance and privity of contract and the need to specify exactly which parties were to be granted rights and which were to assume obligations, and that BMC was dropped from the proposed agreement, the textual considerations supporting the construction contended for by the respondent and the surrounding circumstances and conduct of the parties supporting the continuing intention of the parties that BMC should have a role in the distribution or sale of GMA garnet, in my view overwhelmingly point to the necessary continuing intention of the negotiating parties in that regard. In such circumstances, I consider the rectification to cl 2.5 proposed by Barton International does not involve a rewriting of the bargain between the parties, but rather constitutes a clear reflection of what the parties understood and, in substance, agreed should be the continuing position. It is appropriate, if the parties commonly understood that BMC should meet the branding requirements that it should also be able to affix the GMA Garnet name and logo --- as indeed envisaged by the co-branding provision in cl 2.5 as referred to above. I am unconvinced that issues raised by the applicants in their fourth, fifth and sixth objections militate against the respondent's proposed rectification. Barton International remains the primary party subject to the obligations imposed by cl 2.5 of the GSA on the Buyer. Whether there is a breach by the Buyer for the purposes of cl 8.1(c) of the GSA will remain a matter of fact. As to whether or not there is some conventional estoppel preventing Barton International claiming the proposed rectification, I do not see that the proposed rectification is inconsistent with the evidence of how the parties actually dealt with earlier alleged breaches. Barton International in fact responded to allegations on its own part and plainly indicated in respect of allegations that BMC in the USA had failed to meet the branding obligations of cl 2.5, by saying that the contractual obligations would be met. If anything, Barton International provided assurances designed to meet exactly the obligations that the rectified cl 2.5 would impose on it in respect of a related entity. As to whether the rectification proposed by the applicants is different from that proposed by Barton International, I accept that it is. The question of the applicants' proposed rectification is dealt with further below in relation to the marketing obligation the applicants say were assumed by Barton International and, in effect, by BMC. But, largely for the reasons advanced on behalf of the respondent, I consider there is no clear and convincing proof of agreement to support the rectification proposed by the applicants. While the parties had in mind a continuing involvement of BMC in relation to distribution and sale of branded Product, there is no demonstrated continuing intention that BMC should undertake the market development role contended for by the applicants. Accordingly, for these reasons, I would allow the rectification of cl 2.5 of the GSA pleaded by Barton International. Third strand of the construction argument: does the phrase "which is 100% Product" qualify the branding obligation? The third major strand of the cl 2.5 constructional issue, is what garnet "must be branded" by the Buyer. It is the addition of the words, "which is 100% Product", which textually complicates the issue. The phrase "100% Product" is not defined or interpreted in cl 1.1 of the GSA, or elsewhere in the GSA. Nor is it defined in the Principal Agreement or attachments. The use of the expression "100%" in relation to "Product" first appears in the GSA at cl 2.5. unmixed or unblended). The respondent says that nothing in the GSA provides that garnet purchased under the GSA cannot be mixed or blended with other garnet before it is distributed or sold. The respondent contends that the words "which is 100% Product" must be given meaning and effect. The respondent says this qualifying expression makes it apparent that the parties recognise that there might be blending of GMA garnet with garnet from other sources before distribution and sale. The respondent says that if the parties had agreed that all GMA garnet purchased under the GSA had to be distributed and sold as such, and had to be labelled with the GMA Garnet name and logo, that could have been expressly provided for precisely and easily, but that the parties deliberately refrained from imposing such an obligation. Consequently, the respondent contends that the branding obligation in the first sentence of cl 2.5 on its proper construction applies to 100% GMA garnet, that is distributed and sold in packaging, but that it has no obligation to label garnet sold in loose form or to package all garnet that it distributes or sells. Barton International also contends that, to the extent there is any textual ambiguity about the meaning of cl 2.5 in this regard it should be noted that the parties were united in their understanding that cl 2.5 as finally adopted should not impose an obligation of the kind that had earlier been foreshadowed in para 5 of the Principles document of 11 February 2005, which, if accepted, would have precluded blending. Accordingly, cl 2.5 must be construed with that understanding in mind. The applicants, by contrast, contend that Barton International's argument is both untenable and irrelevant. The reason why the applicants say the argument is untenable is that upon the respondent's own pleaded argument in para 5(e) of the defence, it is alleged that it was commonly known by the parties that Barton International did not intend to sell GMA garnet within North America other than by onselling it to BMC. In those circumstances: (1) all garnet purchased under the GSA by Barton International would necessarily be 100% Product; and (2) all garnet sold or distributed by Barton International to BMC would also necessarily be 100% Product. As a result, the phrase "which is 100% Product" simply describes a particular quality or characteristic of garnet "purchased under this Agreement and distributed or sold by" Barton International; it does not have any limiting function as contended for by Barton International. The applicants say that the purpose of selecting this quality or characteristic is because cl 2.5, in the second, final sentence, provides for Barton International to have a non-exclusive licence to brand GMA Garnet Product. In order to protect its reputation and to prevent the GMA Garnet brand from being associated with blended product, the GSA expressly prescribes that the licence can only be used for 100% Product. Hence the reason for emphasising this quality in respect of discounted garnet sold by Barton International in the first part of cl 2.5. The applicants say that the reason why Barton International's argument about the phrase is irrelevant is that, as a matter of fact, Barton International only sold and distributed 100% Product to BMC. Hence, whether Barton International could have chosen to blend GMA garnet is neither here nor there in the present case --- they in fact sold 100% Product to BMC and were obliged to brand it. However, as I have found above, the obligation to brand is created in the context: (a) of packaging, not loose bulk; and (b) of a provision concerned with the distribution and sale of GMA garnet to third party customers that is emphasised by the rectification of cl 2.5 which I have allowed. Thus, it follows that the branding obligation takes effect at the point at which Barton International or BMC distributes or sells to a third party customer. The final critical question is "Distributes or sells what?". On the construction contended for by the applicants, the thing which must be so branded is "All garnet purchased under this agreement". The words which appear to qualify those words, namely, "which is 100% Product" are effectively ignored by the applicants. In opening the case for the applicants, senior counsel for the applicants accepted that, from the applicants' point of view, one should more or less put a line through the words "which is 100% Product" (transcript 12). In my view, on their ordinary, textual construction, the words "All garnet purchased under this agreement and distributed by the Buyer" are in fact qualified by the subsequent words "which is 100% Product". These qualifying words are capable of having meaning. It is not appropriate in the circumstances to say they are meaningless, or that they have been placed in the first sentence because the same expression is used in the second sentence. I accept the submissions made on behalf of Barton International that the obligation to label or brand Product, created by cl 2.5, only arises at the point of distribution or sale by Barton International (or BMC) and only in respect of Product which is then identifiable, as a matter of fact, as "100% Product". In other words, if the Product is less than 100% GMA garnet (such that the GMA Garnet name and logo cannot be affixed to the Product on its distribution or sale having regard to the terms of the second sentence of cl 2.5), then there is no obligation to label it. Further, to the extent there is any textual ambiguity introduced by the words, "which is 100% Product" it is also relevant to the construction of cl 2.5, whether rectified or not, to note the Court's finding that the form of cl 2.5 as ultimately negotiated and agreed was a direct consequence of the discussion between Mr Cole and Mr David Williams on 11 February 2005. Mr Cole then advised Mr Williams that Barton International did not wish to be compelled to label all GMA garnet --- as then proposed by para 5 of the Principles document --- because "there may be blending". This finding tends to confirm that the expression "which is 100% Product" was intended to qualify the preceding words in the first sentence of cl 2.5, and that the branding obligation was and is not intended to preclude the blending and unbranded distribution and sale of GMA Garnet Product, which blended product is less than "100% Product". In other words, Barton International agreed to ensure that all garnet purchased under the GSA and distributed or sold by it or a related entity which, at the point of sale, was in fact 100% Product must be branded. That allowed for the possibility that some of the garnet purchased under the GSA might not be 100% GMA garnet at the time of distribution or sale to an ultimate consumer because it may have been blended with other non-GMA garnet. Distribution or sales in the States of Missouri, Kansas and Texas, USA are relied upon. Further, the applicants plead that BMC has used the GMA Garnet name and logo or has used it in connection with the distribution or sale of garnet which is not 100% GMA garnet and has held out that garnet which is not 100% GMA garnet is GMA garnet (para 19B.2 statement of claim). The applicants say this happened at least in the State of Texas, USA. No damages are sought in respect of these breaches only declaratory relief. The applicants in making the claim in reliance on the conduct of BMC do so on the basis that the GSA should be rectified in the manner the applicants have pleaded. The Court however rejects the applicants plea for rectification, as mentioned above and explained further below. Nonetheless, the Court has allowed the rectification pleaded by Barton International has the effect that Barton International must ensure that BMC abides by cl 2.5 and BMC has the right to affix the GMA Garnet name and logo when branding product. Be that as it may, I am not satisfied that the evidence concerning the lack of prominence pleaded in para 19B.1 constitutes persistent breach by the Buyer of its obligations under cl 2.5 for the purposes of cl 8.1 of the GSA. Whilst the matters of prominence were canvassed in evidence, particularly during the cross examination of Mr Bracken and Mr Summers, the fact is the issues raised by the applicants at material times were attended to. Even if it may be said, as probably it can that in 2005 there appears to have been instances where BMC failed to adequately affix the GMA Garnet name and logo on packaging in the manner required by cl 2.5, the breach was relatively minor and was remedied in a timely manner. It cannot be said, on a proper analysis of the sequence of events, that there was persistent breach such that the applicants were entitled to a declaration that Barton International's actions constituted a breach of the GSA. So far as the claimed breach of cl 2.5 holding out provision pleaded in para 19B.2 of the statement of claim is concerned, only the one instance of this is particularised. It too does not prove a persistent breach. In all the circumstances, there is also much to be said for the view that, even if these particular instances constitute sufficient breach for the purposes of a notice of termination under cl 8.1 of the GSA, a declaration in such circumstances would serve little purpose and should not be made: Aussie Airline Pty Ltd v Australian Airlines Ltd (1996) 139 ALR 663 , 670. As noted above, cl 1.2(c) of the GSA provides that in the interpretation of the GSA, unless there is something in the subject or context inconsistent therewith, headings used in the GSA are for convenience only and shall not be used in the interpretation or construction of this Agreement. No party relied on the heading to cl 4.2 referred to above in making their interpretation or construction arguments and I do not consider it to be relevant. The term to this effect is also alleged by reference to the Principal Agreement (para 13.1, para 13.2 and para 16 of the statement of claim). ● Barton International is not entitled to order and purchase GMA garnet at concessional prices if neither it nor another member of the Barton group intends to sell the garnet as 100% GMA garnet to ultimate consumers within North America and to label it as GMA Garnet (para 15.2, para 16A.3). The applicants say that Barton International is not only obliged to brand the discounted garnet at the point of on-sale to BMC but, by reason of the terms of cl 2.5 of the GSA and cl 4.2 of the GSA as well as cl 2.3(b) of the Principal Agreement, has positive and negative obligations in relation to the promotion in North America of GMA garnet discharged into North America, in return for receiving a discount on the price of that garnet. The applicants say that those obligations arise from the expressed mutual acknowledgement by Barton International and GMA Garnet found in cl 4.2 of the GSA, that GMA Garnet "wishes to promote distribution of Product" in North America "and for that purpose" shall allow to Barton International a concessional rate; and from an identical acknowledgment by Barton International and GIRL, of what they say is the same contractual purpose in cl 2.3(b) of the Principal Agreement. The applicants, as an additional matter, claim that the parties commonly intended, and that both assumed and acted on the basis, that Barton International would cause BMC to abide by the provisions of the Principal Agreement and GSA relating to the purpose of promotion for which the discount was being given. On this basis the applicants seek rectification of each Agreement to correctly record this obligation, or alternatively, claim that Barton International (and the applicants) are conventionally estopped from denying such an obligation, as regard BMC. The applicants say that the contractual purpose and object of the discount expressly nominated by cl 4.2 of the GSA is very clearly stated and does not need to be inferred. The discount provided was for the purpose of GMA Garnet being able to "promote" distribution of GMA garnet in North America. The applicants contend that, axiomatically, bulk GMA garnet is incapable of being identified by a potential consumer in that market as Product. Equally, GMA garnet blended with garnet from other sources and therefore unbranded, cannot be identified in the market as Product. It would otherwise remain a bulk amorphous bare garnet substance and therefore be unrecognisable in the marketplace. The applicants say that the same contractual purpose is not only expressly stated in the GSA but also found in cl 2.3(b) of the Principal Agreement. The applicants say a commercial court will be astute not to diminish or negate a pragmatic end consequence, such an express confirmation of contractual purpose. The applicants say the concept of "distribution" has the dictionary meaning --- namely, "the dispersal of commodities among consumers effected by commerce": Shorter Oxford Dictionary (2007), 6 th ed at 717. Hence, the contractual purpose of the discount is for GMA Garnet to promote dispersal of GMA garnet (Product) among consumers in effective commerce in the North American marketplace. The applicants say Barton International was and remains part of the Barton group of companies all of which interact in conducting the principal business of that group, namely the importation, mining (to a small extent), production and sale of garnet for industrial abrasive uses. In other words, Barton International and BMC are both a part of an integrated large scale business of garnet distribution, particularly in North America. Neither Barton International nor any other member of the Barton group has a principal business of themselves actually using the garnet in the day to day industry as an industrial abrasive. In this context, the applicants say GMA Garnet's contractual purpose of "promoting distribution" of GMA garnet, can only mean the purpose of GMA Garnet promoting distribution of GMA garnet in North America, through that principal business of the Barton group of companies of which Barton International forms an integrated part. The applicants say, that outcome also reflects and builds upon the status quo at the time the GSA was executed on 31 March 2005. The applicants say advancement of this purpose was the tangible benefit GMA Garnet would have obtained by means of Barton International's adherence to the branding obligation in cl 2.5 of the GSA, in return for Barton International being allowed a substantial discount on the price of acquiring GMA garnet over time. The applicants say no such benefit is obtained by GMA Garnet where price discounted GMA garnet is merely shipped and discharged into North America. This is because the landing of GMA garnet upon North American soil will not carry any necessary connection to a subsequent dispersal of that garnet to ultimate consumers in the North American garnet marketplace. The applicants say that in the statement of contractual purpose (and operational effect of the GSA) expressly define the benefit of the GSA rather than leaving it to be deduced or inferred. The applicants say that in spite of this benefit, Barton International has agreed to do all the things reasonably necessary in the performance of its obligations and provide to the applicants, particularly in the performance of its labelling obligation in cl 2.5 of the GSA. That is to say, the expressly stated benefit of the GSA for the applicants is still promotion of some, if not absolutely all, discounted garnet. Then the question arises whether the contract imposes a duty to co-operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself. Therefore, Mason J's reference to the greater difficulty of making implication in the second category of case does not apply, as no process of implication is required. In these circumstances the applicants argue that even if Barton International is not obliged to label all 100% Product, the implication should still be made that Barton International would label and sell or distribute sufficient product in North America to the extent necessary to facilitate promotion of distribution, or at least not hinder distribution of GMA garnet in that geographical area. In this case it has singularly failed to do so, as almost all garnet supplied has been blended. In response, Barton International contend the meaning of cl 4.2 is clear and unambiguous and that care must be taken to note and respect the specific way in which terms are expressed in this provision. It begins with an acknowledgement of GMA Garnet's "wish" and then gives Barton International a right to concessionally priced GMA garnet which Barton International "ships and discharges" into North America. Barton International says that the parties deliberately refrained from transforming GMA Garnet's wish into an obligation on the part of Barton International. Barton International says the specific and limited scope of the first sentence cannot be destroyed by a process of construction. The limited intention of the parties as deliberately and carefully expressed here must be respected. Clause 4.2 does not impose any obligation on Barton International to distribute GMA garnet in North America nor any obligation to market GMA garnet. If the parties had intended that Barton International should have any such obligations imposed on it, the respondent points out that could have been simply and directly specified, but the parties did not agree to impose such obligations and precisely for that reason no obligations are imposed. There is no enforceable promise in cl 4.2. The respondent emphasises that GMA Garnet's wish "to promote distribution" of GMA garnet within North America is recorded and limited to a stated wish, for competition law reasons. The wish is stated to be the reason for concessional pricing. This connection is made apparent by the word "Accordingly" in cl 4.2. The respondent says that rather than imposing any distributional marketing obligation, cl 4.2 requires no more than shipping and discharge into North America for Barton International to get the benefit of its right to concessional prices. Barton International contends that this is put beyond doubt by cl 7.3 of the GSA which specifically deals with the circumstance in which the concessional price may be lost. The only such circumstance is if product is not in fact shipped and then discharged into North America. Barton International says it is important to appreciate the sense in which "promote" is used in the opening words of cl 4.2 where GMA Garnet's wish is recorded. Acknowledgment is of a wish "to promote distribution" of GMA garnet in North America. When "promote" is used in that context it means to "encourage" distribution of GMA garnet: see Shorter Oxford Dictionary (2007) 6 th ed at 2366. That is, the acknowledgement itself makes it plain that there is no obligation to distribute but rather a wish to "encourage" the distribution of GMA garnet in North America. This is far from the language of obligation. Barton International also say that the use of the word "promote" is not to be equated with advertising or marketing. Barton International says that to the extent that cl 2.5, which contains specific branding obligations, refers to distribution of GMA garnet, that is wholly unconnected with the opening words of cl 4.2, which contain nothing more than an acknowledgement of GMA Garnet's "wish" that GMA Product be "encouraged" to be "distributed" in North America. As to the effect of cl 2.3 of the Principal Agreement, Barton International says that cl 2.3(a) shows that the parties accepted that the consideration for the sale by Barton International of its partnership interest and other interests, included the rights it obtained under the GSA for concessionally priced garnet. Clause 2.3(b) is, therefore, no more than a repetition of the opening words of cl 4.2 of the GSA and involves no more than an acknowledgement of GMA Garnet's "wish" that Product be encouraged to be distributed in North America. The fact that the acknowledgement is repeated in cl 2.3 does not change the acknowledgement into an obligation or give it any greater meaning than is readily apparent on its face. Barton International emphasises that there is no link between the limited and specific labelling obligation in cl 2.5 of the GSA and Barton International's entitlement to concessional prices under cl 4.2. The acknowledgement in cl 4.2 records GMA Garnet's wish to encourage the "distribution" as opposed to the marketing of the GMA garnet in North America. Moreover, the limited and specific labelling requirements in cl 2.5 applies to all GMA garnet, not just concessionally priced GMA garnet purchased under cl 4.2. The respondent also points out that, unlike cl 2.5, a persistent breach of which may entitle termination of the GSA under cl 8.1(c), no such remedy is specified as regards acquisition of concessionally priced product. Barton International says this is because cl 4.2 imposes no obligation which can be breached. Rather, it describes a condition which when fulfilled gives rise to concessional prices. The circumstance of the concession not being fulfilled is dealt with in cl 7.3, not the termination provision in cl 8. If the condition is not fulfilled, Barton International is deprived of its right to the concessional price. It must then pay an uplift cost under cl 7.3. That event, however, cannot lead to termination of the GSA. Barton International also contends that GMA Garnet and GIRL misread cl 2.5 by suggesting that it imposes a requirement of labelling for Barton International to obtain the discount or concessional price. On a plain reading of cl 2.5, it imposes a specific obligation to use the GMA Garnet name and logo in relevant circumstances, regardless of whether the GMA garnet was acquired under the GSA at a discount and regardless of whether the GMA garnet is distributed and sold in North America. Barton International emphasise that cl 4.2 of the GSA does not confer on GMA Garnet a right to have GMA garnet distributed in North America, nor does it confer on GMA Garnet a right to have GMA garnet promoted in North America. Of the two distilled pleaded terms mentioned above, Barton International says they are different ways of conveying the idea that product was acquired at concessional prices but the product is required to be sold as 100% GMA garnet, so labelled to ultimate consumers within North America. Additionally, Barton International says two aspects of the terms alleged in paras 15.1, 15.1A and 15.2 of the statement of claim must be rejected because it was the very thing the parties were united in rejecting, in reaching agreement upon the GSA and the Principal Agreement. The applicants respond to the Barton International claim that there is no express link between the labelling obligation in cl 2.5 and the provision in cl 4.2 of the discount. The applicants say this is a flawed argument and the practical reality is that Barton International has sufficient demand in the North American market to consume over 50,000 tonnes of GMA garnet. Hence, assuming Barton International acts in a commercially rational manner, Barton International will only purchase garnet under the GSA, where the GSA provides a discount to the price of which it may otherwise purchase garnet from GMA Garnet or elsewhere. As the labelling obligation applies to all garnet purchased under the GSA, it follows that the labelling obligation will, in practice, apply to all discount garnet. As to the submission of the respondent that there are no words which impose any promissory obligation upon Barton International in the introduction of cl 4.2, the applicants state that their primary position is that the introductory words state the contractual purpose and operational effect of the GSA, and that the principle in the High Court's decision in Secured Income [1979] HCA 51 ; 144 CLR 596 operates on this statement to supply the necessary, promissory obligation. In other words, the introductory words expressly state what might otherwise be deduced about the contractual purpose of the GSA. The Court in large part accepts the construction of cl 4.2 of the GSA and cl 2.3(b) of the Principal Agreement contended for by Barton International, mostly for the reasons Barton International advances. The language actually employed in cl 4.2 of the GSA and cl 2.3(b) of the Principal Agreement whereby the parties "acknowledge" that "the Seller wishes to promote distribution of Product within the United States of America and Canada", for which purpose a concessional rate for Product is provided, is not the ordinary language of legally enforceable rights and obligations. If the parties had in fact intended that Barton International should undertake to develop the North American market into which discounted garnet was shipped and discharged --- or "sold", as the applicants would have it - then the express language of cl 4.2 of the GSA would surely have been quite different from what it is, particularly in circumstances where two highly distrustful commercial groups were negotiating such a significant supply agreement that was part of the consideration of the overall settlement of their bitter dispute. For that purpose the Seller shall allow the Buyer a concessional rate for Product. Just how the wish of the seller will be realised by the grant of the concessional rate is not clear from cl 4.2. It is perhaps to some extent explained, as a matter of commerciality, by the product branding obligations created by cl 2.5 in relation to the distribution or sale of relevant Product. If all 100% Product must be branded by the Buyer with the GMA Garnet name and logo, as required by cl 2.5, compliance with this obligation may, where it applies, commercially assist in achieving market recognition of that Product in the markets in which it is sold. If Product can only be landed in North American at the concessional rate, commercial considerations suggest that ordinarily the Buyer would seek to sell in the same geographical market to maximise profits by limiting further transportation costs. In this way, the concessional price may be seen as an "incentive" for promoting distribution or sale of Product by the Buyer in North America (as indeed it was described by Mr Cole in his letter to Mr David Williams in the course of negotiations, dated 10 February 2005 in relation to the delivery of GMA garnet to the Americas). It is a very big --- and different --- step to take, however, as the applicants submit should be taken, to construe the acknowledged wish of the Seller to promote distribution of Product in North America, in the light of the concessional rate purpose stated in cl 4.2, as constituting a contractually enforceable undertaking by Barton International to develop the North American market for the distribution or sale of GMA garnet in North America. As the respondent points out, so far as cl 2.5 is concerned the branding obligation is not limited to Product purchased at a concessional rate. Rather, it applies to all garnet supplied under the GSA. Nor does cl 2.5 impose a branding obligation only in respect of Product distributed or sold by the Buyer within North America. The most that can be said of cl 4.2 is that it constitutes an acknowledgement by the parties that the concessional rate granted by the Seller to the Buyer for shipping and discharging Product into North America is for the purpose of facilitating the Seller's wish to promote the distribution of that product within North America. As to how the grant of a concessional rate in respect of such Product will actively achieve this purpose is not provided for in the GSA. To some extent, the introductory words may be explained by GIRL's real concern to avoid drafting the GSA in such a way that the adverse attention of the competition regulators might be attracted. However, the applicants say the explanation is supplied by construing terms of the GSA as providing for the development of the North American market by the respondents and (effectively) BMC (or by recognising that certain representations were thereby made to similar effect). What is very clear on the evidence, as outlined above, is that the parties understood Barton International and BMC were adamant that they would not undertake any form of distributorship for GMA garnet in North America or elsewhere but simply wanted a steady supply of GMA garnet for their own purposes. At the same time the parties were focussed on ensuring the GSA did not create any competition law problems. In the end, the only specific obligation that touches on the question of distribution of product --- or marketing - are those to be drawn from cl 2.5, which relates simply to branding of relevant Product. In my view, no legal obligations were imposed on Barton International to develop a market into which discounted garnet was sold in North America, as the applicants contend. It follows that, in my view, there is also no term of the GSA to the effect that Barton International (or BMC) must not do anything to diminish the reputation of GMA Garnet or its distribution. This conclusion is also supported by the finding I have made earlier concerning what the parties understood concerning the possible blending of GMA garnet supplied under the GSA. I have found that cl 2.5 of the GSA found its form directly as a consequence of the discussions and Mr Cole and Mr David Williams on 11 February 2005, during which Mr Cole said that Barton International did not wish to be compelled to label all garnet acquired under the GSA (as was then proposed by para 5 of the Principles document, prepared by Mr Williams and dated 11 February 2005), because "there may be blending". The substance and effect of the marketing terms of the GSA pleaded and advanced by the applicants are inconsistent with this understanding. As I previously emphasised, it is irrelevant, in my view, whether the applicants, at the point of discussion between Mr Cole and Mr Williams, had any full appreciation of the implications of their understanding that there may be blending or its extent. Clause 2.5, in my view, was drafted so as not to prohibit intentional blending of GMA garnet supplied under the GSA. The negotiations concerning the provision of concessionally priced product also militates against the construction of the GSA contended for by the applicants. Barton International through Mr Cole steadfastly declined to undertake any distribution responsibilities in North America. Mr David Williams prepared a draft of the GSA which linked the entitlement to concessionally priced product to "distribution" of product in North America. Mr Cole altered the word "distributes" in cl 4.2 with the words "ships and delivers". Mr Williams, on the advice of Mr Ketelsen changed the word "delivers" to "discharges", for the reason he explained in his evidence. The parties clearly were of a common understanding that in order to obtain the concessionally priced product, all that was required was for Barton International to ship and discharge the relevant GMA garnet into North America. There was no requirement that it be sold or distributed in North America in order to obtain the concessional price. (This plainly also militates against the representations propounded by the applicants to the effect that all concessionally priced GMA garnet acquired under the GSA must be marketed in North America and labelled as GMA garnet, as discussed below. ) I also do not consider that the so called duty to cooperate from Secured Income [1979] HCA 51 ; 144 CLR 596 relevantly assists the applicants in this case. As Mason J pointed at 607 --- 608 implied obligations are necessarily governed by the specific content of express obligations. It goes a bridge too far to say an implied term can attribute to a party a substantive intention which has not been incorporated in the express terms of the bargain. As the respondent points out, in Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] [1984] HCA 73 ; (1984) 156 CLR 414 at 434 --- 435, the High Court disposed of an argument that Philip Morris could not apply to register a trademark of its own to market Golden Lighter cigarettes on the basis that it was, as licensee of Moorgate Kent cigarettes, obliged to not to hinder or prevent the development of Kent Light cigarettes. Deane J explained (at 435) that there was nothing in the agreement to indicate that any such term was assumed to exist; that such a term would preclude competition; and that such a term could not be implied because it did not correspond with some evident underlying intention of the parties. In Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 , the New South Wales Court of Appeal (at 124) said that there is no duty to cooperate in bringing about something which the contract itself does not require to happen. If a wider duty to cooperate to give the other party a perceived benefit under a contract is sought to be imposed, such a term has to be implied as a matter of fact. There is no warrant in this case to imply a term that Barton International would cooperate and assist GMA Garnet to develop a market in North America. In other words, in my view, there is no relevant term expressed, on its proper construction, or to be implied upon which the duty to cooperate can operate to bring about the outcomes contended for by the applicants. I should add for completeness that I reject the applicants' rectification plea. As to the substance of the applicants' rectification plea there is no clear and convincing proof that the parties intended BMC to be bound by the GSA. During the early stage of negotiations GIRL wanted BMC to be a party to the GSA and to act as an exclusive distributor of Product. BMC was dropped when the parties agreed that Barton International would get the benefit of an open supply agreement, with the right to a concessional price if it shipped and discharged GMA garnet into North America. I also accept the respondent's contention that the applicants' suggestion that Barton International was treated as part of the Barton group and that "Barton" was used to refer to the group and not to a particular Barton entity does not show the requisite common intention in this particular context --- which is quite different from the context in which I have allowed the respondent's proposed rectification. There was no general understanding that Barton International would ensure BMC's compliance with the GSA in respect of generally stated obligations under the GSA. The question whether the conduct of a party is misleading or deceptive is a question of fact and requires an examination of all of the relevant conduct in the circumstances considered as a whole: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60 ; 218 CLR 592 , 625 [109]. The question is one to be determined objectively: Butcher at [109]. The applicants' primary position in these proceedings is that the introductory words of cl 4.2 of the GSA state the contractual purpose and operational effect of the GSA and that the principle from Secured Income [1979] HCA 51 ; 144 CLR 596 operates upon this statement to supply the necessary promissory obligations. In other words, the introductory words to cl 4.2 expressly state what might be otherwise deduced about the contractual purpose of the GSA. The Court has found in the preceding section that the construction of cl 4.2 in this regard advanced on behalf of the applicants should not be preferred. In those circumstances the applicants say that it does not follow that the introductory words of cl 4.2 have no legal significance and can be ignored for the purposes of construing the GSA. The applicants claim that the introductory words of cl 4.2, alone or understood in the context of pre-contractual negotiations, are at least a statement of Barton International's present and future intention to perform the GSA in a manner which would facilitate promotion of GMA Garnet in North America. The applicants say that it does not automatically follow that if their primary contractual position is rejected, that Barton International's construction, which gives no effect to the introductory words, should be accepted. The applicants say there is an intermediate position, namely that Barton International represented, but did not contractually promise, to facilitate promotion of GMA garnet in North America. The applicants essentially rely upon the same argument deployed above in relation to the contractual interpretation. In effect, that the introductory words of cl 4.2 of the GSA and cl 2.3(b) of the Principal Agreement, were intended to have some legal effect beyond the statement of an expectation or a dream. The applicants say further that the pre-contractual negotiations demonstrate that the parties themselves understood that there was significance to Barton International's position and that it would facilitate promotion of GMA garnet in North America. Barton International undertook to develop the market into which discounted garnet was sold---and it was irrelevant whether that market was the Americas or North America, as the essential nature of the negotiated obligation remained the same but applied to a smaller area. The applicants say, however, that Barton International never intended to facilitate promotion in the North American market. Its proposed undertaking was effectively an undertaking to do nothing. Mr Bracken himself believed soon after signing the Principal Agreement and before execution of the GSA that members of the Barton group could blend GMA garnet. The applicants say that it is only a matter of short inference that he and Barton International always intended to blend GMA garnet in order to prevent it being promoted in North America. The applicants say, that in context, whenever an order was placed, pursuant to the contractual framework of the GSA, it follows that the Barton International represented that it was making an order on the basis of the GSA, including the representation derived from the introductory words of cl 4.2. The Court has already found that it is not prepared to draw the inference that Barton International always intended to blend GMA garnet in order to prevent it being promoted in North America. For the reasons given above in relation to the proper construction of cl 4.2 and having regard to the relevant surrounding circumstances and the pre-contractual negotiations, I do not consider that by the time the Principal Agreement was signed and the terms of the GSA were settled, any such representation was made about the development of the North American market for GMA Garnet by Barton International. As explained in the section dealing with the key points of negotiations above, on 9 February 2005, Mr David Williams for the applicants put forward a separate proposal that included in para 2.2 that Barton International be appointed as a distributor of GMA product on a non-exclusive basis; and "to incentivise the maintenance and development of the North American (ie USA/Canada) market, GMA product distributed into that market each year would attract a rebate/discount for the first 50,000 tonnes of product sold". On 10 February 2005, Mr Cole responded to that proposal noting the mutual desire of the parties to structure arrangements to minimise the prospects of adverse response from competition law regulators and, in relation to the proposal to "incentivise" the North American market, expressed some willingness to consider that proposal in respect of the Americas and stated that "Barton is prepared to accept an undertaking that the discount is offered as an incentivisation with respect to the market in the relevant territory (but without performance and market growth obligations) and that product acquired at the discount must only be distributed into that market". In the event, the negotiations developed in different ways. There was no agreement that product acquired at a discount could only be distributed or sold into a particular market, whether the Americas or just North America. Instead, the terms of the GSA were such that the discount would be attracted by landing --- "ships and discharges" --- the relevant GMA garnet into North America. Nothing more was said about distribution. Having regard to the concern of the parties about: the competition regulators; the plain unwillingness, at all material times, of the Barton interests to undertake any distribution responsibilities; and the notion of "incentivisation" used at material times (as discussed above), I do not consider that cl 4.2 of the GSA on its own, or cl 4.2 or the GSA when read with cl 2.3(b) of the Principal Agreement, or either or both of those provisions when taken with the pre-contractual negotiations constituted a representation, short of a contractual obligation, that Barton International would distribute GMA garnet supplied under the GSA in the North American market under the GMA Garnet name or that it would refrain from doing anything that would affect the reputation of GMA garnet in the North American market. At the very most, I consider that what was represented by the Principal Agreement and the GSA and what passed during the course of negotiations, was that the Seller of GMA garnet under the GSA had a wish to promote distribution of Product in North America, and that, by the operation of terms of the GSA concerning concessional pricing, that wish might be advanced. Apart from that representation, nothing else obliged Barton International (or BMC) to develop the North American market for GMA garnet or, short of a contractual obligation, constituted a representation that they would do so. The fact that the Court has found that Mr Cole and Mr David Williams achieved a level of concurrence concerning the possibility of blending of GMA garnet during the discussions on 10 February 2005, which was reflected in the drafting of cl 2.5 of the GSA, only serves to confirm that no such representation was made. Given that the parties were represented during the negotiations leading up the execution of the Principal Agreement and the GSA by two highly experienced commercial lawyers, who acted as their agents, and who understood the degree of acrimony between the parties and exactly what was at stake in the conclusion of the matters in dispute by the terms of the Principal Agreement and the GSA, it is hard to believe that either of the parties could have thought, or that the parties together intended, that the terms of cl 4.2 read in isolation or with cl 2.5, or in the context of the whole of the Principal Agreement and the GSA, and having regard to the pre-contractual negotiations, did, or was apt to, create any contractual obligations or convey any representations different from those made express in the contract. Nor does the Court consider that the "acknowledgement" of the "wishes" of the Seller in cl 4.2 of the GSA gave or gives rise to any representation short of a contractual promise that Barton International would assist in the marketing of GMA garnet in North America. For that purpose, rights conferred under cl 2.5 may be exercised by BMC. The Court also finds that the GSA does not contain terms requiring Barton International's cooperation in the promotion of the continued distribution and/or sale of 100% Product and the other terms pleaded in para 15 and para 16 of the statement of claim. Accordingly, the applicants' application for declarations that Barton International's actions as pleaded in para 16A.1 of the statement of claim constitute a breach of cl 2.5 of the GSA and that the notices referred to at para 25 of the statement of claim were lawfully issued, should be refused. The Court also finds that the basis for the rectification sought by the applicants in respect of Barton International's responsibilities for the conduct of BMC is not made out. As to whether there should be a declaration in respect of the breach pleaded in para 19B of the statement of claim relating to the question whether BMC has distributed and/or sold GMA garnet which is 100% Product branded by BMC with the GMA Garnet name and logo of lesser prominence than that which was applied during the 2004 calendar year, the conduct complained of has not been shown to constitute a "persistent" breach of cl 2.5 for the purposes of cl 8.1 of the GSA. Such relief should be refused. Having regard to the Court's finding refusing the applicants' claims based on terms of the GSA alleged in relation to Barton International's distribution and promotion obligations, the applicants' claim for damages for such breach should be dismissed. The Court also finds that Barton International did not make the representations pleaded in para 4 and para 4B of the statement of claim. Accordingly, the applicants' claim for damages by reason of loss arising from the alleged misleading or deceptive conduct of Barton International should also be dismissed. The Court therefore orders that: The application of the applicants is dismissed. The cross-claim of the respondent is allowed. For that purpose, rights conferred under clause 2.5 may be exercised by Barton Mines Company LLC. Such other orders as the Court may consider appropriate after hearing from counsel for the parties. I certify that the preceding five hundred and ninety-one (591) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. | construction of contract principal agreement garnet supply agreement construction of branding obligation whether garnet supplied as loose bulk subject to branding obligation whether obligation to develop north american market rectification of contract whether misleading or deceptive conduct in relation to development of north american market contracts trade practices |
It is the patentee of Australian Patent No 621713 for an invention described in the patent as " Apparatus for Simulating Flames " ( the Patent ). The essential object of the invention is to achieve a realistic simulation of flames emanating from a simulated combusting log or coal fire. It has application in electric and gas fired domestic room heaters. Bitech commenced four sets of proceedings. The respondent parties in each proceeding are different. The issues in the proceedings, however, are broadly the same. The four sets of proceedings were heard together with the evidence in each proceeding being evidence in all of the other proceedings, and vice versa. In each proceeding, Bitech has sued the respondent parties for infringement of the Patent by, amongst other things, importing and selling certain electric heaters which also have a simulated flame effect. Attached to these Reasons for Judgment as Table A is a table in which the conduct on the part of each respondent said to constitute infringement of the Patent is more particularly described. Bitech claimed permanent injunctive relief, delivery up of all infringing articles, damages or account of profits, interest and costs. In three of the four proceedings, three of the respondents sought orders that the Patent be declared invalid and that it be revoked. Cohen Nominees Pty Limited ( Cohen ), the second respondent in proceeding NSD 1681 of 2006, did not cross-claim for revocation of the Patent. Nor did Bunnings Group Limited ( Bunnings ), the sole respondent in proceeding NSD 43 of 2007. Flameglow Pty Ltd ( Flameglow) , the sole respondent in proceeding NSD 105 of 2007, also claimed damages against Bitech for allegedly making unjustified threats of patent infringement proceedings. The hearing before me involved liability only. All questions concerning damages or account of profits have been reserved for further consideration in light of these Reasons for Judgment. Only Garth Living Pty Limited ( Garth Living ) (the first respondent in proceeding NSD 1681 of 2006) put in issue the allegation that it engaged in infringing conduct by importing and selling heaters of the type which Bitech alleged infringed its patent. It will, therefore, be necessary to determine whether Garth Living did import and sell those heaters. Bitech also alleged that Garth Living was party to a common design involving the importation and sale in Australia of the BH heaters by Bunnings and the MS-5 heater by Cohen. There was no dispute on the part of the other respondents that each of them engaged in the particular conduct attributed to them by Bitech, particulars of which are set out in Table A. Of course, all respondents denied that their conduct constituted any infringement of the Patent. Cohen said that it had ceased to sell the MS-5 heater in February 2007 and proved that fact in evidence. The main issue between Bitech and the respondents which arose in the infringement case involved the proper construction of Claim 1 of the Patent and dependent Claims 8 and 20. Initially, Bitech also contended that the respondents had infringed dependent Claims 12 and 14 of the Patent. That contention was abandoned in final address. The unjustified threats Claim will turn on the resolution of the other issues referred to in [6] and [7] above. That Claim was adjourned on 21 October 2008 because Mr Ogilvie, the principal witness to be called by Flameglow in support of that Claim, was ill and could not attend Court when the hearing of the other liability issues took place. The orders made on that occasion and the reasons for them are to be found in Bitech Engineering v Flameglow Pty Ltd [2008] FCA 1583. In addition, Flameglow did not participate to any real extent in the hearing before me. Its participation was confined to seeking to have its unjustified threats claim adjourned and to seeking to read an affidavit sworn by Mr Ogilvie, which I rejected. At that time, the provisions of the Patents Act 1952 (Cth) ( the 1952 Act ) were in force. The Patent was granted on 20 July 1992. By the operation of s 234(2) and s 234(5), the 1990 Act applied to the application. However, the Patent cannot be revoked on a ground that would not have been available against the Patent under the 1952 Act. The 1952 Act has been repealed and the legislation now in force is the Patents Act 1990 (Cth) (the 1990 Act). And where the ground of invalidity under the 1952 Act is narrower than the corresponding ground under the 1990 Act, the patentee has the benefit of the narrower ground. That follows from the decision of the Full Court in NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd [1993] FCA 404 ; (1993) 44 FCR 239 at 253-254. Section 234(2) and s 234(5) are also relevant to the cross-claimants' claims that the Patent is invalid and should be revoked. All parties referred me to the joint judgment of the Full Court in Jupiters Ltd v Neurizon Pty Ltd [2005] FCAFC 90 ; (2005) 222 ALR 155 , (2005) 65 IPR 86 , (2005) AIPC 92-098 at [67] . Reliance was also placed by some of the respondents upon the statements made at [68] in the same case. Those paragraphs are in the following terms: There is no real dispute between the parties as to the principles of construction to be applied in this matter although there is some difference in emphasis. It is one in which business rivals are striving to invent around the patented inventions of others and within narrow regulatory limits. In such a context it is, in our view, important to recognise that claims made for an invention may need to be formulated narrowly to avoid invalidity. While accepting the primacy of purposive construction in interpreting patents, such a construction may well provide little by way of illumination where, as here, the inventive context is a cramped one. It is not appropriate to take a claim carefully drawn to avoid invalidity and then permit a wider "purposive" construction of it for infringement purposes: Grove Hill Pty Ltd v Great Western Corp Pty Ltd (2002) 55 IPR 257 ; [2002] FCAFC 183 at [311] . In Ranbaxy Australia Pty Ltd v Warner-Lambert Co LLC (No 2) [2006] FCA 1787 ; (2006) 71 IPR 46 at [62] ---[64] (pp 61---62), Young J distilled from a number of authorities a set of principles which his Honour held should ordinarily guide the construction of patents. The observations which his Honour made in that case are reminiscent of the statements made by the Full Court in Jupiters [2005] FCAFC 90 ; 222 ALR 155 , 65 IPR 86 , AIPC 92-098 and need not be set out in full here. However, I am content to adopt and apply what his Honour said, which, to some extent, helpfully adds to the statements of principle made by the Full Court in Jupiters [2005] FCAFC 90 ; 222 ALR 155 , 65 IPR 86 , AIPC 92-098. But this objection is not established by reading the specification in the abstract. It must be construed in the light of the common knowledge in the art before the priority date. The general principles governing the construction of specifications are well known, and no lengthy reference to them is necessary. It is, however, fitting that we remind ourselves of the criterion to be applied when it is said that a specification is ambiguous. For, as the Chief Justice pointed out in Martin v. Scribal [(1954) [1954] HCA 48 ; 92 CLR 17 , at p 59], referring to Lord Parker's remarks in National Colour Kinematograph Co. Ltd. v. Bioschemes Ltd [(1915) 32 RPC 256] , we are not construing a written instrument operating inter partes, but a public instrument which must, if it is to be valid, define a monopoly in such a way that it is not reasonably capable of being misunderstood. Nevertheless, it is to be remembered that any purely verbal or grammatical question that can be resolved according to ordinary rules for the construction of written documents, does not, once it has been resolved, leave uncertain the ambit of the monopoly claimed (see Kauzal v. Lee [(1936) [1936] HCA 39 ; 58 CLR 670 , at p 685]). The specification must be read as a whole. But it is a whole made up of several parts, and those parts have different functions. Courts have often insisted that it is not legitimate to narrow or expand the boundaries of monopoly as fixed by the words of a claim by adding to those words glosses drawn from other parts of the specification. Similarly, if a claim be clear it is not to be made obscure simply because obscurities can be found in particular sentences in other parts of the document. This, however, is not an essential part of the body of a specification. It is not required by the Act. Its purpose may be quite well met by the claims themselves: United Shoe Machinery Corporation's Application [(1939) 57 RPC 71]. Indeed, the usual practice in England is now to use in the consistory clause the wording of the broadest of the claims: see Mr. Blanco White's book, Patents for Inventions 2nd ed. (1955) p. 34n. The present Australian Act expressly requires the claim or claims to define the invention: s. 40. In a patent for a combination, such as this is, the most important function of the body of the specification is to show what are the mechanical means which, operating together, produce the result claimed; and how they so operate. It was granted on 20 July 1992 on an application filed on 9 February 1990 as a Convention Application pursuant to Pt XVI of the 1952 Act. It claims priority from the filing of two basic applications in the United Kingdom on 10 February 1989 and on 15 September 1989 respectively. The apparatus may be part of, or embodied in a heating appliance (such as an electric or gas fire) in order to create the impression of flames due to combusting fuel. Many attempts have been made in the past to simulate combusting fuel. The prior art devices often included some means intended to represent flickering flames but they lacked realism. Moreover, when an appliance having such an effect is seen from day to day, it becomes less convincing with the passage of time. In many prior art devices, dust and dirt can also build up on various surfaces so that any initially pleasing effect is spoilt thereby detracting from any realism. At least the preferred embodiments of the invention seek to solve these problems. That clause mirrors the wording of Claim 1. The consistory clause is then followed by a detailed description of various preferred embodiments. This helps to exclude dust and dirt. Preferably, the flame effect means is sealed against the ingress of dust and dirt. Preferably, the flame effect means comprises pieces of material supported in such a way that they move in response to a current of air provided, for example, by a small fan. In a preferred embodiment of the invention, ribbons of material extend between spaced supports and the ribbons are supported in such a manner so as to promote their movement due to the current of air. The ribbons may be made of silk, satin or a similar fabric which reflects light and tends to undulate in an air stream so as to provide a constantly changing reflecting surface similar to the appearance of a flame. Such ribbons are preferably suspended or held in a substantially vertical orientation. They can be suspended or held substantially edgewise to the screen means or they can be twisted so that e.g. a lower portion of each ribbon is edgewise to the screen means whilst an upper portion is substantially parallel to the screen means. They may also be shaped to improve the realism of the effect, for example, they may be triangular, or trapezoidal, or other shapes which tend to imitate the shape of a flame and/or increase its movement e.g. with ragged or curling edges, and they may also have slits or holes to promote this effect. The ribbons can also be coated with material to improve their reflectivity. Preferably, the screen means includes one or more panels. For example, a single panel may be used which is made so that it partly transmits, partly reflects and also diffuses light. More specifically, a single panel may have a partly or lightly silvered front surface to reflect light and its rear surface treated so as to diffuse light. In any event, the partially reflective property is such as to reflect light from the simulated fuel bed so that the simulated flames appear to emanate from a position between the simulated fuel and its reflection in the screen. This considerably improves the realism of the simulated flames and is surprisingly effective. The diffusing action of the screen is such as to prevent the ribbons (or their equivalent) from being seen too clearly through the screen whilst at the same time allowing sufficient light there-through (reflected from the ribbons) to give the simulated flame effect. This kind of diffusion may be provided by a surface having closely spaced lines and such a surface may be part of a single panel which is also partly reflective. Alternatively, it can be part of a separate panel. Such a diffusing effect also tends to create a magnified image due to refraction. The lines may be spaced at about 1,000 lines to the cm. and they can be horizontal (as viewed), or cross-hatched. An alternative screen means has a clear or transparent panel (e.g. of glass) mounted closely adjacent [to] a diffusing panel (e.g. of heat resistant plastics). Suitably, the diffusing panel is matt on the side immediately opposite the transparent panel. Suitably, a diffusing panel is made of material which usually has two polished or shiny sides and one side is made matt by e.g. abrasion. A suitable panel can be made from polycarbonate (available under the Trade Mark "Lexan". ) When such a screen is used, the transparent panel acts partly as a reflector for light received either directly from the simulated fuel means, or indirectly from the latter means after at least one reflection from the transparent front panel which is preferably partly silvered to promote such reflection. The transparent panel directly transmits the light received from the flame effect means and the diffusing action softens the edges of the images of the ribbons. In a preferred embodiment of the invention, the flame effect means is positioned closely adjacent [to], but not touching the screen means. More generally, the flame effect means is preferably positioned at a distance from the screen means (on one side) which does not exceed the amount by which the simulated fuel bed extends away from the screen means (on the other side). Where a front panel is provided for enclosing a casing containing the apparatus, the front panel may be tinted so that the means for simulating flames and combusting fuel are not visible when the light source is extinguished. However, a clear sheet may be used where this effect is not required. In either case, the front panel may be partly or lightly silvered so that it is both reflective and transparent whereby the simulated fuel bed appears to extend more deeply into the back of the fire (due to multiple front-to-back reflections between confronting surfaces of the screen means and the front panel) and the simulated flames appear to emanate from different regions in the extended fuel bed. The screen means is referred to in this part of the Patent between line 20 on p 2 and line 22 on p 3. The particular embodiments described in that part of the Patent in which the preferred embodiments are described incorporate a flame effect means which comprises a series of ribbons suspended vertically in the apparatus. These ribbons ripple or undulate in a current of air which is provided by a fan unit located within the apparatus. They also reflect light from a light source so as to provide the desired flame effect. Bitech submitted, and I accept, that the scope of the claims made in a patent may, and almost always does, extend beyond a description of the preferred embodiment. Rather, the question is whether there is a real and reasonably clear disclosure in the body of the specification of what is then claimed, so that the alleged invention as claimed is broadly, that is to say in a general sense, described in the body of the specification. After the description of the preferred embodiments set out in the Patent, there is a description of an embodiment of the invention by reference to accompanying schematic drawings. This description is to be found between line 5 on p 4 and line 20 on p 9 of the Patent. Eight drawings are depicted in the schematic drawings forming part of the Patent. These are found on pp 10---12 of the Patent. There are two independent Claims (Claims 1 and 15). As is usually the case, each of the independent Claims is followed by several dependent Claims which become progressively narrower as additional features or limitations are added to the invention. Claims 1---14 and 20 are in the following terms: Apparatus for simulating flames, the apparatus comprising a source of light, simulated flame effect means for reflecting said light to simulate flames, simulated fuel means to simulate a bed of combusting fuel, and screen means on which to view an image of the simulated flames, said screen means being positioned between said flame effect means and said simulated fuel means, said screen means being capable of diffusely transmitting light reflected by said flame effect means and also being capable of reflecting light from said simulated fuel means so that the simulated flames appear to emanate between the simulated fuel means and an image of the latter means reflected in said screen means. Apparatus according to Claim 1 wherein said flame effect means comprises pieces of material supported so that they are capable of movement, and means for causing said movement. Apparatus according to Claim 2 wherein said pieces of material are ribbons extending between spaced supports. Apparatus according to Claim 3 in which each of said ribbons is twisted. Apparatus according to Claim 3 or 4 wherein the means for causing said movement generates a current of air. Apparatus according to Claim 5 wherein said means for causing movement includes an electric fan and a cylinder mounted for rotation by the air stream generated by the fan the cylinder being provided with air deflection means for imparting a more random movement to said ribbons to improve the simulated flame effect. Apparatus according to Claim 3, 4, 5 or 6 wherein said ribbons are shaped in such a way as to imitate the shape of a flame and/or to increase their movement. Apparatus according to any one of the preceding Claims wherein said screen means is a translucent or transparent panel or panels having a partially reflective surface and a diffusing surface. Apparatus according to any one of the preceding Claims in which said screen means is a single panel having a partially reflective front surface and a rear surface on which are provided a multiplicity of closely spaced lines. Apparatus according to Claim 9 wherein said lines are horizontal, as viewed from the front of the apparatus, inclined, as viewed from the front of the apparatus, or cross-hatched. Apparatus according to any one of Claims 1-7 in which said screen means comprises a transparent panel situated closely adjacent [to] a diffusing panel. Apparatus according to any one of the preceding Claims mounted in or forming part of a casing having a transparent front panel through which the simulated fuel and the screen means are visible. Apparatus according to Claim 12 wherein said transparent front panel is tinted so that the simulated fuel and the screen means are substantially obscured when the source of light is extinguished. Apparatus according to Claim 12 or 13 wherein the front panel is both transparent and reflective whereby multiple front-to-back images of the simulated fuel means are provided and the simulated flames appear to emanate from different regions in an extended bed of fuel. Claims 8, 12, 14 and 20 are dependent on Claim 1 and provide further definition in respect of particular features. I have reproduced the full text of those Claims at [32] above. Claim 1 is the critical Claim. These are the last six lines of Claim 1. The integer of the apparatus defined as the simulated flame effect means for reflecting said light to simulate flames is met when the light from the light source is reflected by the simulated flame effect means in order to simulate flames in a manner which can be observed upon the screen means ( the viewing screen ) which is referred to later in Claim 1. The simulated fuel means refers to a bed of simulated combusting fuel (such as imitation wood or coal) intended to mimic the combustion of that fuel, so as to create an image of combusting fuel on the viewing screen which also can be observed by a person sitting or standing in front of the device in which the apparatus is installed. The viewing screen must be positioned between the device which creates the flame effect and the simulated fuel means. The viewing screen must be capable of diffusely transmitting light reflected by the flame effect means and must also be capable of reflecting light from the simulated fuel means so that the simulated flames which are observable on the viewing screen appear to emanate from an area located between the simulated fuel means and an image of that simulated fuel means which is reflected on the viewing screen. As I read Claim 1, the source of light contemplated by that Claim must be so located within the chamber of the heater or other device within which the apparatus is constructed so as to enable light reflected by the flame effect means contemplated by Claim 1 to reach the viewing screen which in turn must be capable of diffusely transmitting that reflected light so as to create an image of flames on the screen appearing to emanate from the area which I have described in [37] above. The idea captured in Claim 1 is that, from the perspective of a viewer sitting or standing in front of the heater or other device in which the apparatus is installed, there appears on a viewing screen within the device simulated flames the creation of which begins with a light source and the development of which is attributable to some flame effect means (not described in detail in Claim 1) which reflects light from the light source to the viewing screen through which that reflected light is diffusely transmitted in order to create flame images on the screen. Those flame images must appear to emanate from an area located between the simulated fuel means and the viewing screen. The essence of the way in which light from the light source is ultimately used to create the images of flames on the screen is reflection. Claim 1 does not contemplate, in my opinion, that the flame effect means will substantially rely upon or involve to any significant degree a process whereby light is directly emitted from that means to the viewing screen so that the images viewed on the screen are substantially or predominantly the result of the transmission of light directly emitted from the flame effect means. Consideration of the language employed in Claim 8 leads to the same conclusion. There is just no mention of directly emitted light in either Claim 1 or in Claim 8. Each of the Claims proceeds upon the basis that the means by which the light from the light source will be transferred to the screen in a way which creates flame images will be by reflection. The language of the description, the preferred embodiments and the other embodiments in the specification tends to support this construction of the Patent. Further, that language does not suggest that the flame effect means includes the inner surface of the back panel of a consumer product in which the apparatus defined by the Patent might be installed---for example, the inner surface of the back panel of an electric domestic room heater. Nor does that language suggest that the flame effect means includes other surfaces of the outer casing of such a product. For example, the Patent goes into some detail in order to describe the way in which the ribbons referred to in the preferred embodiments section of the Patent might be set up in order to create the necessary flame effect. The whole purpose of deploying ribbons in the way described in that part of the Patent is to transmit reflected light to the viewing screen. In addition, the other embodiments which are the subject of the text and the schematic drawings forming part of the Patent all proceed upon the basis that the process by which light from the light source is transported via the flame effect means to the viewing screen has to be by way of reflection. An apparatus that relies to a substantial degree upon the transmission of directly emitted light from or via the flame effect means to the viewing screen in order to simulate flames on that screen is outside the monopoly claimed by Bitech in the Patent. Counsel for Hotpoint (Aust) Pty Ltd ( Hotpoint ), the respondent in proceeding NSD 2056 of 2007, made an additional submission as to the proper construction of Claim 1. This submission was adopted by Counsel for Garth Living, Bunnings and Cohen. She submitted that the type of reflected light called for by Claim 1 is light produced by specular reflection, and by specular reflection alone. She relied upon a number of indications in the Patent in support of that submission, in particular, the language which emphasised that all reflective surfaces should be kept clean and free of dust. Claim 1 does not make a distinction, either expressly or implicitly, between specular and diffuse reflection when it speaks of reflection. The language of Claim 1, understood in the context of the balance of the Patent and looked at from the point of view of a skilled reader familiar with optics, having regard to that reader's general knowledge and to what is disclosed in the body of the specification, does not distinguish between types of reflection. The Patent contemplates that the reflected light, which is integral to the invention, might be specular, diffuse or a combination of the two. I do not accept the submission made by Counsel for Hotpoint that the reflected light called for by Claim 1 must be specular. Bitech called Dr Ian Cowling, who is an Associate Professor in the School of Physical and Chemical Sciences of the Queensland University of Technology ( QUT ). His field of expertise is optics, which is the study of the behaviour and properties of light. He has been involved in that field for more than 25 years. The respondents called Professor Keith Nugent, who is the Laureate Professor of Physics and Federation Fellow, Executive Research Director, ARC Centre of Excellence for Coherent X-Ray Science in the School of Physics at the University of Melbourne. Professor Nugent said that he was expert in the field of optical methods and technologies. The respondents also called Professor Tanya Monro, who is the Professor of Physics with the Chair of Photonics and a Director of DSTO Centre of Expertise in Photonics, School of Chemistry and Physics at the University of Adelaide. Each expert was amply qualified in the relevant field of physics, although none of the experts had ever been involved in the design or manufacture of heaters or devices endeavouring to simulate flame effects. In his first affidavit, Dr Cowling gave a succinct but very helpful synopsis of the behaviour and properties of light insofar as those matters are relevant to the present proceedings. At pars 23---28 of that affidavit, Dr Cowling said: Light is a form of energy, or radiation, that is generally accepted as having the properties of waves. A beam of light is actually a number of different waves travelling through the air (or other medium) together. From a scientific perspective, light behaves in a predictable manner. Energy that has the properties of waves, such as light, will be partially transmitted and partially reflected at the boundary or surface between any two media. Generally speaking, when a beam of light strikes the surface of a new medium (or substance), two things happen. Some of the energy will be reflected off the surface of the new medium in the form of reflected light, and some energy will be transmitted through or absorbed into the new medium. In effect, what this means is that all surfaces reflect light to some degree. Conversely, no surface reflects 100% of light, because some of the energy is always absorbed. At its simplest, reflection of light is the change in the direction of light waves when they hit a surface and bounce off it, retaining their energy. Because not all of the light is reflected, the intensity of the reflected light decreases. This will be the case if that light is again reflected off another surface, with the intensity of the light decreasing with each incident of reflection. The amount of reflection that there is occurring, and consequently the decrease in intensity of the reflected light, depends on the nature of the surface that the light is hitting. The waves of light remain concentrated during specular reflection, and are reflected uniformly off the surface in a particular direction rather than being scattered in different directions. This creates an image behind the surface that can be detected by the eye. The most obvious example of this is an image in a mirror. 26.2 Diffuse reflection occurs when a wave of light is reflected off rough surfaces (such as wood, walls or fabric), and scatters in different directions. While this may (depending on the degree of scattering that takes place) be sufficient to produce an outline of an image on the surface, it is not the clear mirror image that can be seen in the case of specular reflection. Through my experience in conducting such measurements, I am generally aware of the reflective qualities of different kinds of materials. By way of example, from my own knowledge and experience, I am aware that glass typically has a reflectivity of about 8% (that is, it reflects about 4% as it enters and another 4% as it emerges from the glass, with the remaining light being transmitted through or absorbed into the glass). When light encounters an obstacle in its path which is not transparent (so that it does not transmit light, as for example glass does), the obstacle, to a significant degree, tends to block the light waves. Some of the light waves will be reflected off the obstacle and some will be absorbed by the obstacle. In addition, however, some light will diffract (bend) around the edges of the obstacle, which is why shadows can have what appear to be fuzzy edges. Diffraction is the change of direction of waves as they pass around an obstacle or barrier. The matters set out in the paragraphs of Dr Cowling's first affidavit which I have extracted at [49] above were not controversial. Professor Monro agreed with Dr Cowling's exposition. She also agreed with Dr Cowling's opinion that those matters were part of the common knowledge of persons with an undergraduate qualification in the field of optics in Australia prior to 10 February 1989 and as at late 2008. In his first affidavit, Dr Cowling went on to set out his understanding of the essential features of the invention the subject of the Patent in order to provide an appropriate setting for evidence which he gave later in the same affidavit concerning particular features of the respondents' heaters. Dr Cowling then analysed particular features of a number of those heaters and expressed views as to whether or not those heaters infringed the Patent. In his first affidavit, Dr Cowling dealt with the following electric flame effect heaters which came to be known by reference to their model numbers, namely, BH1, BH2, BH4, BH5, BH6, BH7, BH9, BH10, BH12, MS-5 and FG150. Dr Cowling testified that he had personally inspected physical samples of each of those heaters with the exception of that described as BH5. He had only looked at photographs of that heater. BH6, Fineline 4440175 (referred to in paragraph 57.5 above), and Garth Living Electric Flame Effect Heater Reference No. BH12, Fineline 4440191 (referred to in paragraph 57.9 above), the cylinder has both a set of zig zag shaped apertures (approximately 1.5mm x 17mm), and an alternate row of approximately 6 smaller flame shaped apertures (approximately 8mm x 5 mm). 60.3 with the exception of Garth Living Electric Flame Effect Heater Reference No. The flame appears to emanate from between the simulated fuel and the reflection of the simulated fuel bed that appears at the bottom of the screen. In all but one of those heaters, that light globe is situated within a rotating cylinder made of plastic and finished with a matt black coating. The Flameglow FG150-2 model heater has a shiny stainless steel cylinder, not a plastic matt black coated cylinder. In all models, the rotating cylinder is located behind the viewing screen. That screen is used to transmit light and to project the flame image to the observer looking at the heater from the front. The light from the light globe is initially radiated in a number of directions within the cylinder. Dr Cowling said that some of that light passes out through some of the apertures in the cylinder and into the rear chamber of the appliance. In his view, the simulated flames in the respondents' heaters are produced by the combined operation of the light globe, the rotating cylinder with apertures, a metal plate with a flame shaped cut out, the interior surfaces of the rear chamber and the viewing screen on which the image of the flames is seen. In all but one of the respondents' heaters (heater BH12), there is a flame shaped cut out metal plate located behind the viewing screen but above the rotating cylinder. Dr Cowling accepted that some of the light which hits the rear of the screen to produce an image of simulated flames on the screen is directly emitted from the light source, in the sense that it passes from the filament of the light globe, out through some of the apertures in the rotating cylinder (those located towards the middle of the length of the cylinder), through the flame shaped cut out plate and onto the screen without hitting any surface in between. That light is not reflected off any surface within the chamber or compartment which houses the apparatus. Dr Cowling said that the light which is directly emitted from the light source onto the screen produces relatively bright images on the screen which reflect the shape of the apertures in the rotating cylinder. He said that these images appear to be moving because of the rotation of the cylinder. This reflected light is of lower intensity and produces weaker and more diffuse images on the screen which are dispersed around the brighter images produced by the directly emitted light, adding to the realism of the simulated flames. Dr Cowling contended that a substantial part of the flame effect that can be observed from the front of the heater by someone looking at the heater is contributed to by reflected light. In their affidavit materials, the experts called by the respondents asserted that the contribution to the flame effect seen on the screen made by reflected light is almost zero or is, at most, negligible, and that reflected light only creates a static background glow which, although part of the image, is not part of the flame effect itself because it does not have the necessary shape nor does it give the necessary impression of movement. The light being emitted from the light globe that hits the rotating cylinder itself will be both partially reflected from, and partially absorbed into, the cylinder. 66.2 Some of the light radiating from the light globe will be emitted directly out through the apertures in the rotating cylinder. 66.3 Some of the light that hits the internal surface of the rotating cylinder will reflect off that surface inside the cylinder. A percentage of this reflected light will ultimately pass out of the apertures in the cylinder. 66.4 Once light is emitted through the apertures, some will pass directly through the flame shaped cut out in the metal plate and hit the back of the screen. Some light will hit the interior surfaces of the rear chamber or the metal plate itself. Some of this light will be reflected off those surfaces, and may ultimately pass through the flame shaped cut out and hit the back of the screen, while some light will be absorbed. 66.5 Some of the light that passes through the apertures and the flame shaped cut out in the metal plate will be diffracted around the edges of the apertures and the cut out, although I would expect such diffraction to produce only a minimal effect. 66.6 As identified above, the light that is transmitted through the screen will be diffused due to the partially diffusing surface. The rotating cylinder creates a varying obstacle for the light radiating from the light globe. The light that is ultimately viewed on the screen is made more random, and therefore realistic, by the shaped apertures in the metal cylinder, and the flame shaped cut out in the metal plate. These features work together to direct light from the light source to the back of the screen in a manner which, in my opinion, simulates a more realistic flame effect. I have made some detailed observations in relation to my inspection of the Flameglow FGI50 Floor Standing Model with Glass Door. I noted that, as the cylinder rotates, there is at any one time, only one set of apertures along the cylinder which faces in the direction of the screen. Of this one set of apertures, approximately half of these apertures (being the centre three or four) allow light to pass directly through the flame shaped cut out of the metal plate and onto the screen. The other half of the apertures facing the screen, and the apertures facing in different directions, allow light out of the cylinder into the rear chamber of the apparatus, where it is reflected off surfaces. When considering the total area of the screen on which one views the simulated flame effect in the Electric Flame Effect Heaters, I estimate that approximately equal areas of the screen are illuminated by directly emitted light (passing through the centre three or four apertures facing the screen) and by less intense reflected light. In this regard, my observations in relation to the Flameglow FG150 Floor Standing Model with Glass Door indicate that approximately 30% to 40% of the area of the screen in the line of one set of apertures is illuminated by light emitted from the centre three or four apertures facing the screen --- that is, directly emitted light. A further 40% of that area of the screen in that heater is illuminated by less intense reflected light, and the remaining part of that area of the screen (20% to 30%) is not illuminated at all. As mentioned in [56] above, one of the models of the respondents' heaters, the Flameglow model FG150-2 tendered in evidence, has a silver or polished stainless steel rotating cylinder as part of its mechanism instead of a cylinder with the matt black finish used in the other models inspected by Dr Cowling. Dr Cowling said that the apparatus in that particular model of heater generates a brighter simulated flame effect image and illuminates a greater area of the screen with reflected light than does the apparatus in those models which have matt black finished rotating cylinders. This is because the shiny stainless steel surface of that particular rotating cylinder has a much higher reflectivity than the matt black surface of the cylinders in the other models. While the majority of the light reaching the screen is directly emitted light that is more intense than the reflected light, the area of the screen which is illuminated by each is, in my opinion, approximately equal (as explained in paragraph 69 above). The directly emitted light, being more intense than the reflected light, produces the brightest images on the screen. However, reflected light also makes a significant contribution to the flame effect. The light that is periodically emitted through the shaped apertures, in combination with the contrasting glow of the less intense, reflected light, achieves the object of simulating flames arising from a bed of combusting fuel. Without the reflected light, the screen would only be illuminated with intermittent flashes of directly emitted light. In my opinion, reflected light makes a significant contribution to achieving the objective of a more realistic flame effect. In his opinion, therefore, those devices employed the same principle as is embodied in the Patent. In affidavits subsequently sworn by Dr Cowling, he related the views which he had expressed in his first affidavit to two further models of electric flame effect heaters namely, the Flameglow model FG100 and the Flameglow model FG400. He also updated his views about the heater BH5 based upon an inspection of a sample of that heater and not merely upon the photographs of the model which he had previously used in order to found his opinions. In effect, Dr Cowling said that the observations which he had made in his first affidavit applied equally to those additional models. Professor Nugent provided one affidavit which was mostly directed to the Cross-Claim for revocation of the Patent brought by Garth Living. In two additional affidavits, he also expressed some opinions directed to the issue of infringement. In his affidavits addressing issues related to infringement, Professor Nugent said that the simulated flame effect is produced in the respondents' heaters by a combination of the operation of the rotating cylinder, the viewing screen and the flame shaped metal plate. These items allow light from the light source in the globe to form patterns of light on the screen that mimic the form of natural flames. In his view, although some light will inevitably be reflected from the surface of the interior of the rotating cylinder, such reflection will be a diffuse reflection and will detract from the flame effect by contributing a featureless bright background and not contribute much, if at all, to the flame effect depicted on the screen. The interior of Rotating Sleeve B has been treated so as to effectively eliminate reflected light. Professor Nugent went on to conclude that specular reflection from the interior of the rotating cylinder would be negligibly small. Professor Nugent conducted an experiment in order to assess the contribution that diffuse reflection made to the flame effect in the respondents' heaters. In light of his experiment, he concluded that reflections from the interior of the rotating sleeve do not contribute to the flame effect in the respondents' heaters. Dr Cowling amplified his assertion that other surfaces within the compartment of the device, including the inner surface of the rear panel, provide reflective surfaces for the purposes of conveying light from the light source (the filament in the globe) through the rotating cylinder and ultimately to the screen. Dr Cowling said that he disagreed with Professor Nugent that reflection has been effectively eliminated in the respondents' heaters by means of the matt black finish on the rotating cylinder. Further, Dr Cowling disagreed with Professor Nugent that a diffuse reflection will detract from and not contribute to the flame effect depicted on the screen. Dr Cowling conducted tests which depended upon a visual and measurement assessment of three of the respondents' heaters in order to ascertain the contribution made by the reflected light to the flame effect depicted on the screen. As a result of these tests, Dr Cowling reaffirmed his view that reflected light does contribute to the observable illumination of a significant proportion of the screen during operation of the respondents' heaters. He estimated that proportion to be of the order of 40% of the screen area. Professor Nugent subsequently swore his third affidavit. In part, these conclusions were based upon certain experiments conducted by Professor Nugent. In her first affidavit, Professor Monro concentrated on the Flameglow FG150 model with the matt black finished rotating cylinder. In particular, I disagree with Dr Cowling's interpretation of the amount of contribution that reflected light makes to the overall image of the simulated flames. My direct observations of the FG150 Heater were that the patterns visible from the front are not due to reflections either within the cylinder or within the chamber behind the screen, and are instead predominantly due to the direct transmission of light through the slits and then the metal plate. The contribution of the reflected light is minimal, and while not zero, it makes little contribution to the overall patterns observed from the front of the heater while the apparatus is operational. She accepted that some light reaching the screen is light which is reflected internally but contended that very little of the light reaching the screen is in that category. She said that the limited reflections that occur from matt black surfaces are predominantly diffuse light and that diffuse light emerging from the apertures cannot produce a clear image of the apertures on the screen. She said that that type of light emerging from the apertures acts only to increase slightly the overall illumination on the screen. Dr Cowling answered Professor Monro's first affidavit in his fifth affidavit (one of the affidavits sworn by him on 3 March 2008). He observed that the dominant type of reflection which was observable on the screen of the respondents' heaters is not specular reflection, but is diffuse reflection. He repeated his contention that all surfaces, including matt black finished surfaces, reflect light to some degree. He took issue with Professor Monro's assertion that the appearance of the flames to the eye of an observer placed in front of the unit is qualitatively similar, regardless of whether the back panel is fixed to the unit or not. Whether the reflected light dispersed around the brighter images gives a more realistic flame effect is a matter of opinion for the viewer. In my opinion, as stated in my First Affidavit, reflected light does make a significant contribution to achieving the objective of a more realistic flame effect. In a separate affidavit sworn on 3 March 2008, Dr Cowling said that his essential views as to the contribution which reflected light makes to the flame effect images on the viewing screen in the respondents' heaters applied equally to the one model of Hotpoint heater in issue in the proceedings, namely, the large heater tendered in evidence. The basic workings of the Hotpoint heater are the same as those of the other heaters which are alleged to have infringed the Patent. However, there are some differences which, in light of the decision to which I have come on infringement, need not be traversed. He thought that approximately 35% of the screen along the line of the apertures is illuminated by directly emitted light. Dr Cowling was cross-examined at some length by Counsel for Bunnings, Garth Living and Cohen and briefly by Counsel for Hotpoint. The cross-examination of Dr Cowling took place after a demonstration had been conducted in Court during which each of the experts had an opportunity to make observations, ask questions and give testimony. Each of them was sworn for the purposes of providing evidence during that demonstration. Throughout his cross-examination, Dr Cowling adhered to his views that reflected light reaches the viewing screen and contributes to the image of flame depicted on the screen. He said that the reflected light that reaches the screen is reflected light that has been diffusely reflected from behind the screen. He repeatedly adhered to his view that all surfaces both reflect and absorb light and that the extent to which a particular surface did so was always a matter of degree. In cross-examination, Dr Cowling agreed that the plate with the flame shapes cut into it had no role to play in reflection or in creating the time-varying aspect of the flame effect. The plate was simply included in all but one of the respondents' heaters in order to limit the height of the flames to the observer looking at the heater from the front in order to make the flame effect more realistic. He said that all reflective surfaces within the device contribute to the time varying effect of the flame effect shown on the screen. He agreed that there is a significant contribution from directly emitted light to the production of the flame effect in the respondents' heaters. This, of course, was not inconsistent with the evidence which he had provided to the Court in his affidavits. It seemed to me that all of the experts were endeavouring to address the question of whether or not there is a substantial amount of reflected light reaching the viewing screen in the respondents' heaters and being transmitted through that screen and, if so, whether it is contributing substantially to the flame effect shown or depicted on the viewing screen to the observer looking at the device from the front. Various tests were undertaken by the experts in an endeavour to separate out the relative contributions being made to the flame effect depicted on the viewing screen by directly emitted light from the light source through the apertures in the rotating cylinder and by reflected light originating at the same light source but being reflected from the inner surface of the rotating cylinder and other surfaces inside the chamber in which the device is housed. Ultimately, I have benefitted most from the demonstrations which took place on the first and second days of the hearing. That is not to say that the evidence of the experts contained in their affidavits and oral evidence was not significant. That evidence served to crystallise the main issue between Dr Cowling, on the one hand, and Professors Nugent and Monro, on the other hand viz did reflected light contribute substantially to the flame effect depicted on the screen in the respondents' heaters and, if so, in what way and to what extent? That evidence also provided a descriptive analysis and context in which I could assess that contribution for myself during the demonstrations. This demonstration did not incorporate any commentary or evidence from the experts. Samples of three of the respondents' heaters were placed side-by-side in the body of the Court. These were samples of the BH1, MS-5 and FG150-2 heaters. Various operations were performed with each of those heaters. Initially, the MS-5 heater was operated normally, just as it would be by the ultimate consumer in his or her sitting room. The back panel was removed from the BH1 heater and then it was operated. The MS-5 heater continued to operate whilst the BH1 heater was operated. The FG150-2 heater was also turned on. Observations were then made. A matt black finished metal baffle (Exhibit A) was then inserted into sample heater BH1 adjacent to the light globe. It was designed to prevent light from the light source passing through the middle apertures of the rotating cylinder thus preventing any directly emitted light from reaching the viewing screen. The back of the heater was then reaffixed to the body of the heater. On the assumption that the baffle operated to do that which it was designed to do, it was then possible to observe whether reflected light was making any contribution to the flame effect and, if so, in what way and to what extent. The bright light in the flame effect in the baffled unit was effectively removed by the insertion of the baffle. And I think the only other observation that I want to record is that to my eye, the unit that does not have the baffle's central flames in the centre of the unit seem a little higher to me. And that depending upon whether one is perhaps sitting down or standing, looking at the baffled unit, one gets a slightly different level of intensity of the flame, that is to say, standing up, it looks a little softer than sitting down. They're the observations that I am seeing and would wish to have recorded --- anybody disagree with that? A similar baffle (Exhibit B) was then inserted into the Flameglow heater FG150-2. But the effect ... putting the baffle in is to diminish the appearance of the flame both in intensity and colour as occurred with the insertion of the baffle in the earlier device. I thought that that was a reasonable observation. On the second day of the hearing, a further demonstration took place. This demonstration was enhanced by the direct participation of all of the expert witnesses. During the demonstration, all of the witnesses made observations which I have found to be most helpful. The format of this demonstration followed the format of the earlier demonstration. The baffle used on this occasion (Exhibit L) was longer than the baffle that had been used in the first demonstration. All of the experts agreed that this longer baffle would prevent all of the directly emitted light reaching the viewing screen. The time variation seemed to be in sequence with the rotation of the cylinder. Some of the images had a discernable flame shape and others were more blurred but these latter images nonetheless gave the impression of movement of flames as the cylinder rotated. It contributed to the overall flame effect. Dr Cowling was of the opinion that the images referred to in subpar (a) of [88] above were reflected off the rear of the chamber (meaning the inner surface of the outer casing of the heater). Professor Nugent thought that those images were most likely the consequence of reflections within the matt black rotating cylinder. He said that it was impossible to eliminate entirely reflections from that source. Professor Monro agreed with both Dr Cowling and Professor Nugent. She agreed that there were time varying light distributions observable on the viewing screen but wanted to see further demonstrations before she would accept that they were significant. When the MS-5 heater was operated without the baffle, Professors Nugent and Monro both expressed the view that the contribution to the flame effect made by reflected light was not significant. They said that the structure of the images on the screen was such that there was no additional flame effect created by reflected light. Rather, the flame effect created by reflected light was contained within the envelope of the image observable on the screen which was created by the directly emitted light. Dr Cowling reiterated that, in his opinion, images created by reflected light covered most of the width of the viewing screen whereas the direct light images only occupied specific parts of the screen. The observations which I have recorded in [90] above were the only points of difference amongst the experts as to what could be observed during the second demonstration. My own observations accorded more with those of Dr Cowling. I thought that the images created from reflected light did contribute to the observable flame effect to some extent. Dr Cowling also includes within that means the inner surface of the rear panel of the outer casing of the heater and perhaps other similar surfaces above and below the rotating cylinder. All experts agreed that some of the flame shaped images observable on the viewing screen from the front of the heater were transmitted to and created on that screen by reflected light. Dr Cowling measured the respective contributions made by directly emitted light and reflected light to the images observable on the viewing screen and concluded that each contributes about half of the observable effect. He accepted that, in the sense described in subpars (c), (d) and (e) of [88] above, the images created by the directly emitted light were the dominant observable images. Professors Nugent and Monro focussed more on the shape and intensity of the contributions. Professor Nugent concluded that the contribution to the flame effect by reflected light was negligible. Professor Monro expressed similar views to those of Professor Nugent but seemed to accept that the contribution from reflected light was greater than Professor Nugent was prepared to accept. The observations made and recorded by the experts and by me during the demonstrations supported Dr Cowling's opinions and conclusions. Because there is a diffuse reflection I would have expected the apertures to be somewhat more---the image to be somewhat more diffuse. It seemed to me that Professor Nugent was unable to explain the presence on the viewing screen of flame shaped images transmitted there by diffusely reflected light. His view was that diffusely reflected light could not produce such images. Professor Monro was of the same view but was prepared to concede that the flame shaped cut out metal plate may have contributed to the observable flame shaped images on the screen. However, she said that that plate was not part of the simulated flame effect means. I find that diffusely reflected light emanating from the filament in the globe inside the rotating cylinder reaches the viewing screen, is transmitted through the viewing screen and results in the formation of flame shapes on the viewing screen and other images which are visible to the users of the respondents' heaters when those heaters are put to their ordinary use. That diffusely reflected light may be reflected off the inner surfaces of the rotating cylinder and other inner surfaces of the heater (eg the back panel). As Professor Nugent ultimately agreed, there are both flame shaped and non flame shaped images attributable to reflected light visible on the screen. About half the viewing screen is occupied by images sourced from reflected light, although they occupy the full width of the viewing screen. The images created by directly emitted light are found in the centre area of the viewing screen, are brighter and fuller than other images and dominate the flame effect. The respondents contended, however, that the flame effect means in the respondents' heaters comprised only the rotating cylinder and the flame shaped cut out plate (putting the light source to one side) and that that means did not fall within the flame effect means envisaged by the Patent because very little (if any) of the light which is transmitted to the viewing screen by those devices is reflected light. Rather, most of the light travelling to the viewing screen from those devices is light which is directly emitted from the light source via the cylinder and the flame shaped cut out plate. I have found that, in the respondents' heaters, a substantial and predominant contributor to the light which is transmitted through the viewing screen and is thus the source of the flame shapes observable on that screen is light which is directly emitted (and not reflected) from the light source. On the construction of the Patent which I have found, that finding means that the flame effect means in the respondents' heaters falls outside the scope of the Patent. Therefore, the respondents have not infringed the Patent and Bitech's claim must be dismissed. It also denied that it directed, procured, aided or abetted such acts by others. It also denied Bitech's allegation that it was involved in a common design with Bunnings and Cohen involving the importation, sale and distribution in Australia of those heaters. This Defence was filed at a time when the evidence was closed. In that same letter, Bitech's solicitors threatened proceedings and sought undertakings. By letter dated 25 July 2006, Garth Living's solicitors responded to the letter of demand. The response was detailed and was stated to have been made on the instructions of Garth Living. The response took up issues in relation to infringement but did not contain any denial that Garth Living was relevantly involved in the importation, sale and distribution of the allegedly infringing heaters. As you will no doubt appreciate, such threats may lead to my client suffering significant loss and damage. It is apparent from the findings which I have made in [105] above that there is a good deal of evidence before the Court supporting the proposition that Garth Living was directly involved in the importation, sale and distribution in Australia of all of the allegedly infringing electric flame heaters. Its failure to deny such involvement is significant. I am comfortably satisfied that Bitech has made good its pleaded allegations that Garth Living was directly involved in those activities. I am reinforced in this conclusion by the circumstance that Garth Living made no attempt at all to challenge the import of that evidence or to explain any of that evidence. Given the findings which I have made in [105] above, it is not necessary for me to consider whether Garth Living was involved in the alleged common design. Had it been necessary to do so, I would have found that it was involved in the allegations of common design pleaded against it by Bitech. Given the views to which I have come as to the proper construction of the Patent and as to the question of whether or not the respondents' heaters infringe the Patent, it is strictly not necessary for me to make findings in respect of Garth Living's conduct. Bitech has been put to some additional time, trouble and expense by reason of Garth Living's denial of its involvement in the importation, sale and distribution in Australia of the respondents' heaters. Further, Bitech was driven to seeking to amend its pleading to allege common design because of Garth Living's denial of those matters. These circumstances may be relevant to the way in which I should exercise my discretion in respect of the costs of the proceedings. The effect of s 234(2) and s 234(5) is that the grounds of invalidity and revocation available under the 1990 Act apply, with the qualification that the Patent cannot be revoked on a ground that would not also have been available under the 1952 Act. As was submitted by Bitech, this standard does not differ materially from the standard which was applicable under s 100(1)(g) of the 1952 Act, save that, in the case of the latter provision, the applicant for revocation was required to establish publication of the relevant prior art in Australia . In the present case, there is no dispute that each of the four items of the prior art referred to and relied upon by Garth Living, Flameglow and Hotpoint in support of their claims for revocation was published in Australia before the priority date of the relevant Claims made in the Patent. It was submitted on behalf of Garth Living and Hotpoint that the Patent does not contain a patentable invention and is therefore liable to be revoked pursuant to the provisions of s 138(3)(b) of the 1990 Act. Those parties pressed their claims for revocation only in respect of Claims 1, 8, 12, 14 and 20 of the Patent (and no other Claims). 654 , at p. 681 [1865] EngR 708 ; [11 E.R. 1488 , at pp. 1498-1499]). Here no prior object and no object according to a prior document involved or incorporated all the integers of any one of the claims and could therefore possibly constitute an infringement. Accordingly I am satisfied that the objection of want of novelty has not been made out. Therefore, this test would directly apply to the alleged anticipation constituted in the present case by the HECLA heater. A direction, recommendation or suggestion may often, of course, be implicit in what is described and commonly the only question may be whether the publication describes with sufficient clarity the claimed invention or, in the case of a combination, each integer of it. In that sense, it will have been anticipated. It is a question of whether or not the prior inventor's publication would render the later effort an infringement of the patentee's claim, on the assumption that the patentee's patent is valid. To anticipate the patentee's claim the prior publication must contain clear and unmistakable directions to do what the patentee claims to have invented: Flour Oxidising Co Ltd v Carr & Co Ltd ((1908) 25 RPC 428 at 457, line 34, approved in BTH Co Ltd v Metropolitan Vickers Electrical Co Ltd (1928) 45 RPC 1 at 24, line 1). A signpost, however clear, upon the road to the patentee's invention will not suffice. The prior inventor must be clearly shown to have planted his flag at the precise destination before the patentee. In assessing novelty, each alleged anticipation must be considered separately. Each alleged anticipation must disclose each and every one of the essential integers of a claim or claims under consideration. The case advanced by Garth Living and Hotpoint in support of the proposition that the relevant claims in the Patent lacked novelty was rather loosely put in the sense that, as I understood it, it was impermissibly founded upon selectively aggregating individual items of information in order to present a mosaic or an entire picture favourable to those parties' case for revocation. This type of approach was rejected by the High Court in Minnesota Mining and Manufacturing Company v Beiersdorf (Australia) Ltd [1980] HCA 9 ; (1980) 144 CLR 253 at 292---293. Neither the HECLA heater nor the apparatus described in any of the three prior patent specifications incorporates the feature of "screen means" which is capable of both diffusely transmitting light from a flame effect means and reflecting light from a fuel means so that simulated flames appear to emanate between the fuel means and an image of the latter means reflected on the screen means. This being an essential integer of Claim 1, upon which the other relevant claims are dependant, it is not necessary to go further. The HECLA heater contains a very primitive attempt to simulate flames and fuel and plainly goes nowhere near the essential integers of the Patent referred to in Bitech's submission. The prior patent specifications do not provide clear and unmistakeable directions to construct an apparatus which incorporates the feature of the screen means which was the subject of Bitech's submission extracted at [126] above. Garth Living and Hotpoint were unable to present a coherent and persuasive submission which identified such clear and unmistakable directions. The evidence of Professors Nugent and Monro did not assist in that endeavour. Both Professors Nugent and Monro accepted that there was a step required to be taken from the prior patent specifications to the Claims made in the Patent but each of them attempted to assert that the step did not involve novelty. I do not accept these opinions. Garth Living and Hotpoint bore the onus of establishing lack of novelty and have failed to do so. Those terms restricted the analysis to a consideration of the common general knowledge before the priority date. The standard for the assessment of obviousness or inventive step was not otherwise different. In the present case, Garth Living and Hotpoint relied upon the HECLA heater and other patents "... for the purposes of s 7(3) of the Act ...". It is clear that, at least to some extent, those parties are relying upon s 7(3) of the 1990 Act in support of this ground of revocation. They seek to rely upon information which did not form part of the common general knowledge but which could potentially be taken into account under s 7(3). In my judgment, they are not permitted to do so for the reason which I have noted at [132] above. Further, the generalised assertions made by Professors Nugent and Monro to the effect that the existence of the HECLA heater and Australian Patent Application No 3567/66 was part of the common general knowledge before the priority date of the Patent are not persuasive. The knowledge must be available to all in the relevant trade and must be treated as part of a general body of knowledge in that trade (see Minnesota Mining and Manufacturing Company 144 CLR at 292). Patent specifications do not become part of the common general knowledge merely by reason of their publication: Minnesota Mining and Manufacturing Company 144 CLR at 294---295. Even if the prior art relied upon by Garth Living and Hotpoint could be taken into account, there is no evidence that would justify a finding that the claimed invention was obvious in light of that prior art. The evidence tendered by Garth Living and Hotpoint falls well short of the test expounded in Aktiebolaget Hassle [2002] HCA 59 ; 212 CLR 411 at [53] ---[54] (pp 433---434) where Gleeson CJ, Gaudron, Gummow and Hayne JJ in their joint judgment, after addressing the question of whether or not the experiments were part of the asserted inventive step or simply of a routine character which would inevitably have been attempted as a matter of course, said (at [53]---[54] (pp 433---434)): That way of approaching the matter has an affinity with the reformulation of the "Cripps question" by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [[1970] RPC 157]. This Court had been referred to Olin in the argument in Wellcome Foundation [(1981) [1981] HCA 12 ; 148 CLR 262 at 267. See also Washex Machinery Corporation v Roy Burton & Co Pty Ltd (1974) 49 ALJR 12 at 16]. Graham J had posed the question [ Olin Mathieson [1970] RPC 157 at 187-188. " (Emphasis added. He erred by giving it an operation more favourable to Alphapharm's case. What his Honour did was in line with the position which now apparently obtains in England, that "all of the courses of action which present themselves without the exercise of invention are obvious" [ Pharmacia Corporation v Merck & Co Inc [2002] RPC 775 at 818]. His Honour did not assess what was said by the expert witnesses concerning the procedures they would have followed by making findings whether they would have been led directly as a matter of course to pursue one avenue in the expectation that it might well produce the claimed compound. This is substantially the same requirement as was laid down by s 40 of the 1952 Act. Fair basis involves a comparison between the claims made in the Patent and what is disclosed in the specification in order to determine whether there is a "real and reasonably clear disclosure" of the invention claimed, or whether the claims "travel beyond" the invention described (see Lockwood Security Products Pty Ltd [2004] HCA 58 ; 217 CLR 274 at [57] (p 295), [69] (p 300) and [83] (p 306) (per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ)). I cannot see how, in the present case, the claims travel beyond the invention which has been described in the specification. Garth Living and Hotpoint seemed to be advancing this ground as a means of dealing with Bitech's construction of the Patent. Having regard to the construction which I have placed upon Claim 1, I do not think there is any room for a challenge based upon the absence of fair basis. This ground must be rejected. I will make orders accordingly. The parties have requested that I defer ruling on costs until they have had an opportunity to consider these Reasons for Judgment. I am prepared to accede to that request. I will provide a timetable for dealing with costs in the orders which I will make. Further, or in the alternative, Garth Living has been a party to, and participated in, a common design involving the importation and sale and distribution in Australia of the BH1, BH2, BH4, BH5, BH6, BH7, BH9, BH10 and BH12 heaters by Bunnings Group Limited. Garth Living Pty Ltd has imported and sold the MS-5 heater. Further, or in the alternative, Garth Living Pty Ltd was a party to, and participated in, a common design involving the importation and sale and distribution in Australia of the MS-5 heater. Samples of the BH1, BH2, BH4, BH5, BH6, BH7, BH9, BH10, BH12 and MS-5 heaters were purchased from particular stores within Australia. A sample of the MS-5 heater was purchased from a Good Guys store. Samples of the BH1, BH2, BH4, BH5, BH6, BH7, BH9, BH10 and BH12 heaters were purchased from particular Bunnings stores. Samples of the FG150 (with black rotating cylinder), FG100 and FG400 heaters were purchased from particular stores within Australia. A sample of the FG150-2 (with silver rotating cylinder) heater was purchased from a Clive Peeters store. A sample of the HP1 heater was purchased from a Harvey Norman store. I certify that the preceding one hundred and forty-two (142) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. | construction of patent for simulating flames with common application in domestic room heaters whether the respondents' domestic room heaters infringed some of the claims in the patent whether the patent is invalid and should be revoked patents |
In addition, an order is sought that an earlier costs order made on 17 December 2004 be set aside. 2 The proceedings already have a long and somewhat tortuous history. 3 The original Application was filed in the Victoria District Registry of the Court on 9 December 2003 as was the original Statement of Claim. At the time of the institution of the proceedings the respondents named therein were the first and second respondents. The third respondent was added by an order made on 30 March 2006. 4 The Melbourne office of Corrs Chambers Westgarth ('Corrs') had the conduct of the matter for the applicant from its inception until 4 October 2005 whereupon the Sydney office of Allens Arthur Robinson ('Allens') took it over. 5 Throughout the history of the matter to date, the respondents, including the third respondent, have been represented by the Canberra office of Phillips Fox. 9 For the purposes of the application presently before the Court, I have been invited to treat the version of the Second Further Amended Statement of Claim filed on 20 April 2006 as if it had been filed on 31 March 2006. 10 Apart from the several versions of the Application and Statement of Claim which were filed in the Court, the then solicitors for the applicant proposed other amendments to the Application and/or Statement of Claim on 18 July 2005, 28 July 2005 and 24 August 2005. In the end result the applicant did not proceed with any of these. 11 The first and second respondents filed a Defence to the original Statement of Claim on 14 April 2004, a Defence to the Amended Statement of Claim on 24 May 2004, a Defence to the Further Amended Statement of Claim on 20 August 2004, an Amended Defence to that Statement of Claim on 17 December 2004 and a Defence to the most recently filed 'Second Further Amended Statement of Claim' on 8 June 2006. The third respondent was also a party to the last mentioned Defence. 12 The Defence to the original Statement of Claim filed on 8 April 2004 incorporated a Cross-claim by the first and second respondents as cross-claimants against the applicant as cross-respondent. 13 That Cross-claim was ultimately discontinued with the leave of the Court constituted by Merkel J on 17 December 2004. 14 In conjunction with the discontinuance the first and second respondents were ordered, on that day, 'to pay the Applicant's costs thrown away by reason of the cross-claim'. 15 By reason of the amendments which have now been made to the applicant's case, the respondents submit that it has become necessary for them to reagitate the issues which were the subject of the Cross-claim in their Defence to the current version of the Statement of Claim. In the circumstances it is submitted that it would be unjust to allow the earlier order in respect of the payment of costs thrown away in relation to the discontinued Cross-claim to stand. 16 The application presently before the Court was commenced by the filing, on behalf of the first and second respondents, of a Notice of Motion on 10 May 2006. That Notice of Motion was superseded by an Amended Notice of Motion filed on 5 July 2006. In turn, that Amended Notice of Motion was superseded by the handing up in Court by Senior Counsel for the first and second respondents, at about 2.30 pm on 5 July 2006, of a document entitled 'Respondents' Short Minutes of Order' which recast the form of relief now sought by the first and second respondents on the motion. The costs order made on 17 December 2004, that the Respondents pay the Applicant's costs thrown away by reason of the Cross-Claim, be set aside. The Applicant pay the First and Second Respondents' costs of this motion on a party and party basis. The First and Second Respondents have leave to tax forthwith the costs referred to in orders 1 and 3 and such costs, as agreed or taxed, are to be paid forthwith. 18 The applicant does not oppose the proposed order 1.5, but is emphatic in its opposition to the other orders sought. 19 Apart from quite extensive exhibits, the evidence on the hearing of the motion consisted of an affidavit of Gary Albert Rumble, a partner in Phillips Fox, affirmed 4 May 2006, a further affidavit of that deponent affirmed 30 June 2006 and an affidavit of David Larcombe Yates, a senior associate at Allens, sworn 9 June 2006 (a 51 paragraph affidavit), a further affidavit of the same deponent sworn 9 June 2006 and an affidavit of Deborah Susan Vine-Hall sworn 9 June 2006, filed on behalf of the applicant. 20 Much of the material in the several affidavits was objected to and either not read or rejected. In the case of the affidavit of Deborah Susan Vine-Hall none of it got into evidence. Even in respect of those parts of the affidavits which were not objected to or were allowed over objection I must say that I have grave reservations as to the necessity for including much of the material, especially where that material did no more than provide a recitation of the pleadings and the correspondence all of which spoke for themselves. 21 Notwithstanding the relatively slow start to the proceedings it must be recognised that the case as ultimately advanced will be an important one. Expressed in the most simple terms the case concerns claims to copyright made by the applicant in respect of numerous aeronautical publications. One of the problems the applicant faces in the presentation and preparation of its case is that the publications themselves are regularly updated and revised. They are not static. 22 It is common ground that the first respondent is a company incorporated in the State of Delaware in the United States of America which carries on business as an international aeronautical information materials business offering for sale, selling and distributing aeronautical information materials to members of the aviation industry. For present purposes it is unnecessary to specify the business of the second respondent beyond noting that the applicant contends that the second respondent was at various times an agent of the first respondent or otherwise involved in the marketing, importation into Australia and sale in Australia of the first respondent's products. 23 The applicant has claimed copyright in numerous works and now alleges infringement of that copyright, although it did not originally do so. The respondents dispute the applicant's claims and also contend that if they published or otherwise used works in which the applicant had copyright, they did so under licence so that there was no relevant infringement. 24 The circumstances in which copyright in an original literary, dramatic, musical or artistic work will be found to subsist is dealt with in s 32 of the Copyright Act 1968 (Cth) ('the Act'). The nature of copyright in original works is dealt with in s 31 of the Act. 27 Sections 36 et seq of the Act deal with acts which constitute infringement of copyright and s 115 of the Act makes provision for the bringing of actions for infringement of copyright by the owner of such copyright. 28 The court's power to order costs is found in s 43 of the Federal Court of Australia Act 1976 (Cth). Costs are in the unfettered discretion of the Court to be exercised judicially in light of all the circumstances of the particular case (per Franki J in Thompson v Mastertouch TV Services Pty Limited (1977) 15 ALR 487 at 498; per Einfeld J in Re Sanchez; Ex parte Smits (1994) 49 FCR 326). Such costs should be capable of being recovered without the innocent party having to wait, possibly years, for that to occur (per Weinberg J in McKellar v Container Terminal Management Services Limited [1999] FCA 1639 at [41] ). 32 The making of an order under Order 62 rule 3 is justified where, through no fault of a party, such as the first and second respondents in the present case, there has been substantial delay in the proceedings because an applicant has attempted a number of versions of the Application and of the Statement of Claim, additional directions hearings have taken place which should not have been necessary, interlocutory steps have been taken and applications have been brought unnecessarily given the changes to the pleadings that have occurred (see All Services Australia Pty Ltd v Telstra Corporation Ltd (2000) 171 ALR 330 at 333 [11]. 33 The circumstances of this case clearly bring it into the category where, if costs are to be ordered by reference to the changes that have been proposed or made to the Application and/or the pleadings of the applicant, then justice requires, firstly, that the burden of the costs thrown away should fall upon the applicant who has put the first and second respondents to wasted and unnecessary expense and, secondly, requires that such costs should be payable forthwith. It follows that the first and second respondents should be entitled to have any costs that are ordered to be paid forthwith, taxed forthwith also. 34 As will become clear, fine lines will have to be drawn by the taxing officer upon the taxation or assessment in accordance with Order 62 of any costs that may be so ordered in this case. In some areas, the distinction between what are truly costs thrown away and costs related to matters which will necessarily form part of the first and second respondent's preparation of their case in response to the pleadings as they now stand, will not be readily apparent. For example, in relation to affidavits that may have been filed, discovery that may have been sought and given and inspection of documents that has occurred, the task of the taxing officer may be a challenging one. Whilst the nature of the challenge militates against an order for taxation forthwith being made, nevertheless, the rights of the first and second respondents and the economic impact upon them of the steps which the applicant has taken, cannot be put to one side. 35 In many instances the determination of what work has been undertaken and expense incurred, which has been rendered redundant, will be quite obvious. 36 I trust that I do not do an injustice to the applicant's case by saying that the applicant gives the appearance of being a somewhat reluctant suitor. From the little that I know about the matter thus far, the appearance is that, whilst the applicant is firm in its resolve to secure a commercial outcome which ensures that it is rewarded for its efforts in relation to the aeronautical publications in which it claims that copyright exists of which it is the owner, it does not want to, if I may use the vernacular, kick its bedfellows, the respondents, with whom it almost certainly will have an ongoing business relationship. 37 This appearance may have been the reason for its unwillingness, until 31 March 2006 to stand up and propound a case that ought properly occupy the time of the Court. Another problem for the applicant may have been its difficulty in formulating a manageable case where the publications in respect of which it claims copyright are forever changing. 38 Under Order 13 rule 2 of the Federal Court Rules , it is, of course, possible for an applicant to plead facts and matters in an amendment to its pleadings that have occurred or arisen since the commencement of the proceedings and to effect amendments that add new claims for relief or foundations in law for claims for relief which arise out of facts and matters that have occurred or arisen since the commencement of the proceedings. 39 Prior to the introduction of the amendments to Order 13 rule 2 of the Rules to allow such amendments, it was possible for a party to plead a fact or matter that had occurred or arisen since the commencement of the proceeding (see Order 11 rule 7), but amendments to a Statement of Claim were impermissible if they had the effect of introducing into the Statement of Claim a cause of action based upon facts which had not arisen at the time when the Statement of Claim was filed (see Baldry v Jackson [1976] 2 NSWLR 415 at 419). But for the changes to the rule, the applicant's task may have been easier to undertake. 40 Even now, the applicant wishes to progress the matter by way of separate questions before the trial in the proceedings (see Order 29 rule 2). There may be merit in such a proposal as it may allow a convenient snapshot to be taken when the issues of copyright and infringement could be addressed in respect of a discrete selection of aeronautical publications rather than in respect of all such publications at all times covered by the current Statement of Claim (see generally ss 21 and 22 of the Federal Court of Australia Act ). 41 In the Application as originally filed the applicant made no claims of infringement in respect of the works in respect of which it claimed that copyright subsisted and of which it claimed to be the owner. 42 In the Amended Application filed 26 July 2004, this position remained the same. All that was sought was declaratory relief in respect of the subsistence and ownership of copyright. The second proposed version of the Second Amended Application sent by Corrs to Phillips Fox on 28 July 2005 did not relevantly alter the position. It continued to seek nothing other than declaratory relief as indicated in the earlier draft. 45 Neither of the 18 July 2005 nor 28 July 2005 proposed Second Amended Applications were ever filed. 46 It was not until Allens filed the applicant's 'Second Amended Application' on 31 March 2006 that the relief sought in the proceedings was expanded to go beyond declaratory relief and include claims for injunctions, damages, accounts of profit and delivery up of alleged 'Infringing Materials'. 47 Turning to the various versions of the applicant's Statement of Claim, including the three proposed versions of the 'Second Further Amended Statement of Claim', it is evident that the applicant shifted its ground in relation to the nature of the aeronautical publications in respect of which it alleged that copyright subsisted and of which it claimed to be the owner and also in relation to the dates at which the questions of subsistence and ownership were to be determined. 48 The original Statement of Claim asserted that the applicant was the owner of copyright in certain literary and artistic works being compilations of aeronautical information or data and charts. The particulars provided in the Statement of Claim made it clear that what was being claimed was that copyright subsisted, of which the applicant was the owner, in a compilation being an integrated aeronautical information package and in, what I might describe as, the sub-compilations making up that compilation. 49 In the Further Amended Statement of Claim filed 26 July 2004, the claim was expanded to include the compilation, the sub-compilations and, what I might describe as, sub sub-compilations making up the sub-compilations. 50 Ultimately, in the Second Further Amended Statement of Claim filed 31 March 2006 and 20 April 2006, the claim was changed to one in respect of the compilation being an Australian integrated aeronautical information package and, with some exceptions, each of the component documents which were said to be works the subject of copyright. 51 In the original Statement of Claim the works in respect of which copyright was claimed would appear to have been all those covered by the description contained in paragraph 4 of the Statement of Claim which were 'created and first published by the Applicant in 1995' and thereafter, up to, one would assume, the filing of the Application on 9 December 2003. 52 The Further Amended Statement of Claim focused on works said to have been first published on or about 9 January 2003 and subsequently thereto. 53 The first proposed Second Further Amended Statement of Claim of 18 July 2005 sought declaratory relief in respect of works as at 2 September 2004 and/or alternatively as at 25 November 2004 --- what one might call 'snapshot' claims as at those dates. 54 As I understand it, the second proposed Second Further Amended Statement of Claim of 28 July 2005 sought to maintain the 'snapshot' approach, but by reference to a differently described package of claimed original works. 55 The Second Further Amended Statement of Claim filed on 31 March 2006 and 20 April 2006 abandoned the snapshot approach and sought to advance claims of copyright not only in respect of the compilation described as the Australian integrated aeronautical information package but also, as I understand it, in respect of most of the relevant component works first published since 1 July 1995 and presumably up to 31 March 2006. It also contained allegations of infringement of copyright from 'at least 9 December 1997'. 56 During the course of argument on the first and second respondents' motion I was taken to several requests for further and better particulars and responses thereto and to passages from the transcript of directions hearings with a view to demonstrating that what the applicant was saying in each of its pleadings was quite clear and well understood by the first and second respondents. 57 The applicant also sought to draw comfort from paragraph 19 of an outline of submissions which the first and second respondents' counsel prepared on 12 July 2005 for a hearing in respect of a discovery motion before Merkel J in 22 July 2005. The end result is that the applicant's claim --- in which it seeks declarations as to subsistence and ownership of copyright in each and every one of such "Copyright Works" since "at least on or about 9 January 2003" --- covers a vast number of separate works, of different kinds, each of which is alleged to be a copyright work in its own right, as well as being part of one or more series of larger "compilation" works forming part of the IAIP in which copyright is also asserted. As also stated in that facsimile, the Applicant's position is that costs should be taxed on the usual basis. That is, that costs be taxed on a party/party basis. Our client proposes that the Court order that the costs which may have been thrown away by your clients in connection with the proposed amendments to the pleadings (if any) be reserved at this time. As indicated above, the applicant accepts that the first and second respondents are entitled to an order in terms of paragraph 1.5. 63 In relation to the costs order of 17 December 2004 in relation to the discontinuance of the first and second respondents' cross-claim, it seems to me that given the volte-face which is apparent in the applicant's attitude to the relief sought, the clear indication which preceded the volte-face that infringement relief was not sought and the circumstances in which the cross-claim was discontinued, it would be quite unjust to allow the costs order of 17 December 2004 to stand. This does not mean that an order having the same effect would be inappropriate at the end of the day. However, it should be a question for the trial judge as to whether such an order should be made. In my opinion an order should now be made setting aside the earlier costs order as sought in paragraph 2 of the respondents' Short Minutes of Order. 64 In relation to the costs of the first and second respondents' motion the applicant has failed conclusively. In the circumstances the costs should follow the event and an order should be made in accordance with paragraph 3 of the respondents' Short Minutes of Order. 65 In relation to paragraph 4, I have already stated the relevant principles to be applied by the Court in the exercise of its discretion on such a matter. In my opinion this is a clear case where the order sought in paragraph 4 of the Short Minutes of Order should be made. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | where substantial delay in proceedings caused by numerous attempts at amending the application and statement of claim, directions hearings have been held which should not have been necessary and interlocutory steps taken and applications brought unnecessarily given the changes to the pleadings. costs |
The evidence satisfies me that that meeting was duly convened taking into account the signed certificates which have been provided and the undertaking which has been proffered. The result of the meeting was a resounding yes to the proposed transaction. No person has given notice of appearance to oppose. The matter was called today and nobody has appeared to oppose. 2 As I indicated when I made orders convening the meeting, I had scrutinised (without the benefit of a contradictor) the arrangement to ensure, so far as I could detect, that there was nothing on the face of it which might lead to a refusal of approval if the meeting assented to the transaction. I saw no such barrier and none has been pointed out to me since. 3 I drew attention on that occasion to a question which arises as to the means of enforcing arrangements such as these, including (although not restricted to) issues about solvency. I am satisfied by the evidence that there is both the capacity to meet the obligations which are being undertaken and willingness on the part of those involved to do so. Indeed, there is every reason for them to do so. 4 Under those circumstances there is no barrier to making an order approving the scheme. I make orders in accordance with the draft minutes of order which I have initialled and placed with the papers. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | scheme of arrangement approved corporations law |
3 The Authority is established under the Agricultural and Veterinary Chemicals (Administration) Act 1992 (Cth). Its functions include, where appropriate, the granting of applications for approval of "active constituents" and for the registration of "chemical products". These expressions are defined in s 3 of the Code. Broadly, an active constituent forms part of a chemical product. Sections 17 and 18 respectively require the Authority to keep a Record of Approved Active Constituents for Chemical Products ("the Record") and a Register of Agricultural and Veterinary Chemical Products. The latter is, by virtue of s 3 , referred to in the Act as the Register of Chemical Products ("the Register"). 4 Decisions to approve and register made under s 19(1) and s 20(1) respectively are given effect by entering "relevant particulars" together with any conditions of approval in the Record and Register under s 19(2) and s 20(2) respectively. "Relevant particulars" include particulars prescribed by regulation. An approval or a registration must include, as part of the prescribed particulars of each active constituent and each chemical product required to be entered in the Record and the Register, the name of each manufacturer and the address of each site of manufacture. Evergreen Nurture Agrochemicals Ltd (Evergreen) was included in the Record and Register as a manufacturer of certain active constituents and chemical products. Evergreen is a fictitious name admittedly provided by Imtrade to the Authority. The address provided was also incorrect. Imtrade did this because it did not want this information to be made available to its competitors. It did not think that the information was relevant to the decision of the Authority whether or not to approve active constituents or to register chemical products. The primary issue is whether this deliberate misrepresentation constitutes fraud on the Authority such as to vitiate each of the approvals and registrations. 5 The current proceedings relate to the approval of nine active constituents and the registration of 52 chemical products in the name of the second respondent (Imtrade). These active constituents and chemical products are set out as attachments to a letter of the Authority to the solicitors for Imtrade, dated 21 May 2008. There is no dispute about the identification of the relevant constituents and products, or that Evergreen is recorded as a manufacturer of each of them. 6 The matter comes before this Court following action by the Authority to treat the relevant approvals and registrations as invalid and to remove them from the Record and Register. Forty-seven of the registrations were validly registered initially but were subject to variation under the Code by adding Evergreen in each case as a formulator. It is common ground that this is another name for a manufacturer. The variations were said to have been achieved by fraud and therefore it is contended by the Authority that those registrations as varied are also invalid. The Authority took this action on the basis of its view that the fraud of Imtrade vitiated each of the approvals and registrations. Imtrade sought to characterise this action as a decision by the Authority under Division 5 of Part 2, of the Code to cancel the several approvals and registrations reviewable in the AAT under s 167(1)(f) of the Code. 7 The Authority contends that it did not cancel or even purport to cancel the approvals and registrations under the provisions of the Code. There is no decision, it says, for review by the AAT, and its jurisdiction is not attracted. 9 The applicant also seeks to enliven the original jurisdiction of the Court under s 39B(1) of the Judiciary Act 1903 (Cth) by seeking a writ of prohibition against the AAT restraining the AAT from proceeding to review the removal of the entries in question from the Record and Register. 10 Founded on that original jurisdiction, the applicant also seeks declarations pursuant to s 21(1) of the Federal Court of Australia Act 1976 (Cth) in the Court's accrued jurisdiction: Queensland Medical Laboratory v Blewett (1988) 84 ALR 615 at 637 per Gummow J. Those declarations are to the effect that the approval of the active constituents and registration of the chemical products are of no legal effect because they were affected, procured, or induced by fraud. 11 Further, the applicant seeks a writ of certiorari against the AAT, quashing its decision to issue the stay orders commensurate with the ancillary or accrued jurisdiction of the Court to issue a writ of prohibition sought under s 39B(1) of the Judiciary Act : Klewer v Dutch [2000] FCA 509 ; (2000) 99 FCR 217 at 230 [53] - [54] per Hill J. The control measures apply up to the point of retail sale with the states and territories remaining responsible for control of use matters. ... The agvet code focuses on the registration of chemical products, approval of active constituents, and approval of labels. The overriding criteria to be addressed by the NRA are public health, occupational health and safety, the environment, product performance, and trade and commerce. The public will be invited to comment in respect of each chemical product containing a new active constituent prior to determination of an application. The NRA will also be able to reconsider an existing registered chemical product to ensure it continues to meet contemporary safety and performance standards. 14 The Agricultural and Veterinary Chemicals Code Act 1994 states that it is an Act " to make provision for the evaluation, registration and control of agricultural and veterinary chemical products, and for related matters... . 16 The Agricultural and Veterinary Chemicals Act 1994 applies the Code, as in force for the time being, as a law for the government of participating Territories. I will refer to these later in the context of the purported variations to the relevant particulars in respect of the 47 valid registrations. 19 Applications for approval of an active constituent and for registration of a chemical product are, by s 10 to be made to the Authority. Section 11 provides for how such applications are made. 20 By s 19(2)(a) , approval of an active constituent takes place by the Authority entering in the Record of Approved Active Constituents the relevant particulars, which include "any other particulars that are prescribed by the regulations. " Similarly by s 20(2)(a) , registration of chemical product takes place by the Authority entering in the Register of Chemical Products the relevant particulars, including those prescribed by the regulations. 21 Any person may inspect and obtain a copy of or extract from any part of the Record [s 17(4) and (5)] and Register [s 18(4) and (5)] that does not contain confidential commercial information which is defined under s 3. Section 3(c)(ii) may well result in the information prescribed under Reg 15 and Reg 16 being confidential. (Emphasis added) (2) In relation to an active constituent approved in accordance with section 14A of the Code, the particulars mentioned in paragraphs (1) (c) to (j) need be entered in the Record of Approved Active Constituents only if those particulars are readily available to the APVMA. If any of the relevant particulars are varied, then, the date of the approval or the registration, as varied, is the date on which particulars of the variations are entered in the Record or Register: s 22(2) of the Code. 24 By s 14(1) of the Code, the Authority must grant an application for approval or registration made under s 10 if it is satisfied of all the matters referred to in s 14(3). If the Authority is not satisfied of all those matters, then, under s 14(2) it must refuse an application. This section requires that the application must be in writing and contain or be accompanied by any information that the Authority requires; • the applicant has provided for analysis, a sample of each active constituent or each active constituent for a proposed or existing chemical product required by the Authority (s 157(1)(a)); • the applicant has provided for analysis, if the application relates to a chemical product, a sample of any constituent of the product or a sample of the product or both required by the Authority (s 157(1)(b)); • the applicant has paid the cost of the analysis to the Authority (s 157(3)); • the applicant has provided information to the Authority required by it relevant to an application relating to an active constituent or chemical product (s 159(1)(a) and (e)); • the applicant has carried out research for the Authority of published literature for information about the active constituent or the chemical product or any of its constituents and provided a report to the Authority on the results of the search (s 159(1)(f)); • that any requirement prescribed in the regulations in relation to the active constituent or chemical product has been complied with; • that the use of the active constituent or chemical product would not be an undue hazard to the safety of people; would not be likely to have an effect that is harmful or human beings or an unintended effect that is harmful to animals, plants or things or to the environment; • the use of the chemical product, in accordance with the instructions of use approved by the APVMA, would be effective. Section 14(4), (5) and (6) together impose very detailed obligations on the Authority as to how it is to satisfy itself as to whether or not the active constituents or chemical products would be an undue hazard or have an effect that is harmful to human beings or would be effective. This is to give practical effect to the 'overriding criteria' mentioned in the second reading speech as well as what is found in the preambles, to which I have referred: protection of the health and safety of human beings and animals and the environment. 25 Division 3 provides for applications to vary relevant particulars of approval or registration. In summary, an interested person in relation to the constituent or product may apply to the Authority for variation of the relevant particulars: s 27. Again, the Authority must grant the application if satisfied of specified matters: s 29. Those matters include that the application contain or be accompanied by the information that the Authority requires: s 29 and s 28(1)(b). There follows a similar process to that for the initial approval or registration. 26 Division 5 provides for suspension or cancellation of approval or registration. In summary, the division prescribes the circumstances in which the Authority may suspend or cancel, as well as the procedure to be followed. This includes a requirement to give notice. 27 Division 6 provides for the duration and renewal of approval or registration. An approval continues in force unless cancelled: s 47(1). The registration of a chemical product, however, ends at the end of 30 June next following the day on which the registration was granted or renewed, or last renewed, as the case may be: s 47(2). The interested person may apply for renewal of the registration of a chemical product. The Code provides for late application. The discretion of the Authority in acting on an application for renewal is limited: see s 49(4). 28 Section 145 creates an offence for a person, in specified circumstances, to give information or produce a document to the Authority that the person knows to be false or misleading in a material particular. By s 161 it is an offence for an interested person who becomes aware of any relevant information in relation to a constituent or in relation to a product or of any of its constituents, to not give that information to the Authority. By sub-section (2), relevant information includes any information that contradicts any information given to the Authority under the Code, or would have had to be given to the Authority in connection with the application for the approval, registration, listed registration or permit if the applicant had been aware of the information when the application was made. It seeks declarations to that effect. 30 The Authority submits that the approval of each active constituent by the entry pursuant to s 19(2)(a) of the Code in the Record of the relevant particulars was in law not an approval and could be ignored. The same is said of the registrations and the variations to the relevant particulars of registrations under s 20(2)(a) and s 29(1)(h)(i) respectively. This is so, it says, because subject to limited exceptions, a person will not be permitted to keep an advantage obtained by fraud: an administrative decision procured by fraud may be ignored as an invalid decision and of no effect at law. This is what the Authority has purported to do here. It has manifested its view that it may ignore the approvals in the Record and the registrations in the Register, which are each in electronic form, by deleting each of them. They no longer appear in the Record or the Register. It has not purported, as I have said, to cancel the approvals and registrations under the provisions of the Code. The Authority submits that the decision of the Full Court in Leung v Minister for Immigration & Multicultural & Indigenous Affairs (1997) 79 FCR 400 is warrant for their actions. 31 The issue in Leung was whether the Minister for Immigration could, absent an express statutory power to do so, revoke the grant of a certificate of Australian citizenship where the applicants had misled his delegate about their factual circumstances. The appellants sought a certificate of Australian Citizenship, which involved two steps: the Minister must grant the Certificate and the applicant must make the prescribed pledge of commitment. The appellants made representations of fact, asserting that during their time spent overseas they were engaged in activities beneficial to the interests of Australia, namely the promotion and export of Australian goods (rough opals and fresh produce to Hong Kong). On the basis of these representations the Minister exercised his discretion under s 13(1) of the Australian Citizenship Act 1948 (Cth) in favour of the appellants. In fact, the applicant and his wife had both been practicing as medical professionals in Hong Kong for the better part of the time they initially claimed to have been promoting Australian exports. The Certificates were granted. However, before the appellants made their pledges of commitment, it was discovered that the representations of fact were false. The Minister's delegate then decided to 'revoke' the decision to grant the Certificates. 32 The Court was divided in its reasoning. The majority (Finkelstein J and Beaumont J concurring) concluded that as the decision to grant the certificate was procured by fraud it was invalid and could be ignored without any formal process of revocation. It was unnecessary, the majority concluded, to rely upon any express or implied power of revocation under the statute to proceed as it did. 33 Heerey J resolved the appeal on the basis of an implied statutory power to revoke a certificate of citizenship where a statutory criterion for the issue of the certificate did not in fact exist although such a power terminated once the pledge of commitment had been made because a person could not be deprived of citizenship other than by virtue of s 21 of the Citizenship Act . The supposed general rule would necessarily extend indefinitely in time and to factual errors for which persons affected by the decision were in no way responsible. Such persons might have arranged their own affairs on the basis of the decision. To ignore an invalid decision is not to revoke it. It is merely to recognise that that which purports to be a decision does not have that character. To decide the matter again is not a reconsideration of it. It is in fact the original exercise of the power to make the decision. ... Nor is there any need to find either an express or an implicit power of reconsideration. Those doctrines, to the extent that they are applicable to administrative decision-making, only apply to validly made administrative decisions. 35 There has been much controversy as to whether invalid administrative decisions may simply be ignored by the decision-maker without judicial determination. The debate between the absolute and relative invalidity schools of thought is far from resolved. There is a very useful discussion of these in a paper presented by Robert Orr and Robyn Briese at an AIAL Forum in October 2002: Don't Think Twice? Can Administrative Decision Making Change Their Mind? Absolute invalidity means that a decision-maker, and those affected by the invalid decision may just ignore it as if it had never been made. There is no requirement for judicial review to achieve this result. It does not constitute a decision. Support for it is found in Ouslow v R [1997] HCA 49 ; (1997) 192 CLR 69 per McHugh J and by some commentators: Sykes, Lanham, Tracey and Esser, General Principles of Administrative Law (4 th ed, Butterworths, 1997) at 447 . Examples are to be found in Forbes v New South Wales Trotting Club Ltd [1979] HCA 27 ; (1979) 143 CLR 242 at 277 per Aikin J; Ousley v R per Gummow J at 130-131; R v Balfour; ex parte Parkes Rural Distributors Pty Ltd (1987) 17 FCR 26 at 33. Kirby J cites other strong support both judicial and from legal commentators in Minister for Immigration & Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at [103]-[104]. 37 The concept of absolute invalidity has been rejected by the High Court, at least in the context of judgments and orders of federal courts declared by legislation to be "superior courts" of record: Bhardwaj per Kirby J at [108]; Residual Assco Group Ltd v Spalvins [2000] HCA 33 ; (2000) 202 CLR 629 at 660 [77] ; Re Macks; Ex parte Saint [2000] HCA 62 ; (2000) 204 CLR 158. A J Burr Ltd v Blenheim Borough Council [1980] 2 NZLR 1 at 4 is an example. There, Cooke J said that other than in cases which involve "flagrant invalidity" an administrative decision is generally to be taken to be operative until set aside by judicial determination. 39 The question of invalidity and its consequences was considered by the High Court in Bhardwaj. The respondent, whose student visa was cancelled by a delegate of the Minister for Immigration and Multicultural Affairs applied to the Immigration Review Tribunal for a review of the decision. The Tribunal proposed to deal with the matter on 15 September 1998, and invited the respondent to attend a hearing. Late in the afternoon of 14 September 1998 the Tribunal received, from the respondent's agent, a letter stating that the respondent was ill and would be unable to attend the next day, and requesting an adjournment. By an administrative oversight, the letter did not come to the attention of the member of the Tribunal to whom the matter had been assigned. The Tribunal dealt with the matter on 15 and 16 September, adversely to the respondent, and notified the respondent and his agent on 17 September. The reason given for the Tribunal's decision was that the respondent had not provided any information which suggested that the cancellation of his visa was unfair or inappropriate. When the respondent's agent was informed of the decision, the attention of the Tribunal member was drawn to the letter of 14 September. A new hearing date was arranged. The Tribunal heard the respondent's explanation of the conduct which had resulted in the cancellation of his visa, accepted the explanation, and, on 22 October 1998, revoked the cancellation. The issue in the appeal concerned the capacity of the Tribunal to proceed as it did thereby correcting its own error. The Minister contended that the power of the Tribunal to review the delegate's decision was spent after it made the decision in September. 40 Hayne J attached significance to whether the earlier decision would be set aside by the Federal Court or the High Court under s 75(v) of the Constitution at [147], concluding that where a decision would be set aside the power has not been exercised: [142], [155], [157]. It might seem that the practical application of such a test by a decision-maker raises its own self-evident difficulties, absent clear authority on all fours, with the circumstances of the case in question. However I do not take his Honour to have been referring to circumstances other than where there is a clear error involved as in his citation at [152] of Dixon J in Posner v Collector for Inter-State Destitute Persons (Vict) (1946) 74 CLR 461 at 483 suggests. 41 How is invalidity to be determined? In the present case, alleged fraud amounting to jurisdictional error is involved. However the facts other than in respect to the variation of relevant particulars in respect of 47 existing valid registrations are in contest. Accordingly, it cannot be assumed that a Court would set aside the decisions of the Authority. Even in respect to the variations to the particulars, I do not think that it could be assumed that the provision of false particulars would lead a Court to declare the underlying valid registrations as thereby invalid. Posited in that way, it might be said that the necessary precondition to the right to ignore a decision, earlier made, has not been established and necessarily requires judicial determination of both fact and law on the question of validity. 42 In Leung the question of fact and law as to whether Mr and Mrs Leung were entitled to the favourable exercise of the discretion under s 13(4)(b)(i) of the Citizenship Act was disputed. The dispute involved questions of fact. The Minister had not purported to rely upon the common law doctrine of vitiation by fraud but rather upon s 33(3) of the Acts Interpretation Act 1901 (Cth) as the source of power to revoke the certificate of citizenship. The AAT resolved the factual dispute in favour of the Minister. Finkelstein J observed that no point had been taken that the AAT lacked jurisdiction and proceeded on the basis that it did. Importantly however, when the matter was before the Full Court the factual controversy had been resolved. It was not in dispute by then that the decision to grant the certificate of citizenship had been procured by misrepresentation. The question was whether in those circumstances the decision to grant the certificate as a result of proven misrepresentation was thereby vitiated. 43 Likewise, the error in Bhardwaj might be characterised as "flagrantly invalid" to use the language of Cooke J in Blenheim . In their joint judgment, Gaudron and Gummow JJ referred to the decision as one which "clearly involved a failure to exercise jurisdiction". Hayne J said that it was not seriously disputed in the Courts below or in the High Court that due to an oversight, the Tribunal had not given the respondent the opportunity to appear and give evidence and present arguments which s 360(1)(a) of the Migration Act 1958 (Cth) required he be given before the Tribunal made the September decision. This was the jurisdictional error involved. 44 Invalidity, in a particular case, may be demonstrated by consensus. In Comptroller General of Customs v Kawasaki Motors Pty Ltd [1991] FCA 518 ; (1991) 103 ALR 661 the Full Court concluded that an administrative order made under the provisions of Pt XVa of the Customs Act 1901 (Cth) could be revoked by agreement of the parties without the necessity for a judicial determination. 45 The concept of invalidity involves questions of mixed fact and law. There may be evidentiary considerations. As Kirby J said in Ousley at 1594 the presumption is merely a tool in the process of reasoning to a decision. See also Wigmore on Evidence (1981) vol 9, par 2491. But again, that is a presumption which operates, chiefly, in circumstances where there is no challenge to the legal effect of what has been done. Where there is a challenge, the presumption may serve only to identify and emphasise the need for proof of some invalidating feature before a conclusion of invalidity may be reached. It is not a presumption which may be understood as affording all administrative acts and decisions validity and binding effect until they are set aside. 47 Whether an administrative decision ought be presumed to be valid until set aside by a court will depend upon the particular case having regard always to the particular legislation under which the decision was made. 48 In my opinion, the presumption in this case cannot be displaced, merely at the instance of the Authority, in the face of factual questions, the resolution of which is necessary before determining the legal validity or otherwise of the several decisions to approve and to register. It is a fact that incorrect information was given to the Authority by Imtrade concerning the name and address of the manufacturer. Evergreen was a fictitious name. The factual question whether this affected induced or procured the several decisions is disputed. The Authority cannot determine that question for itself. 49 There is a further reason why curial disposition is necessary in this case. The presumption of validity is of particular importance here because the legislation involves a system of approvals and registration affecting innocent third parties. Approvals and registrations require by s 52(1) and (2) respectively to be published by the Authority, at least in the Gazette. The position under s 53 in respect to variations and s 55 in respect to suspensions or cancellations is the same. Approval and registration confers important rights upon third parties such as suppliers and purchasers of chemical products. It also protects them against criminal liability. For example, supply and possession with the intent to supply unapproved active constituents and unregistered chemical products are offences under the Code: ss 74 - 78 . Some offences are indictable offences: s 170 and may involve imprisonment: ss 162 , 163 . Conviction for offences under the Code may involve forfeiture of property: s 150. Part 7A of the Agricultural and Veterinary Chemicals (Administration) Act 1992 deals with importation, manufacture and export of chemicals. Under Part 7A , it is an offence to import into Australia an active constituent that has not been approved or a chemical product that is not registered: s 69B(1). The removal of the approvals and registrations by merely deleting these electronically has the very real potential to expose innocent third parties to prosecution as well as financial loss. The system of recorded approvals and registrations enables third parties to organise their affairs accordingly. 50 Compliance with the Code may also be the subject of injunctions, as well as action involving the execution of search warrants with Inspectors having powers of entry and seizure. 51 Furthermore, Part 2 , Div 5 of the Code empowers the Authority in certain circumstances to suspend or cancel approvals and registrations. Upon cancellation, the Authority must give written notice to interested and approved persons as defined in s 3 and to any other person it believes notice should be given: s 45A(1). After such notice, that person is taken to have been issued with a permit to "possess, have custody of, use or otherwise deal" with the constituent or product for a certain period of time: s 45A(5). A penalty applies for not acting in accordance with the instructions contained in the notice: s 45A(6), ss 74 - 78 . Accordingly, s 45A(5) protects, for a period of time, third parties affected by the cancellation. That protection is not available to them in the circumstances which presently exist. The Authority issued a recall notice to Imtrade under s 101 of the Code. I will consider this in more detail below. It is relevant in the present context to note that under Clause 2 of the Notice, which sets out various definitions, there is included the word "Permit". It is stated to mean a permit under Part 7 of the "Agvet Codes". There is however no operative clause in the Notice concerning permits. A consideration of Part 7 of the Code immediately demonstrates that its provisions are not apt to the circumstances of this case. 52 The observations of Hayne J at [143] and Kirby J at [122] in Bhardwaj are relevant to these third party considerations. 53 In my opinion, it is for this Court to decide the legal question involving as it does a preliminary factual enquiry. Indeed, the Authority seeks declarations from this Court that each approval and each registration was of no legal effect because each was affected, procured or induced by fraud. I will now consider those questions. 54 It is fundamental to the Authority's case that invalidity be established in respect of each approval and registration. It is necessary to establish that the decisions to approve and to register were actually induced or affected by fraud on the balance of probabilities and having due regard to Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336. This is sometimes referred to as operative fraud. It is not enough to prove a "real suspicion" or a "real possibility": Wati v Minister for Immigration and Ethnic Affairs (1996) 71 FCR 103 at 112-113. Wati on this point was referred to with apparent approval by the High Court in SZFDE v Minister for Immigration and Citizenship [2007] HCA 35 ; (2007) 237 ALR 64 at [25] . The alleged fraud must affect the decision-making process: Minister for Immigration and Citizenship v SZLIX [2008] FCAFC 171 ; (2008) 245 ALR 501 at [33] . This statement was approved by the High Court in that case on appeal: SZFDE at [41]. 56 The Authority, as part of its case on the issue of fraud, did not seek to prove what information it actually had received and relied upon in making its several decisions to approve and register under ss 19(1) ; 20(1). It was acted on by the making of the registration. I do not agree. There is no evidence as to whether the various applications were made in or to the effect of the approved form. No reliance was placed upon the wording of the approved form. It was not referred to in submissions. 61 Approval is effected under s 19(2)(a) by entering in the Record of Approved Action Constituents amongst other things the particulars prescribed by Regulation 15. However such approval is effected only after the Authority decides to approve an active constituent: s 19(1) of the Code. 62 A decision under Division 2 of Part 2 to refuse an application for approval of an active constituent or to register a chemical product is reviewable under s 167(1)(a) and a decision to approve either of these applications is reviewable under s 167(1)(b). There is no provision to review the act of recording prescribed particulars in the Record or the Register which gives effect to those decisions. 63 There is no evidence as to what information the Authority had before it in arriving at its several decisions to approve. Even if it had the information prescribed by Regulation 15 this does not mean it was information required for the purposes of s 11(1)(b). 64 There is no evidence as to when the Authority asked for information concerning the name and address of the manufacturer in China. There is no evidence that Imtrade or its agents officers or employees was aware that such information was relevant to their application or putting it another way, that the information was material to the Authority's decision-making process. No reason has been proffered as to why this information was to be regarded as significant other than for the purpose of complying with Regs 15 and 16 which concern events after the relevant decisions were made: cf Sharples v O'Shea (unreported Supreme Court of Queensland, Atkinson J, 18 August 1999 at [66]. 65 The position in respect to the registration of chemical products is to the same effect: registration under s 20(2) is effected by the entry in the Register, amongst other things, of the particulars prescribed by Regulation 16. However this occurs only after the Authority decides to register under s 20(1). If the second respondent at the time it made its applications for approval of the active constituents and registration of chemical products had told the APVMA in its applications that the information concerning the identity of the manufacturer and site of manufacture to be entered into the Record and the Register respectively was false, or if the APVMA had been aware of the falsity of those particulars, the APVMA would not have granted those applications. 67 That assertion is to beg the question as to what information was required under s 11(1)(b) for the purposes of making decisions under s 19(1) and s 20(1) as distinct from what was required in giving effect to those decisions under s 19(2) and s 20(2). Regulations 15 and 16 are directed not to s 19(1) and s 20(1). The regulations are expressed to be "for the purposes of" subsection s 19(2) and s 20(2) of the Code, respectively and to be "in relation to" the approval of an active constituent and the registration of a chemical product, respectively. The prescribed particulars are accordingly not for the purposes of either s 19(1) or s 20(1) nor are they required in relation to a decision to approve or a decision to register. 68 Applications to vary relevant particulars and the mode of such applications are provided for in ss 27 and 28. These are to the same effect, mutatis mutandis as applications under ss 10 and 11. The submissions of the Authority in respect to the 47 variations of registration are also to the same effect. 69 Fraud requires to be strictly articulated and proved: Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 538D per Kirby P. A finding of fraud is not to be made lightly. I am not persuaded that the misinformation provided, at some point, by Imtrade to the Authority led to operative fraud, namely, that the Authority was actually induced by the provision of that information to make the decisions to approve and to register. I am not prepared to infer such fraud merely because Regs 15 and 16 require particulars of the name and address of the manufacturer to be recorded and registered. There are provisions in the Code which lend support to the conclusion that such information is not operative in the making of those decisions. 70 First, the provision of such particulars is not immediately referable to the objects of the Act or Code which as I have indicated centre upon concerns of safety and health of individuals, animals and the environment. The Authority points to paragraph (d) of the preamble to the Code which concerns the creation of a regulatory system that is open and accountable and which gives opportunity for public input with respect to the regulation of chemical and veterinary products. The particulars in question do not, I think, touch on that object. They are particulars which I earlier suggested may well be maintained in the confidential part of each of the Record and Register. Certainly, according to Mr James Suter who is acting CEO of the Authority, in his affidavit in support of the application sworn on 5 June 2008 at [9], the identity of the manufacturer and address of the site at which chemical products are manufactured are kept in the confidential part of the Register. 71 Second, incorrectly recorded or registered relevant particulars may be corrected in the Record and Register by the Authority under the provisions of s 26 of the Code. Furthermore, Part 2, Div 5 of the Code provides for suspension and cancellation of approval or registration. Under s 40(1), it is only if the relevant particulars or conditions for approval or registration cannot be varied to comply with the prescribed requirements that the approval or registration may be cancelled. The legislature has prescribed this approach for cases where the prescribed requirements are not complied with. 72 Third, although under s 145 the provision of false information to the Authority for the purposes of, or in connection with, the consideration by the Authority, in the course of the performance of any of its functions or the exercise of any of its powers under this Code is an offence, it is not a ground of cancellation under s 41. That section provides for cancellation or suspension of approvals and registrations where the continued use of the active constituent or chemical product may be an undue hazard to the safety of people exposed to it, or which may be likely to have an effect that is harmful to human beings or may be likely to have an unintended effect that is harmful to animals plants or things or to the environment. 73 The matters taken together tend against a view that the name and address of a manufacturer is information which the Authority requires under s 11(1)(b) of the Code to which it must be satisfied by reason of s 14(1) and (3)(a). 74 It follows that I am not prepared to find that the several approvals and registrations were affected, procured or induced by fraud. The removal of these by the Authority from the Record and the Register was in each case unlawful. 75 As I foreshadowed, the position is different concerning the variation of relevant particulars to 47 of the existing valid registrations by adding the name Evergreen and its address as an additional manufacturer. It is not to the point that the intention of Imtrade was not to obtain these variations by misrepresentation but rather was to protect their confidential commercial information from competitors. Ironically, this is something for which the Code expressly caters. It is not disputed by Imtrade that these applications under s 27 contained the fictitious name and address. There can be no doubt that, in those respects, the Authority was misled in an operative sense. The false information was the very subject matter of each of the variation applications. The decision to vary the prescribed particulars was accordingly induced by this misrepresentation. However as these variations were of no effect ab initio they cannot, in my opinion, operate to render the pre-existing registrations invalid. 76 Accordingly, other than in relation to the applications for variation of relevant particulars, the declarations sought should be refused. The appropriate declaration in my opinion, in relation to the purported variations is that the variations in each case are of no legal effect. However the declarations are limited to that extent. The 47 valid registrations to which they relate are unaffected. 77 Irrespective of the outcome of this case, the Authority, in my opinion, ought to have sought appropriate relief from the Court rather than resorting to self-help, involving the expunging the approvals and registrations of the Record and the Register. No safety considerations were present. Even if there had been, the Court could have made appropriate interim orders to deal with that situation. Does the AAT have jurisdiction? It also seeks the issue of writs of prohibition and certiorari as against the AAT under s 39B(1) of the Judiciary Act 1903 (Cth). 79 It says, correctly, that when the jurisdiction of the Court to challenge an administrative decision is invoked whether under s16 of the ADJR Act or under s 39B of the Judiciary Act , the Court is confined to exercising judicial power. Since it is not permissible for the Court to exercise administrative power, it cannot conduct a merit review of the decision, that is, an inquiry to determine the correct or most appropriate outcome. Its role is limited to determining whether the administrative decision is within the power conferred on the official and whether the decision-making process, in so far as the decision-maker was bound to comply with a particular process, has been followed. The Court has no jurisdiction simply to cure administrative injustice or error. The merits of the administrative action as distinct from its legality are not a matter for the Court: Minister for Aboriginal Affairs v Peko Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 40-41; Attorney-General (NSW) v Quin [1990] HCA 21 ; (1990) 170 CLR 1 at 35-36. 80 This Court's jurisdiction to make declarations and to issue writs of prohibition and certiorari is properly invoked. The intervention of this Court is sought to review decisions of the AAT, of an administrative character, not on the basis of an excess of jurisdiction failure to afford procedural fairness or any other recognised ground but rather because the AAT is said to have no jurisdiction. 81 Imtrade contends that the Authority's actions in removing the approvals from the Record and the registrations from the Register amount in effect to a decision to cancel under Div 5 of Part 2 of the Code. If that were the case then such a decision is reviewable under s 167(1)(f). 82 The Authority contends, ultimately as a matter of law, that each approval and registration is invalid and of no legal effect because each was affected, procured, or induced by fraud. There was no cancellation of approvals or registrations under the Code because there was nothing to cancel. It follows, Imtrade submits, that there is no decision to cancel reviewable by the AAT. 83 The word "decision" in the Code has, by virtue of s 167(4) the same meaning as in the AAT Act . There was no suggestion that the removal of the approvals and registrations by the Authority was other than a "decision" for the purposes of the wide definition of that word provided in s 3(3) of the AAT Act . The issue is whether for the purposes of s 25(1)(a) of the AAT Act it was a "decision(s) made in the exercise of powers conferred by ..." s 167 of the Code. The meaning of "decision" in s 25 of the AAT Act was considered in Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307. The majority construed "decision" as including one in purported exercise of powers conferred by the enactment: Brian Lawlor per Bowen CJ at 317 and Smithers J at 339. 84 A number of decisions, using that word loosely, were made by the Authority. It made a decision to remove the approvals and registrations from the Record and Register respectively. This was the consequence of its earlier decision to treat these approvals and registrations as of no legal effect: a decision that, at law, it had made no decisions to approve under s 19 or to register under s 20 of the Code. 85 The question here is whether the Authority's decision to regard the various approvals and registrations as of no effect at law and to implement that decision by "removing" those approvals and registrations from the Record and the Register constituted a purported exercise of powers conferred by the enactment and therefore reviewable pursuant to s 167 of the Code by the AAT. This test is an objective one. It would, if adopted, appear to introduce a false issue and to impose upon the person aggrieved the burden of proving it. He could well be the very person, who was ignorant of that state of mind. Perhaps also it would involve the consequence that if the evidence on an appeal to the Tribunal showed that an official did not honestly believe he was acting in the exercise of powers conferred by the enactment, the appeal would have to be dismissed notwithstanding that the absence of honest belief might not affect the legal standing of the decision. ... in the ordinary course, it would be reasonably clear from the objective facts under which enactment or in the exercise of which statutory powers an official had purported to act. The adoption of this view would mean that the Administrative Appeals Tribunal would have jurisdiction to entertain an appeal from a decision in fact made, which purported to be made in the exercise of powers under an enactment. It could then proceed to determine whether the decision was properly made in fact and in law. The Authority took no step provided for under Div 5 of Part 2 of the Code directed to cancellation of approvals and registrations. 86 Section 35 of the Code provides that the Authority must not cancel an approval or registration unless it has first given notice and then waited for an adequate period thereafter as provided under s 35(a) and (b). The Authority did not give any such notice(s). It did not make entries in the Record or Register provided for under s 45 following cancellation under the Code . Nor did it give any notice under s 45A. This was not by reason of error or omission on the part of the Authority. This is not a case involving a "colourable exercise of actual power": Brian Lawlor at p 342 per Deane J. The Authority deliberately took no steps to cancel the approvals and registrations under the Code. Here, the Authority placed no reliance, actual or purported, upon the Code to remove the approvals from the Record and the registrations from the Register. Indeed it stated in correspondence to Imtrade that as a result of fraud arising from the provision of the false name and address in respect of Evergreen the relevant active constituents were "unapproved" and the relevant chemical products were "unregistered". 87 The Authority did issue a recall notice to Imtrade under s 101 of the Code. It was not a pre-condition to doing so that the Authority must first have cancelled the registrations under Division 5 of Part 2 of the Code. It is open to the Authority to issue a recall notice where a chemical product is not registered: s 101(1)(a). The Authority considered that the various chemical products were unregistered because the registrations, vitiated by fraud, had been "removed" from the Register. 88 Accordingly it is, I think, wrong to characterise its conduct, as Imtrade does, as, in effect, cancellation of the approvals and registrations under the Code. 89 The Authority has asked this Court to resolve the mixed questions of fact and law upon its core legal contention that the approvals and registrations variously were invalid because they were affected by fraud. The AAT has no jurisdiction to determine such a question of law: Craig v South Australia [1995] HCA 58 ; (1995) 184 CLR 163. In treating the several approvals and registrations as invalid and of no effect the Authority did not exercise a regulatory power under the legislative scheme and has not made a decision reviewable under s 167(1)(f) of the Code or otherwise. 90 For the above reasons the application, to the extent that it seeks declarations that the 9 approvals and 52 registrations are of no legal effect, will be dismissed. Their removal from the Record and the Register was unlawful. The relevant approvals and registrations ought be restored to the Record and the Register, each effective from the respective dates of their original approval and registration. There will be declarations that the variation of the relevant particulars to 47 of the 52 registrations is, in each case, of no legal effect. This, as I have said, does not affect the validity of the prior registrations to which the variations relate. There ought, in respect to the first respondent, be declarations and prerogative relief, as sought by the applicant, subject to questions of unnecessary overlap. I will invite the parties to bring in a minute of consent orders. There will be liberty to the parties to apply in the event that such agreement cannot be reached. I will also hear the parties on the question of costs. I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | applications for approval of active constituents and registration of chemical products authority made decisions to approve and to register under ss 19(1) and 20(1) of agricultural and veterinary chemicals code approval and registration effected by entering relevant particulars in record of approved active constituents and in register of chemical products ss 19(2) and 20(2) of code relevant particulars included name of manufacturer and address of place of manufacture fictitious manufacturer and address submitted to authority authority removed approvals and registrations from the record and register on basis that they were vitiated by fraud whether misrepresentation operated on decisions to approve and to register whether removal was lawful. whether the administrative appeals tribunal has jurisdiction to review decision by authority to remove approvals from the record and registrations from the register whether decision to remove and removal constituted a purported exercise of power conferred by the agricultural and veterinary chemicals code and was thereby reviewable under s 167 of the code by the aat. administrative law administrative law |
The applicant was due to be discharged from his bankruptcy on 5 June 2007: s 149. However, on 25 May 2007 the trustee filed with the Official Receiver a written notice of objection to the discharge. The effect of the objection, if not withdrawn or cancelled, is to extend the bankruptcy for eight years: s 149A(2)(a)(i). The bankrupt seeks an order under s 178 that the trustee withdraw the objection or that it be declared null and void. 2 A notice of objection is required to comply with s 149C. That section provides that the notice must set out the grounds of objection being one or more of the grounds listed in s 149D , refer to the evidence or other material that establishes those grounds and state the trustee's reasons for objecting to the discharge on those grounds. However, the notice need not state reasons if the objection is made on certain grounds including that specified in s 149D(1)(e): s 149C(1A). 3 The ground upon which the trustee relied is that "the bankrupt failed to disclose any particulars of income or expected income as required ... by section 139U": see s 149D(1)(e). Section 139U is found in Div 4B of Pt VI. This division provides that a proportion of a bankrupt's income is to be distributed to his creditors. Income is defined in s 139L to have its ordinary meaning. In addition to its ordinary meaning, s 139L deems certain receipts to be income for the purposes of the division. Among the receipts deemed to be income is "the value of a benefit that: (A) is provided in any circumstances by any person (the provider) to the bankrupt; and (B) is a benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 as in force at the beginning of 1 July 1992 ... being that value as worked out in accordance with the provisions of that Act but subject to any modifications of any provisions of that Act made by the regulations under this Act. ": s 139L(1)(a)(v). 4 A bankrupt is required periodically to provide to his trustee a statement setting out, among other things, the income that he has derived during a particular period, referred to in the Bankruptcy Act as a "contribution assessment period": s 139U(1). Income that a bankrupt "derives" includes income that is not actually received by the bankrupt. It includes income that "is dealt with on behalf of the bankrupt or as the bankrupt directs": s 139M(1)(c). 5 For the purposes of this application the relevant contribution assessment period is 4 June 2005 to 3 June 2006. In his statement provided pursuant to s 139U the bankrupt said that the income he derived during the contribution assessment period was $55,000, being his gross earnings from his employment with Myohealth Pty Ltd and upon which he paid $12,111 by way of income tax. In his notice of objection the trustee alleges that the bankrupt failed to disclose other income, namely twelve monthly payments of, respectively, $1,610 and $2,600 each that had been paid by Lockwood Investments (Australia) Pty Ltd into "two investment property loan accounts" with Westpac Banking Corporation. Lockwood Investments is a company of which the bankrupt's wife, Lisa Lockwood, is the sole director and shareholder. It is the trustee of several trusts established for the benefit of the Lockwood family. The objection states that: "Disclosure of the payments received would have increased [the bankrupt's] income by approximately $50,520 and generated a liability to pay income contributions. The point in contention is whether the payments constituted income of the bankrupt. To resolve that issue it is necessary, first, to relate some background facts. 7 Immediately before his bankruptcy the bankrupt was indebted to Westpac in the sum of $967,328. This amount was the aggregate of three facilities Westpac had provided to the bankrupt. A separate account was maintained for each facility. One was styled "Investment Property Loan" and the account number was 71-1129. Westpac had advanced approximately $250,000 under this facility. The periodic monthly payments of $1,610 were paid into this account. The second facility was for approximately $350,000 and was also styled "Investment Property Loan". The account number was 71-1110. Monthly payments of $2,500 were paid into this account. The balance of the debt related to a commercial bill facility not mentioned in the notice of objection. 8 Each facility is secured by a guarantee given by Mrs Lockwood. The obligations under the guarantee are supported by a first ranking mortgage over a property in Melbourne at 15 Woodmasons Street, Malvern. Mrs Lockwood is the registered proprietor of the Woodmasons Street property. It is the family home where she, her husband and their children live. 9 The effect of bankruptcy is to divest the bankrupt of his property and vest that property in his trustee and to make it available for the payment of his provable debts: Cummings v Claremont Petroleum NL [1996] HCA 19 ; (1996) 185 CLR 124, 132. Speaking strictly, the provable debts of the bankrupt may still be described as his debts but they will be released when the bankrupt is discharged from bankruptcy: Bankruptcy Act , s 153. Accordingly, the debts are no longer debts that are owing by him: Cummings at 137. In Clyne v Deputy Commissioner of Taxation [1984] HCA 44 ; (1984) 154 CLR 589 the High Court said (at 594-595): "The effect of the bankruptcy ... is that the debtor is no longer obliged to pay his creditors; indeed he is disabled from doing so. If he offered payment they could not safely accept it; their right is a right of proof against the estate. Whether or not it was, Westpac has been kept at bay because the interest on the loans continued to be paid as did a small amount to reduce the principal debt. The interest was paid when Westpac applied the money that was deposited into account no 71-1129 and account no 71-1110 for that purpose. 11 The indirect source of the payments that found their way into the two accounts was Myohealth. That company conducts a business as trustee of a unit trust. The unit trust has three unit holders --- Courten Pty Ltd, Jomolu Pty Ltd and Square Circle Pty Ltd. This last-mentioned company is the trustee of a trust in which the bankrupt's wife has an interest. The bankrupt informed the trustee that he (the bankrupt) was "aware that this [t]rust may be associated with my spouse but not anything specific as to the [t]rust and its [d]eed. However, its decisions are its alone and I do not have anything to do with this trust. " I have no doubt that the bankrupt knows a lot about this trust. 12 At any rate, each unit holder in the Myohealth Unit Trust received monthly payments of $15,833. The Myohealth general ledger describes those payments as "unit trust distributions". It seems that the payments are either distributions of income or advances to unit holders on account of income. 13 Following the receipt by Square Circle of its distribution the amount was then paid into a banking account maintained by Mrs Lockwood. From her account the money found its way into a bank account maintained by Lockwood Investments. From that account $1,610 per month was paid into account number 71-11129 and $2,500 per month was paid into account number 71-1110. 14 Upon these facts the first question that arises is whether the monthly payments were income derived by the bankrupt. To reiterate, it will be income if it is income according to the ordinary meaning of that term (s 139L) or if the payments are deemed to be income by reason of s 139L(1)(a)(v) , that is, if they have been "provided" to the bankrupt and are "benefits" within the meaning of the Fringe Benefits Tax Assessment Act . The trustee also suggested that the payments might be deemed income by reason of s 139L(1)(a)(vi) as "loans" to the bankrupt by an associated entity. Yet the trustee did not pursue the point --- in particular, how and whether the definition of associated entity in ss 5 and 5B - 5E would be met --- and so I will not consider the issue further. 15 Whether or not a payment is income according to ordinary concepts depends upon the characterisation of the payment in the hands of the recipient. A payment will be income if it is received as a reward for the provision of services or for some other revenue producing activity: Scott v Federal Commissioner of Taxation [1966] HCA 48 ; (1966) 117 CLR 514; Hayes v Federal Commissioner of Taxation [1956] HCA 21 ; (1956) 96 CLR 47; Squatting Investment Co Ltd v Federal Commissioner of Taxation [1953] HCA 13 ; (1953) 86 CLR 570. That is, for a payment to be income the payment must be remuneration obtained from personal exertion (eg wages), from carrying on a business (eg profit) or from the use of capital (eg dividends, interest). 16 The view that what the bankrupt received in this case was income (assuming, that is, that he received anything at all) rests on the assumption that the payments were periodic and regular. The trustee relies on Commissioner of Taxation (Cth) v Myer Emporium Ltd [1987] HCA 18 ; (1987) 163 CLR 199, 215 where the High Court said: "The periodicity, regularity, and recurrence of a receipt has been considered to be a hallmark of its character as income in accordance with the ordinary concepts and usages of mankind. " But that is not a complete statement of what constitutes income. As the other cases to which I have referred make plain, it is necessary that a payment relates to a person's assets, or to employment, or to services rendered or to a business carried on to enable it to be treated as income. 17 It is in any event doubtful whether it can be said the bankrupt was "provided" the amounts paid into the two accounts. The accounts into which the money was paid were frozen. That is, from the commencement of his bankruptcy the bankrupt was not permitted to deal with those accounts. In particular he could not withdraw any money that had been deposited into either account. Put another way, the accounts were not under his control. What happened was that immediately upon money being deposited into either account it was applied by the bank in reduction of the principal and interest due on the relevant loan. It could not in law be applied in discharge of the bankrupt's indebtedness to the bank (as his debt to the bank was no longer payable by him personally). On the other hand, it could be applied in discharge of Mrs Lockwood's obligations under her guarantee. On this basis it is difficult to see how it could be said the amounts had been "received" by the bankrupt. 18 This approach receives support from National Commercial Banking Corporation of Australia Ltd v Batty [1986] HCA 21 ; (1986) 160 CLR 251 ( Batty's Case ). Davis and Batty had a partnership. Davis, without the knowledge of Batty, fraudulently obtained funds from a client, Bushby, and deposited them into a partnership account at the bank. When Bushby sued the bank to recover the funds, the bank sought indemnification from Batty. 19 Gibbs CJ (with whom Wilson, Brennan and Dawson JJ agreed) held, based on agency principles, that Batty could not be liable. However, Gibbs CJ in obiter considered (at 264) the question of whether Batty could be liable "because the moneys went into the firm's account, without his knowledge and without his actual or apparent authority" and "Batty did not deal with the money in any way nor expressly authorize anyone else to do so. In other words, where the defendant has not had the benefit of the money, has not played any part in disposing of it and was ignorant of the fact that it was theoretically under his control, he should not be liable in the absence of fault on his part. ... In such circumstances, the technical 'receipt' by the firm may be considered as insufficient to make payment into the account a receipt to the use of the [the accountholder]. The borrowing results in a credit item in favour of the customer in the account between the bank and its customer. The debt represented by such item cannot exist unless the customer has authorized the bank to collect the cheque on behalf of the customer, to pay the proceeds of the collected cheque to and to borrow the proceeds from the customer, or the customer knows and acquiesces in the bank's doing so. Mr. Batty had no knowledge of the Bank's collection of the cheques and crediting of the trust account. The firm did not do anything to accept the credit and it derived no benefit from it. It is not liable for money had and received to the use of the Bank merely by reason of the posting of a credit entry in a statement of account. Here, on the other hand, the bankrupt may have had knowledge of the funds' presence in his accounts, but had no ability to act on it. Thus the fact of his knowledge should not be determinative. This accords with the comments of Dawson J in Batty's Case. Because the bankrupt in this case could not act on his knowledge and exercise any control over the funds (because the accounts were frozen), the credit entry in the accounts may be regarded as a mere technical receipt rather than income. 25 As regards the application of s 139L(1)(a)(v), it is certainly true that the word "benefit" is given a very wide meaning. It is defined in s 136 of the Fringe Benefits Tax Assessment Act to include "any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility". But to fall within s 139L(1)(a)(v) the benefit must have been "provided ... to the bankrupt". For the same reason that I reached the conclusion that the deposits had not been "received" by the bankrupt it cannot be said that he was provided with any benefit from the payments. 26 On behalf of the trustee it was argued that other kinds of benefits had been provided to the bankrupt during the contribution assessment period. Those purported benefits include the provision of accommodation, cash payments made into a bank account other than the bank accounts mentioned in these reasons, and so forth. I have not thought it appropriate to determine whether the trustee is correct in his assertion that other benefits had been received. The reason for my not dealing with them is that the notice of objection only referred to the payments that were deposited into the two accounts and I did not think it permissible for the trustee on this application to rely on other benefits, not referred to, to support his objection: see Re Hall (1994) 14 ACSR 488, 492-493; Prentice v Wood [2002] FCA 214 ; (2002) 119 FCR 296, 299. If the trustee's claims are correct then they would need to be dealt with by the trustee in a further notice of objection. 27 Accordingly, the orders I propose to make are that within 14 days the trustee take all necessary steps to withdraw his objection filed on 25 May 2007. I have allowed 14 days within which the objection is to be withdrawn to enable the trustee to consider whether he wishes to file a further notice of objection. 28 So far as the costs are concerned, I think they should for the time being be reserved. The trustee picked up the possibility of the bankrupt having received other benefits during the course of preparing this case for trial. It might turn out that the bankrupt has in fact withheld information from the trustee. Only time will tell. I do not propose to consider costs until I know whether or not the trustee intends to file another notice of objection. I will leave it to the parties to make submissions on costs at an appropriate time. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | failure to disclose income whether payments to a bank account over which the bankrupt has no control are income whether trustee may rely on evidence not referred to in notice of objection to discharge withdrawal of notice of objection income bankruptcy words and phrases |
Judgment pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (FCA) is sought. Alternatively, these respondents seek an order under O 11 r 16 of the Federal Court Rules (FCR) to strike out substantial parts of the statements of claim on the basis that they disclose no reasonable cause of action or have a tendency to cause prejudice, embarrassment or delay in the proceedings. Alternatively, those respondents seek pursuant to O 11 r 16 FCR the striking out of [5]-[41], [42]-[51] and [52]-[58] of the amended statement of claim. The amended motion for WorleyParsons is more complex. In essence, its seeks the same relief but also dismissal pursuant to s 31A FCA or O 11 r 16 FCR of the whole of the claims of misuse of confidential information or, alternatively, so much of them as is constituted by information: disclosed in Australian Patent Application No. 749848 (31293/99); disclosed in the journal article 'R&D Optimises Stainless Steel Optimises Ore Car Bodies', Railway Gazette International, October 1999, pp 643-646; and/or otherwise in the public domain, including by reason of the public use of the Lynx Golynx Wagon. Consequential striking out of other pleadings are also sought. As I propose striking out the entire statement of claim, I make clear that I am not for present purposes specifically addressing the claims concerning detinue or conversion or breaches of the TPA other than to the extent those claims are based on the specific facts which in my view have not been adequately pleaded as to the primary pleas. (Breach of confidential information and breach of copyright). Nevertheless, while the test is lower, as Barrett J in Degiorgio v Dunn (No 2) (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 prospects of success ... they direct the court to the need to see whether there is a "realistic" as opposed to a "fanciful" prospect of success. Section 31A FCA would require these respondents to satisfy the Court that there is no real issue of fact or law to be decided and only the conclusion for which they contend can be said to be reasonable: Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 236 ALR 720 at [45] and see also the Full Court in Jefferson Ford Pty Ltd v Ford Motor Company Australia Ltd and Others [2008] FCAFC 60 ; (2008) 167 FCR 372 at [21] - [23], [71]-[74] and [122]-[134]. There are slightly differing views in relation to the extent to which the Court should enquire into the merits of a matter in circumstances where a question of law will decide the issue. See for example the Full Court in Jefferson [2008] FCAFC 60 ; 167 FCR 372 at [23] per Finkelstein J and at [34] per Rares J compared with Gordon J at [128]-[131]. The law on s 31A FCA has been exhaustively analysed. While there is no doubt that the bar has been lowered for summary dismissal, it is still a serious matter to dismiss a proceeding at an early stage. None of those cases would suggest otherwise. To those I would also adopt the observations of Graham J in J F Keir Pty Limited v Sparks [2008] FCA 611 at [9] - [15] and Gilmour J in Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955. It is clear that, despite the bar being lowered, the Court should approach the question of summary dismissal with considerable caution. For all the reasons expressed in these authorities, as I apprehend it, the lowering of the bar or relaxing of the standard was intended only to give a power which the Court may exercise in the more obvious instances. In or around 1996, Lynx together with the first respondent (ANI) responded to an invitation to tender from BHP Iron Ore Ltd (BHP) for the design, manufacture and supply of gondola ore cars. The tender was unsuccessful. In early 1997, the process was repeated in a subsequent proposed tender to another company, Hamersley Iron Ore Limited (Hamersley) for the design of such wagons. For that purpose Lynx supplied ANI with drawings and technical information. That tender was unsuccessful. In 2000 there was a further tender to Hamersley. That tender also did not succeed. The essence of the complaint arises from the circumstance that some time later ANI and Bradken manufactured and supplied both BHP and Hamersley with railway wagons known, respectively, as the Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Ore Car. Lynx says that in doing so ANI and Bradken used information contained in the drawings supplied from Lynx to ANI. It says that ANI thereby breached a duty of confidentiality that it owed Lynx as to the drawings and technical information or, alternatively, that it infringed the copyright held by Lynx in the designs and drawings. WorleyParsons is joined in the proceedings because the wagons which were supplied were designed by a WorleyParsons subsidiary. Lynx alleges that such design, it is said, was at the instruction or direction of, or otherwise materially involved ANI and Bradken. I am informed that over 2,500 documents were discovered (primarily by the respondents) approximately a year prior to this particular hearing. Shortly put, each of the respondents contends that with the significant amount of time that has elapsed since these proceedings were commenced, together with the very substantial discovery that has been given, Lynx is still unable to plead a cause of action. In those circumstances, it is said that the claim is hopeless or at least falls within the ambit of the lower threshold to which s 31A FCA is directed. Alternatively, the respondents seek to strike out the pleading, recognising that leave to re-plead may be permitted. For reasons set out below, I consider that the applicant's pleading against each of the respondents is deficient in a substantive sense. It will be struck out. This is the first strike out application. I will give leave to amend. Although other substantive evidence and arguments (eg the permissibility of reverse engineering and confidential material entering the public domain) were advanced in support of dismissal of the application, in my view any consideration of those arguments should await the finalised form of any amended pleading. It may well be that defences can be raised and considered at that stage but first, precise breaches need to be pleaded. On 20 December 2006 an application was brought for what was then non-party discovery against WorleyParsons. This was granted on 23 April 2007: Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited [2007] FCA 578. Lynx relies in part upon that judgment as support for the argument that it is arguable that it will be entitled to relief against WorleyParsons. (I consider the earlier decision does not directly afford support of this nature. The relevant tests for non party-discovery and for summary dismissal are different). There was a further decision in WAD 219 of 2006 ( Lynx Engineering Consultants Pty Ltd v ANI Corporation Limited & Others (No 2) [2007] FCA 1510 ; (2007) 163 FCR 372 by Siopis J). The issue concerned preliminary discovery. Additionally, I gave a further brief decision in each of the matters on 23 April 2008 ( Lynx Engineering Consultants Pty Ltd v The ANI Corporation Limited trading as ANI Bradken Rail Transportation Group [2008] FCA 555). This concerned orders for confidential undertakings. In related proceedings in the New South Wales District Registry, Emmett J delivered reasons on 29 August 2008 ( Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd [2008] FCA 1257). In those proceedings the position of the parties is reversed, at least insofar as Bradken and Lynx are concerned. The New South Wales proceedings are concerned with Australian Patent application no.749848 for an invention entitled 'Side Reinforced Bulk Material Transport Container'. One of the issues in those proceedings is an appeal by Bradken from part of a decision of a delegate of the Commissioner of Patents to reject the opposition to the patent application filed by Bradken. In that proceeding Lynx cross-appeals. The other proceeding is a claim by Bradken that in a letter of 11 October 2007 to BHP Billiton Iron Ore Pty Ltd, Lynx made unjustifiable threats in contravention of s 128 of the Patents Act 1990 (Cth). If the Western Australian proceedings are not dismissed, it is possible that the New South Wales proceedings will be transferred to the Western Australian District Registry. The motions to transfer in the New South Wales proceedings have been adjourned pending amendment in those proceedings by Lynx and pending determination of this summary dismissal application brought in connection with these proceedings. This is required in order to determine whether or not there is, amongst a quite lengthy pleading, sufficient appropriate material for the respondents to be put on notice with some precision as to the case they are required to meet. The pleaded events commence in 1996. In that year, Lynx had designed a new or improved wagon body suitable for carrying freight and bulk materials for use in the rail freight market in Australia. It had devised a prototype design together with the requisite technical specifications and manufacturing information and details necessary to enable manufacture and supply of such a wagon. There was a further separate agreement for 1997. Confidential information was imparted again in anticipation of that agreement being executed. The Confidential Information is the same as in 1996 with the addition of certain documents. There is reference to documents and references to outcomes achieved but there is no indication of what it is in the documents that is confidential. It is again pleaded that certain confidential information was disclosed pursuant to the 2000 Confidentiality Agreement. In this regard there is a repetition of the material disclosed under the previous two Confidential Information agreements in 1996 and 1997. Once again various documents are listed. Again, there is no indication of what is contained in the documents and of that, what is confidential. The particulars of this disclosure to the respondents by Lynx is explained as follows: On or about 7 August 2000, in performance of its obligations arising under the 2000 Confidentiality Agreement, the applicant, through Mr Kilian, disclosed the Lynx 1997 Confidential Information in respect of the Lynx Golynx design, to the first respondent, through Mr Walshe. It is to be inferred, Lynx contends, that the Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Ore Car must have been designed with and by use of the Lynx Confidential Information because they have 'the same or substantially identical two (sic-to) features evident in the wagons made to the applicant's design'. Once again it is said that Lynx is presently unable to provide further particulars but 'may do so' after discovery and/or interrogatories herein. These features of the wagons which are said to lead to the inference of misuse of confidential information (and also infringement of copyright) are the closest that Lynx comes to describing the actual physical features of the design which are said to be protected and which it asserts have been copied. The question will be whether the description of these factors is precise enough for the purposes of the pleaded case. A typical request was for Lynx to state separately, in relation to each of the Bradken 9100 Wagon, the Rio Tinto Pilbara Iron Ore Car and the FMG Wagon, which elements or features of the design of the said wagons are alleged to have resulted from the use by the respondents of the Lynx Confidential Information or the Lynx Copyright Works. I accept the submission made for WorleyParsons that this is a fairly straightforward and central question to be resolved in the dispute. Indeed it is difficult to think of a more basic issue. Typically though, the answers have been very incomplete. The nature of the case to be relied upon at trial by the applicant in support of the said allegation is as stated above, and which matter is to be read together with the further matters referred to in sub-paragraph (a) above. Your design looks like ours ... We infer copying but we can't prove that until trial ... Since we say you copied, you now have an onus to disprove that you copied. [for example] the spring coil on the handbrake arrangement [which] is not in the public domain? In response to this, the written submissions for Lynx contend as follows: Insofar as the confidential information relied upon by the applicant, and comprising the Lynx 1996, 1997 and the 2000 Confidential Information is concerned, each of these are separate bodies of information and are duly particularised, and, importantly, with the subject particulars, relevantly, specified so that the context within which the information complained of as being unlawfully disclosed or used by the respective respondents meets the requisite criteria. ( Terrapin Ltd v Builders Supply Co (Hayes) Ltd (1967) RPC 375 at 392 per Roxburgh J O'Brien v Komesaroff [1982] HCA 33 ; (1982) 150 CLR 310 at 328 Per Mason J (as he then was) (with whom the other members of the Court agreed). The question remains as to whether even this explanation descends to any specifics in a meaningful way. Bradken complains that there are three principle issues arising from the absence of particulars of the claim and they are as follows: the claim for breach of confidence must identify the information that is confidential and how it has been misused. The pleading does not reveal what the misrepresentation is and how it was conveyed. The link between WorleyParsons and the other respondents is also pleaded. But for present purposes the same issues arise. WorleyParsons would say that its position is stronger than that of the other respondents as it has no contractual link in any way with Lynx. While that may be correct, it is not a topic that presently falls for consideration. Much of that information is solely within the knowledge of the respondents. It is not uncommon in cases where knowledge of the nature of the breach (if any) resides within the respondents, that it will be necessary to rely upon inferences to be drawn. The respondents on the other hand point to the very extensive discovery already given and to considerable latitude already afforded to Lynx in previous judgments. Bradken for its part issued a request for further and better particulars of the statement of claim. The first request was made by Bradken on 17 August 2006 after service of the original statement of claim on 2 August 2006. On 5 September 2006 in response to the request, Lynx provided a limited amount of information responding to the request for particulars indicating that further responses would be provided after discovery had been given by the parties. On 16 March 2007 after giving substantial discovery, Bradken pressed the question of the outstanding particulars to which it received a response from Lynx indicating that particulars would not be supplied at that stage but would be supplied after it had completed an application for preliminary discovery against WorleyParsons who had now been joined as the fourth respondent. WorleyParsons made its non-party discovery available for inspection by Lynx on 28 May 2007. Lynx did not commence proceedings against WorleyParsons until 13 November 2007. Through 2007 and 2008, Bradken made repeated requests for responses to its request for further and better particulars. Notwithstanding those requests and despite indicating in its correspondence on several occasions during the period that the provision of particulars was imminent, Lynx did not respond to the outstanding requests for further and better particulars. Those which have been supplied, according to the respondents do not answer the deficiencies in the pleadings identified above. The need for precision does not preclude the possibility of proof of a breach by inference. But there must at least be precision in identification of what it is that constitutes the breach. Clearly most applicants cannot give chapter and verse of precisely when, how and by whom a breach was committed. But what constitutes the breach must be identified. Assertions of confidentiality at high levels of abstraction will not establish a basis for relief against a disclosee. In the case of an innocent third party who simply seeks reliance upon a contract struck without notice of a relationship of confidentiality between the primary disclosor and any other party or breach, the requirement for precision is even more acute. The starting point is the identification of the relevant confidential information: Moorgate Tobacco Co Ltd v Philip Morris Ltd (No. 2) (above) per Deane J at CLR 438; ALR 208; IPR 560; Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 443 [1987] HCA 37 ; ; 74 ALR 428 at 438; 10 IPR 53 at 63 [1987] HCA 37 ; ; 13 ALD 254 at 263 per Gummow J; O'Brien v Komesaroff [1982] HCA 33 ; (1982) 150 CLR 310 at 326-8 [1982] HCA 33 ; ; 41 ALR 255 at 266 per Mason J; Liberty Financial Pty Ltd v Scott (No 4) (2005) 11 VR 629 ; [2005] VSC 26 at [13] and [35] per Harper J; Pioneer Concrete Service Ltd v Galli (1985) VR 675 at 711; 4 IPR 227 at 241 per Crockett, Murphy & Ormiston JJ. The party asserting confidentiality must be able to identify some particular pieces of information and show that they were confidential or that an obligation of confidence had arisen in respect to them. In Ammon v Consolidated Minerals Ltd (No 3) [2007] WASC 232 at [286] - [310] Martin CJ noted that conventionally the three features identified by Megarry J in Coco v AM Clark (Engineers) Ltd (1969) RPC 41 at 47 are taken to be normally required if, apart from a contract, a case of breach of confidence is to succeed. First there must be the necessary quality of confidence about the information concerned. Secondly, that information must have been imparted in circumstances importing an obligation of confidence, and thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it. In relation to the quality of confidence, it is necessary to know not only what was the information conveyed, but also what parts of that information were distinct from the elements of it which were common knowledge. There can be no breach of confidence in revealing something that is already common knowledge. Whether one adopts the "reasonable man" test suggested by Megarry J or some other, there can be no breach of the equitable obligation unless the court concludes that a confidence reposed has been abused, that unconscientious use has been made of the information. There is the distinction between use of confidential information in a way of which many people might disapprove, on the one hand, and illegal use on the other. Not only the administration of business and government, but ordinary communication between people, might be unduly obstructed by use of too narrow a test, such as that which the appellants put forward here. He told me that he pointed to nothing in issue here but to the entirety of the plaintiffs' documentary material which is in evidence. If I made an order restraining the defendants from using for their own purposes any of the documentary material contained in the plaintiffs' business literature, but did not identify the particular information that the defendants are not to impart, they would be placed in a most embarrassing situation. I do not know how they could decide what business methods, literature and paperwork to avoid using in order to keep clear of contempt of court, and I think that that is an insuperable difficulty in the plaintiffs' claim under this head. I must observe that I struggle to see where this doctrine has been clearly pleaded but in any event it is no answer to the absence of the requisite precision. He therefore may be restrained from use for that period which competitors would need to put their produce on the market by, for example, "tooling-up" and organising production and distribution: Potters-Ballotini Ltd v Weston-Baker [1977] RPC 202 at 206; Harrison v Project & Design (Redcar) [1978] FSR 81. If the defendant has only known of and has not wrongly used the information before it became public, then the doctrine does not apply to him and he is subject to no special restraint thereafter: Peter Pan Manufacturing Corp v Corsets Silhouette Ltd [1963] RPC 45 t 55; [1963] 3 All ER 402 at 408; [1964] 1 WLR 96 . A basic threshold is the requirement that the applicant identify with specificity that confidential information which has been misused. Although the pleading under consideration in this instance raises definitions of confidential information by reference to drawings and documents at various dates or indeed by outcomes that Lynx has achieved, there is no assertion of precisely what it is that has breached the asserted obligations of confidence. A starting point for this difficulty is the absence of any pleading of precisely what it is that is confidential. Whatever difficulty Lynx may have in identifying precisely the manner in which the confidential information has been misused, it must at least identify with some precision what it is about the information which attracts the legal or equitable notion of being confidential. It appears to be asserted by Lynx that every aspect of the design is confidential as the design is referred to in confidentiality agreements. I do not consider that such a reference meets the test of precision required. The materials relied upon by Lynx show, as would be expected, that there are many features of the design which could not be considered confidential. Lynx must isolate for example, with some precision, what it is about the 'handbrake arrangement' for example which was then confidential. By way of illustration of the pleading deficiency, one of the fundamental difficulties (which in turn has also given rise to foreshadowed defences) is that a substantial number of the documents containing the Lynx Confidential Information include information which it is said cannot possibly attract the necessary character of confidentiality. This, it is argued, is the difficulty in failing to descend to particularity as to the confidential element of the information which it is said has been breached. It says that the Bradken 9100 Wagon and the Rio Tinto Pilbara Iron Car have 'significant design and performance advantages, which are the same or substantially identical to' the Lynx Golynx Wagon such that it would be conveyed to a relevant member of the public that the Bradken wagons were subject to the sponsorship or approval of Lynx. Once again, however, the pleading and particulars do not descend to any detail as to the significant design and performance advantages of the wagons which are central to the pleaded case. The further difficulty with the s 52 TPA pleading is that while it does plead representations, it does not go on to show why those representations were misleading. In particular, the representations are not linked in any meaningful way to any particular conduct said to demonstrate the falsity of the representations. As the s 52 case in large measure repeats (with a different outcome) the elements relied upon for the claims for breach of confidence and breach of copyright, the s 52 claim should also be struck out for the same reasons that the other two claims are to be struck out. The analogy of the notional coiled spring on the handbrake arrangement is apposite. The respondents must be told with precision what feature of the Lynx Confidential Information or Lynx Copyright Works they used without the appropriate authority and how it is that they breached s 52 of the TPA. The generality of the matters listed in the amended statement of claim is not brought into focus by the extensive particulars which have been filed. For the most part, those particulars simply reiterate what was in the statement of claim and rely on various documents which are said to set out the confidential information. It will be necessary to strike out the current version of the amended statement of claim. There is little point in keeping small sections of it. I will give liberty to re-plead as this is the first occasion on which there has been any strike out application. I am mindful that there were substantial other arguments to which I have only briefly alluded but I consider that until the final form of the statement of claim is in, it would be premature to consider those arguments. No doubt they will be taken into account one way or another in producing the final form of the statement of claim together with particulars. What I wish to stress at this stage is that I am simply dealing with the fundamental pleading point which has been raised. I am not dealing with the question of whether or not the case is ultimately arguable. It cannot presently be concluded that it should be dismissed. For the reasons given, I will order that: Each statement of claim will be struck out with liberty to re-plead within six weeks. The applicant is to pay the respondents' costs of the motions to be taxed if not agreed. The applications are otherwise dismissed. I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | application to strike out statement of claim application for summary judgment whether pleadings disclose reasonable cause of action pleadings struck out whether leave to re-plead should be granted applicant claims designs and technical information of railway wagons confidential claimed misuse of confidential information elements of breach of confidence whether confidential information precisely identified in pleadings whether breach of confidential information adequately pleaded claimed copyright in documentary materials evidencing design of wagons copyright infringement pleaded whether applicant identified works alleged to have been reproduced or the manner of alleged reproduction misleading and deceptive conduct conduct said to be misleading not pleaded practice and procedure equity copyright trade practices |
On that date his Honour made an order affirming a sequestration order made against Mr Etl by a Registrar on 25 September 2007. His Honour also dismissed an application for review of the judgment of the Registrar and made certain orders relating to costs. It appears that an application was made by counsel appearing for Mr Etl before his Honour for an adjournment. That application was refused. Thereafter, Mr Etl did not oppose the making of the orders made by his Honour on 17 December 2007. 2 There is before the Court a draft notice of appeal which has been filed by Mr Etl. That notice of appeal says that the appeal is from the whole of the judgment given on 17 December 2007. However, when one comes to the grounds, they are that his Honour erred in the exercise of his discretion in refusing the adjournment. The ground is that his Honour had not exercised his discretion judicially and had done so "in a manner that caused a miscarriage of justice in the affirming of the sequestration order made against the Appellant. I take that view because of what appears in the draft notice of appeal and by reason of the fact that the orders that were made after the adjournment application was refused were not opposed. 4 Mr Etl appeared in person before me on 30 April 2008 and made a strong plea for, in substance, a further adjournment of the proceeding so that he could pursue various lines of inquiry which, as I understood him, were directed towards establishing that the sequestration order made against him by the Registrar in September last year was obtained as a result of conduct by the parties seeking that order which he was disposed to characterise as criminal, fraudulent and improper. The Court is in no doubt that Mr Etl harbours a serious subjective grievance about the circumstances surrounding the making of the sequestration order. 5 His submissions amounted to an attempt to reargue matters which had been raised or which could have been raised before the Registrar in opposition to the making of the sequestration order. As I have noted, allegations of fraud and criminal conduct were made against a number of people. No evidence was advanced to support these claims. It was said that complaints had been made to a legal regulatory authority and a copy of a police statement made by Mr Etl six days ago was also handed up. These complaints related to alleged misconduct which was said to have occurred prior to September 2007. In addition, Mr Etl said that he was involved in discussions with his trustee and other interested parties with a view to having his bankruptcy discharged. 6 Some of the complaints and negotiations which he described postdate the orders made by his Honour and plainly could not have been relied on in support of the application for an adjournment which was made on 17 December 2007. Insofar as there were matters relating to conduct which predated 17 December 2007, they were matters which could properly have been raised before the Registrar at the time the sequestration order was sought. Mr Etl says that he did raise some of these matters. Others were not. 7 In these circumstances the first issue for the Court is whether leave should be granted to Mr Etl to make an application for leave to appeal against his Honour's refusal of the adjournment out of time. 8 Mr Etl would appear not to have slept on his rights but to have made contact with the Registry of the Court with a view to doing that which was necessary procedurally to commence an appeal against his Honour's orders. He was not legally represented at the time. He did not appear to understand the difference between an application for leave to appeal and an appeal. He sought to file a notice of appeal within a relatively short time after his Honour made the order on 17 December. Were that the only issue involved on the present application, I would be disposed to grant Mr Etl the indulgence which he seeks to file a draft notice of appeal out of time. However, there is a more fundamental problem and that is that what he is seeking to do is to appeal against a refusal of an adjournment. That is an order of an interlocutory character and he, therefore, requires leave to appeal (see s 24(1A) Federal Court of Australia Act 1976 (Cth)). 9 The principles are well established. A Court which is asked to grant leave to appeal from an interlocutory decision must first determine whether, in all the circumstances, the decision is attended by sufficient doubt to warrant it being reconsidered. Secondly, it must consider whether substantial injustice would result if leave were refused, supposing the decision to be wrong, see Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397. Mr Etl has advanced no argument at all which suggests that his Honour made any error in the exercise of his discretion to refuse the adjournment sought on 17 December 2007. 10 Even if the draft notice of appeal is to be understood as an attempt to commence an appeal from the whole of his Honour's judgment which includes the affirmation of the sequestration order, no error is established, given that the making of those orders was not opposed and no argument was directed to his Honour designed to persuade him that the Registrar had erred in making the sequestration order. Accordingly, I am not persuaded that his Honour's decision is attended by any doubt and there is, therefore, no occasion for it to be reconsidered on appeal. 11 Moreover, no substantial injustice will result for Mr Etl in the event that leave is refused because he will remain free to pursue the inquiries which he has been undertaking with a view to obtaining fresh evidence which, if it is obtained, may enable him to make application to the Court for the sequestration order to be set aside. That is a matter for the future. 12 There is, therefore, nothing to be gained by enlarging time for the filing and serving of a notice of appeal. 13 The application should be dismissed. I will hear the parties on costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | application for an extension of time to file and serve notice of appeal applicant sought to appeal from interlocutory judgment leave to appeal required principles to be applied where no argument advanced which suggested the trial judge erred in his discretion where no substantial injustice to applicant application dismissed practice and procedure |
NN 3554 of 2008 ('the Bankruptcy Notice') or extend time for compliance with it. On 20 February 2009 the Chief Justice, pursuant to the provisions of subs 25(1A) of the Federal Court of Australia Act 1976 (Cth), determined that the appellate jurisdiction of the Court in relation to the appeal be exercised by a single judge. On 20 April 2009 I dismissed the appeal and I now publish my reasons. The notice of appeal in this Court seeks an order that the Judgment be set aside and an order that the Bankruptcy Notice be stayed until the High Court of Australia has determined the appellant's application for special leave to appeal from a judgment of the New South Wales Court of Appeal (see Miller v Nationwide News Pty Limited [2008] NSWCA 222). On 11 February 2009 the High Court dismissed the appellant's application for special leave (see Miller v Nationwide News Pty Limited [2009] HCASL 22). Arguably, this disposed of both orders sought but I was prepared to hear the appeal on the basis that it only disposed of the stay order, not the order seeing to set aside the Judgment. The Bankruptcy Notice required the appellant to pay debts totalling $91,371.90 under a judgment of the Supreme Court entered on 16 September 2008. The judgment was entered in accordance with two certificates of determination of costs assessments issued on 3 September 2008. The two certificates related to party and party costs orders which had been made in the District Court by Delaney DCJ on 31 January 2008 and by Beazley JA in the New South Wales Court of Appeal on 16 June 2008. The existence of the costs orders, the assessments and the judgment debt is not in dispute, but the appellant invited the Federal Magistrates Court, and invited this Court, to look behind the costs order of Delaney DCJ so as to find that, in effect, it ought not to have been made because the appellant's substantive claim in the District Court should not have been dismissed. He also invited the Federal Magistrates Court to examine the reasoning of Beazley JA, who refused the appellant an extension of time for bringing an appeal from the judgment of Delaney DCJ (see Miller v Nationwide News Pty Limited [2008] NSWCA, unreported, 16 June 2008), and also to examine the reasoning of Hodgson JA, Bell JA and Gyles AJA in the Court of Appeal when refusing his application for review of Beazley JA's judgment. After service of the Bankruptcy Notice, the appellant unsuccessfully applied to the New South Wales Court of Appeal for a stay on the two costs orders and the judgment debt based on the costs assessments. This was addressed by McColl JA on 13 October 2008 (see Miller v Nationwide News Pty Limited [2008] NSWCA 261). The Federal Magistrate carefully considered the appellant's application that came before him. The principal basis upon which the appellant sought to have the Bankruptcy Notice set aside in that court was an assertion that Delaney DCJ's judgment was capable of being overturned on appeal. In relation to the prospects of the High Court special leave application, I would, with respect, form the same opinion of its prospects as was explained by McColl JA [at [27], [28]]. I therefore decline to embark on a retrial of the existence of the contract asserted by Mr Miller, so as to arrive at a conclusion undermining the validity of the bankruptcy notice. I am unable to identify any error in the reasoning of the learned Federal Magistrate. His Honour correctly exercised his discretion to refuse to grant an extension of time to comply with the Bankruptcy Notice or to set it aside. There is no error of the kind referred to in House v R [1936] HCA 40 ; (1936) 55 CLR 499 at 504 --- 505. The appeal must be dismissed with costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. | exercise of appellate jurisdiction by a single judge pursuant to subs 25(1a) of the federal court of australia act 1976 (cth) whether discretion to refuse to grant an extension of time to comply with bankruptcy notice or set notice aside was exercised correctly no error in the exercise of discretion. bankruptcy |
He arrived in Australia on 9 November 2008 and applied to the Department of Immigration and Citizenship for a Protection (Class XA) visa on 17 December 2008. A delegate refused that application in March 2009. The claim essentially advanced by the now Appellant before the delegate centred upon an asserted fear of persecution attributable to his conversion from the Sunni Muslim faith to the Shia Muslim faith. The delegate was not satisfied as to the genuineness of his claim to have converted. He states that he suffered harassment by Sunnis in Pakistan as a result of his religious conversion and that he will be killed on return to his home country. However, in this case, I do not accept that the applicant faces a real chance of persecution if he is returned to Pakistan for reason of his religion or for any other Convention-related reason. At interview, when questioned about the Shia Muslim faith, the applicant knew some basic facts about the religion but he was also unable to confidently answer some very straightforward questions despite prompting on several occasions. The applicant's responses at interview were also often vague and confused. The applicant could not name the branches of Shia Islam. He was also uncertain about the number of imams recognised by Shia followers and could not answer some basic questions on the imams. He was unable to adequately demonstrate an understanding of the differences between Shia and Sunni prayer rituals including the preparation for prayers. The applicant was also unable to adequately explain the spiritual significance of the Shia commemoration of 'Ashura' and the information he did provide about Ashura was vague and unclear. In relation to Ashura communications, although he thought the Shia holy city of Karbala could be situated in Iraq, the applicant indicated he was not certain of this fact. He was also not able to state the location where Shia Muslims make their pilgrimage in Karbala. I consider a genuine, committed follower of the Shia faith would have been able to answer these basic questions accurately and in a confident manner. ... The applicant states that he officially converted to Shia Islam in 2007. Given my conclusion that the applicant is not a genuine convert to Shia Islam, I do not accept that he suffered harassment in Pakistan for religious reasons. I do not accept that he was targeted by Lashkar-e-Taiba and Sunni fundamentalist elements as claimed. There is also no evidence before me to indicate that the applicant faces a real chance of persecutory treatment in Pakistan for any other Convention reason. By way of a letter dated 16 April 2009, he was invited to appear before the Tribunal. He did in fact attend a hearing held on 18 May 2009. On 9 June 2009 the Tribunal wrote to the now Appellant advising him that it had decided to affirm the decision under review. The Tribunal was also not satisfied as to the genuineness of the central claim being advanced by the now Appellant. The essence of his claim is that having converted, he now stands to [sic] the risk of persecution in Pakistan. His claim is therefore one that is fundamentally founded on the fear of persecution on the grounds of his religious beliefs. For reasons that follow below, the Tribunal is not able to accept the applicant's claims and rejects them accordingly. The absence of such a rational explanation leaves the Tribunal to doubt that the applicant ever converted from the Sunni faith to the Shiite faith. The Tribunal's doubts as to the credibility of the applicant's claims are reinforced by the fact that when asked common and fundamental questions about the differences between the Shiite faith and the Sunni faith the applicant was not able to answer these questions. The Tribunal notes particularly that at the hearing when the applicant was asked the differences between the Shiites [sic] practice and the Sunni practice in relation to Hadeeth, the applicant could not answer. The applicant instead persisted in talking about Jihad. Whilst he made some remarks about the first caliph the applicant's answers remained unconvincing and far from clear. On the basis of the evidence, the Tribunal is not satisfied that the applicant converted from the Sunni religion to the Shiite religion. The Refugee Review Tribunal denied the Applicant procedural fairness by reaching adverse conclusions that the applicant was not a witness of truth, being conclusions that were not obviously open on the known material, without giving the applicant the opportunity to be heard in respect of those matters. The Tribunal had no jurisdiction to make the said decision because its " reasonable satisfaction " was not arrived in accordance with the requirements of the Migration Act. The Tribunal's decision was unjust and was made without taking into account the full gravity of applicant circumstances and the consequence of the claim. The applicant satisfy the four key elements of the Convention definition as detailed in page 2 and 3 of the Tribunal decision. The Tribunal has not considered this aspect and therefore committed factual and legal error. The RRT has failed to investigate applicants claim, specially the grounds of persecution in Pakistan. Therefore, the Tribunal decision dated 6 June 2009 was effected by actual bias constituting judicial error. In dismissing the Application , the Federal Magistrate not only resolved the remaining Ground ; he also considered the five Grounds as originally expressed in the Application as initially filed. The Federal Magistrate further concluded that none of these Grounds " were of any assistance to [the Applicant] ": [2009] FMCA 945 at [97] . A Notice of Appeal was filed in this Court on 13 October 2009. Respondent has not consider this aspect and therefore committed factual and legal error. Therefore the Respondent decision dated 6-6-2009 was effected by actual bias constituting jurisdictional error. The now Appellant, it should be noted, appeared before both the Tribunal and the Federal Magistrate unrepresented. He appeared before this Court unrepresented, although he did have the benefit of an interpreter. No real explanation has been forthcoming as to the manner in which the Application as initially filed in the Federal Magistrates Court came to be drafted or why the Grounds there set forth were abandoned or not pressed. Nor has there been any explanation as to why only one Ground was sought to be agitated before the Federal Magistrate. All that is known is that the now Appellant had some legal assistance in the drafting of the sole ground advanced before the Federal Magistrate. The difficulties confronting unrepresented litigants must readily be acknowledged, as must the difficulties confronting those who do not speak English and who are seeking protection as a refugee. But recognition of those difficulties cannot overshadow the need for there to be at least some explanation for the apparently ever-changing basis upon which an application is advanced for judicial resolution. In the absence of explanation, no course should be encouraged --- or even readily permitted --- whereby a litigant can seek to advance a claim upon one basis, be unsuccessful, and then retreat to a claim differently expressed with a view to seeing whether that different claim has any greater prospects of success. In the present proceeding, three considerations (at least) warrant attention, namely: to raise on appeal grounds not previously relied upon requires the leave of the Court; the role of this Court as an appellate court and the role that this Court plays in respect to any subsequent application that may be made to appeal to the High Court of Australia; and relevant to the grant or refusal of leave are various factors, including the fact that a ground sought to be raised was previously abandoned. Each of these considerations has also been repeatedly addressed in decisions of this Court --- but some brief overview of these considerations is perhaps appropriate, lest the Appellant be left with the impression that his appeal has been dismissed on a " technicality " divorced from principle or merit. The serious consequences that may attend a wrongful refusal of a protection visa may also be taken into account when determining whether it is expedient in the interests of justice that leave be given: SZEPN v Minister for Immigration and Multicultural Affairs [2006] FCA 886 at [16] per Branson J. The serious consequences that attend the refusal of leave to raise a new ground in any appeal is, however, a matter warranting careful consideration and migration cases --- it is considered --- attract no different consideration: cf SZKCQ v Minister for Immigration and Citizenship [2009] FCA 578 at [9] . In identifying these considerations, it should obviously be recognised that they do not constitute an exhaustive list. In the specific context of migration cases, in (for example) NAJT v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 134 at [166] , [2005] FCAFC 134 ; 147 FCR 51 at 85, Madgwick J identified relevant questions to be addressed as including the following: Do the new legal arguments have a reasonable prospect of success? Is there an acceptable explanation of why they were not raised below? How much dislocation to the Court and efficient use of judicial sitting time is really involved? What is at stake in the case for the appellant? Will the resolution of the issues raised have any importance beyond the case at hand? Is there any actual prejudice, not viewing the notion of prejudice narrowly, to the respondent? If so, can it be justly and practicably cured? If not, where, in all the circumstances, do the interests of justice lie? Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. All of the issues which are sought to be ventilated should be addressed at the trial in that Court. Parliament has provided for a right of appeal to this Court and in matters of this kind the appellate jurisdiction of this Court may be exercised by a single Judge: s 25(1AA) of the Federal Court of Australia Act 1976 (Cth). Indeed, that is the case on this appeal. If a party is entitled to raise issues for the first time on appeal, the appeal court will become de facto the primary court. That is undesirable. It is particularly undesirable where the appellate jurisdiction of the Court is being exercised by a single judge and any right of appeal from that single judge is to the High Court. If a party is entitled to raise an issue for the first time on appeal in this Court, the High Court will be burdened by applications for leave to appeal from judges sitting alone who have not had their decision reviewed. That must be particularly undesirable from the High Court's point of view. If new grounds are advanced on appeal, it effectively means that the jurisdiction is being exercised by this Court. It is particularly important to the party seeking refugee status that that party's claim be considered by the Tribunal in accordance with law. That said, however, it seems to me that it is necessary to protect the integrity of the appellate jurisdiction that parties be bound by the way in which they conducted their application for judicial review before the Federal Magistrates Court: H v Minister for Immigration and Multicultural Affairs [2000] FCA 1348 ; (2000) 63 ALD 43. " To allow too readily the running of new points, or indeed a whole new case, on appeal is to undermine the appellate process by rendering the trial process almost irrelevant ": WAJR v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 106 at [19] , [2004] FCA 106 ; 204 ALR 624 at 629 per French J. In the Appellant's amended application to the Federal Magistrates Court such a claim was expressly included. However, at the hearing in the Federal Magistrates Court the Appellant, who was represented by counsel, abandoned that argument. There may be some circumstances in which an appellate court will permit a party who has expressly abandoned a point at trial to raise it afresh on appeal. Gyles J would have permitted such a course in Dovuro v Wilkins [2000] FCA 1902 ; (2000) 105 FCR 476 at 527 [181] at least where the point involved no prejudice to the other party. Branson and Finkelstein JJ took the opposite view: 487---488 [38] and 508---509 [119]---[120]. There may be something to be said for the view that where a point is expressly abandoned that the doctrine of waiver is relevant to the question: cf. Browne v Dunn (1894) 6 R 67 at 75 per Lord Halsbury, 80 per Lord Bowen; applied by the Privy Council in Yorkshire Insurance Co v Craine [1922] 2 AC 541 at 552---553 per Lords Buckmaster, Atkinson, Sumner, Parmoor and Wrenbury. If that were so, the question of whether an appellate court should entertain a fresh ground might not be relevant --- there might be no ground to raise. However, whether the question is posed as one about the circumstances in which an appellate court should permit a point abandoned below to be resurrected on appeal, or, instead, one of waiver leading to the conclusion that the point no longer juridically exists --- the outcome is the same in this case. I would not permit the abandoned ground to be entertained. There are unquestionably instances where an argument has been permitted to be raised on appeal even though " unequivocally disclaimed " before the primary judge: e.g. CA Henschke & Co v Rosemount Estates Pty Ltd [2000] FCA 1539 at [30] to [35], 52 IPR 42 at 57 to 60. In the specific context of migration cases, leave to raise on appeal an argument abandoned before a Federal Magistrate may thus be permitted where (for example) there has been " an error of judgment by [an appellant's] counsel in abandoning a point which had originally been taken, and which was plainly viable ": White v Minister for Immigration and Multicultural Affairs [2000] FCA 232 at [35] , [2000] FCA 232 ; 96 FCR 511 at 519; SZBLY v Minister for Immigration and Citizenship [2007] FCA 765 at [36] , [2007] FCA 765 ; 96 ALD 70 at 77. It has generally been recognised that the considerations relevant to whether an argument which has previously been abandoned should later be permitted to be " resurrected " include the circumstances in which the argument was previously abandoned, whether a party was legally represented and whether the argument requires further evidence if leave is given. Other considerations include the importance of the argument sought to be raised and any potential prejudice to an opposing party. Whatever may be the correct approach which may ultimately prevail, the difficulties confronting applicants for refugee status should nevertheless be constantly recalled. Such applicants may have very little (if any) appreciation of either the arguments which are sought to be advanced on their behalf before the Federal Magistrates Court or the significance which may later be given to those arguments by this Court on appeal. As in the present proceeding, the arguments are often drafted by so-called " friends " who neither appear before the Court to explain the arguments sought to be advanced nor explain to the litigant in advance of any hearing the substance of the arguments to be resolved. The quality of the assistance provided by such so-called " friends " may frequently be doubtful. In such a context, there is thus an element of unreality in concluding that an unrepresented litigant has " abandoned " or " not pressed " an argument which he did not really understand he was otherwise advancing for resolution. In many migration cases, and the present is no exception, the Appellant understands little other than the fact that he has not been successful. Not surprisingly, many unrepresented applicants for refugee status cannot explain the concept of " jurisdictional error " or even less esoteric terms such as " actual bias " or " procedural fairness ". Yet such is the language frequently employed in their Grounds of Appeal. Consideration of those factors relevant to an informed decision being made to abandon an argument in circumstances more apposite to civil litigation in which litigants are well-represented may assume little (if any) importance in an appeal such as the present. But some significance, it is considered, is nevertheless to be given to even an ill-informed unrepresented litigant apparently abandoning an argument otherwise available to him and thereafter seeking to resurrect on appeal the very same argument. The " interests of justice ", it is to be recalled, encompass the interests of both the unrepresented Appellant and the interests of the Respondents to an appeal. An unconstrained freedom on the part of an unrepresented Appellant to pursue all such arguments as may advance his own interests may well be inconsistent with the interests of a respondent or the more generally expressed public interest in the orderly administration of justice. An absence of prejudice claimed by a respondent may not be a sufficient reason to allow an argument to be raised for the first time on appeal: e.g. NBMB v Minister for Immigration and Citizenship [2008] FCA 149 at [23] to [33] [2008] FCA 149 ; , 100 ALD 118 at 128. In VUAX v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 158 the grant of leave was thus addressed by reference to whether it was " expedient in the interests of justice " to grant leave. The Court may grant leave if some point that was not taken below, but which clearly has merit, is advanced, and there is no real prejudice to the respondent in permitting it to be agitated. Where, however, there is no adequate explanation for the failure to take the point, and it seems to be of doubtful merit, leave should generally be refused. In our view, the proposed ground of appeal has no merit. There is no justification, therefore, for permitting it to be raised for the first time before this Court. That does not mean that an appellate court should enter upon a full consideration of the grounds. To do so would make the requirement for leave meaningless. It is sufficient to determine whether the grounds sought to be raised have a reasonable prospect of success. We also consider it appropriate to take into account whether the appellant had the benefit of legal representation at the hearing before the primary judge. To that extent, this Court has had the benefit of the obiter views helpfully expressed by the Federal Magistrate. The now Appellant was said to have been given an opportunity of being heard in respect to the adverse conclusions as made by the Tribunal, and those adverse conclusions were held to have been made in reliance on the now Appellant's own evidence. (ii) Jurisdictional error : The Federal Magistrate observed that " no particulars " of this Ground were provided. To the extent that a challenge was made to the manner in which the Tribunal reached its state of " satisfaction ", the Federal Magistrate observed that the Tribunal was " not required to uncritically accept any, or all, of the applicant's claims ". (iii) The decision was "unjust" : In respect to this Ground the Federal Magistrate observed that no jurisdictional error was exposed as " [t]he Tribunal's findings were open to it on what was before it ". It was further observed that " [t]he Tribunal gave cogent reasons in support of its findings ". (iv) A failure to consider an aspect of the claim : This Ground was rejected by the Federal Magistrate upon the basis that the Tribunal did consider the claim advanced. " At best ", the Federal Magistrate observed, the Ground was " an assertion that the applicant meets the definition of "refugee" as set out in Article 1A(2) of the Refugees Convention ". (v) A failure to investigate and "actual bias" : The Federal Magistrate rejected a contention that there was a " general duty to inquire " and further concluded that there was " nothing before the Court to suggest bias, or the apprehension of bias, on the part of the Tribunal ...". No appellable error is exposed in these conclusions of the Federal Magistrate --- even if leave is to be granted to raise the matter addressed as Grounds of Appeal . The final Ground of Appeal that the Appellant seeks to raise, Ground 7 in the Notice of Appeal , was not raised at any stage of the proceeding before the Federal Magistrate. The Ground does not make sense, even allowing for the fact it may have been drafted by someone whose native language is not English. For this reason, this Ground too has no prospects of success. A substantial difficulty confronting the now Appellant is the fact that adverse findings as to his credit were made against him by both the delegate and (more importantly) the Tribunal. The very basis upon which he was advancing his claim, namely conversion from the Sunni Muslim faith to the Shia Muslim faith, was rejected. The findings of fact made by the Tribunal were findings open to it. No jurisdictional error is discernible. There is a recognised public interest in applications for refugee status being resolved in a timely manner and in accordance with the procedure prescribed by the Migration Act : Iyer v Minister for Immigration and Multicultural Affairs [2001] FCA 929 at [62] , [2001] FCA 929 ; 192 ALR 71 at 86 per Gyles J; SZKMS [2008] FCA 499 at [30] per Lander J. Leave to raise the Grounds of Appeal now set forth in the Notice of Appeal is refused. The new arguments seek to raise in large part arguments which were either abandoned before the Federal Magistrate or not pressed in that Court. No explanation has been advanced for the change in the course that the Appellant now wishes to plot. And the new arguments are not considered to have sufficient prospects of success to warrant the grant of leave. The appeal is to be dismissed. There is no reason why costs should not follow the event. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | application for refugee status grounds not pressed before federal magistrate grounds sought to be advanced on appeal leave to raise new grounds whether different considerations apply to the grant of leave in migration cases grounds not pressed before federal magistrate grounds sought to be advanced on appeal migration practice and procedure |
The rule provides that the Court has power to so order if "special reasons" are established. 2 The application is supported by an affidavit of Mr Shane Prince who appeared as pro bono counsel for the applicant in the proceedings before the Federal Magistrate. The matter was heard by Cameron FM who delivered judgment in Sydney on 31 January 2008. Mr Prince was present when judgment was handed down. 3 The appeal period expired on 21 February 2008. The present application was filed on 13 March 2008. The draft Notice of Appeal was filed on that day and was accordingly filed 21 days after the expiry of the time limit prescribed by O 52, r15(1) for the filing of the Notice of Appeal. Mr Prince sets out in his affidavit an explanation the effect of which is that his failure to attend to the preparation of the Notice of Appeal was due to inadvertence and an extremely busy workload. 4 The leading authority on the question of the meaning of the term "special reasons" is Jess v Scott (1986) 12 FCR 187. The relevant passage of the judgment of the Full Court is set out at 195 and it has been cited on many occasions; it is not necessary for me to quote from the passage. 5 The proposed Notice of Appeal raises four grounds of appeal to which I will refer later. It is sufficient to say that the four grounds seek to re-agitate the matters upon which the applicant was unsuccessful before Cameron FM. 6 The Minister opposes the application on two bases. First, the Minister's solicitor submits that the applicant has not established special reasons within the test stated in Jess v Scott . She submits that mere inadvertence of itself does not amount to a special reason. 7 In Minister for Immigration and Multicultural Affairs v Kabail (1998) FCA 1320 (" Roda Kabail "), Tamberlin J declined to exercise his discretion to extend time under the rule. The Minister places considerable reliance upon the decision. It is true that Tamberlin J said in Roda Kabail that, essentially, the basis that was put forward for the application was one of inadvertence. His Honour went on to say that this of itself is not sufficient to establish a special reason, but it is important to note that he also observed that inadvertence can, of course, be taken into account. 8 It seems to me that the decision in Roda Kabail is distinguishable from the present application. The characterisation of "special reasons"...is a matter which is both discretionary and fact specific. That was a matter which his Honour weighed heavily in the balance against the exercise of the discretion. However, here it seems to me that the circumstances are sufficiently different so that, to adopt Tamberlin J's language, the fact situation in that case is of "little real assistance" to me in dealing with this morning's application. 10 In my view, the approach which is to be adopted in applications such as this is that which was stated by a Full Court in WAAD v Minister for Immigration &Multicultural Affairs (2002) FCAFC 399 at [7] . The Full Court in that case observed that the discretion to extend time is given for the purpose of enabling the Court to do justice between the parties. A number of authorities were cited in support of that proposition. I will come back to that shortly. That is one of the factors to be taken into account in the exercise of the Court's discretion. 12 Another is the question of whether the respondent to the proceedings has suffered any prejudice by reason of the delay. Here the Minister does not point to any prejudice other than the need, if an extension of time is granted, to resist an appeal which, on the Minister's submission, is a hopeless one. Again, I will return to that issue later. 13 The reason why I consider Mr Prince's explanation to be acceptable is that Mr Prince appeared as pro bono counsel and, as I have said, the delay was fairly short. Also, as he pointed out in his affidavit, he took steps to arrange for an alternative counsel, Mr Bozic SC, to appear on a pro bono basis on the application. Mr Prince remains willing to appear at the hearing if an extension of time is granted. 14 As Mr Bozic pointed out, applicants for refugee status rely heavily on pro bono counsel for assistance in conducting proceedings. This is of course a benefit, not only to an applicant, but also to the Minister and the Court. It means that quite often pro bono counsel appear on a direct access basis, which is not the way in which their practice would ordinarily be conducted. Where pro bono counsel handle a matter such as this without the benefit of having an instructing solicitor, they are deprived of the advantage of obtaining instructions and assistance from a qualified legal practitioner who will ordinarily be familiar with the need to comply with time limits set by the rules of court. 15 This of course is not to give a charter to pro bono counsel or legal practitioners generally to simply ignore the time limits, but it does seem to me to be a matter which I can take into account, particularly where the delay is not inordinate and where Mr Prince remains willing to appear on the appeal on the same pro bono basis as he appeared before the Federal Magistrate. 16 A critical factor in the exercise of the discretion is a consideration of the merits of the substantive application. This informs the exercise of the discretion and the nature of what amount to "special reasons" in any particular case. In considering the merits of the appeal, an applicant will not ordinarily have to demonstrate that there are reasonable prospects of success. The authorities to which Mr Bozic referred in his written submissions are to the effect that the Court will generally only exercise its discretion against granting leave if the appeal is so devoid of merit that it would be futile to extend time. This was said by Brennan CJ and McHugh J in Jackamarra v Krakouer (1998) 195 ALR 516 at [7]. Other authorities to similar effect were set out in Mr Bozic's written submissions. 17 The Minister's solicitor submitted in her helpful written submissions that the four grounds of appeal appear to be hopeless and that no point would be served in granting an application for an extension of time. She observed that each of the four grounds appears to face difficulties of a number of authorities which would point against the success of the appeal. 18 Notwithstanding this, and bearing in mind that the delay is relatively short and has been explained in a way which I consider to be satisfactory, I think that there are special reasons. It is, in my view, sufficient to say that I do not consider the four grounds stated in the draft notice of appeal to be hopeless. I do not consider that there would be no point in granting the extension of time to argue those points on appeal. 19 One of the factors which must be taken into account is the applicant's personal circumstances. They are sufficiently explained in the decision of Cameron FM. The circumstances upon which the applicant relies to establish her refugee status are that she claims to fear persecution in China because of her religious beliefs. The background facts are set out in some detail in [5] of Cameron FM's decision. They include claims that the applicant was beaten, sexually assaulted and humiliated. 20 It is plain in those circumstances that if I were to decline to exercise my discretion the applicant would be deprived of the ability to put before the Court arguments which are at least available to be run. It cannot be said that the arguments are entirely without legal merit. 21 In all of the circumstances, I consider it appropriate to make the orders sought in the application. I direct that the draft notice of appeal annexed to Mr Prince's affidavit filed on 13 March 2008 be treated as the notice of appeal herein. 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 to file notice of appeal out of time applicant represented by pro bono counsel on direct access basis "special circumstances" requiring leave inadvertence of counsel grounds of appeal not devoid of merit circumstances of applicant leave granted migration |
In the course of the proceeding the applicant filed a list of documents in which he claimed legal professional privilege in respect of a class of documents. 2 The respondent advised the Court that he wanted to challenge the claim for legal professional privilege. I directed the applicant to identify with some particularity each of the documents in the class of documents for which legal professional privilege was claimed. The applicant provided the respondent and the Court with a list setting out with some particularity the documents for which legal professional privilege was claimed. 3 On the last occasion that the Court sat, the respondent sought production of a number of those documents on the ground that the applicant had a duty, akin to a prosecutorial duty in the criminal law, to provide the respondent with the documents for which legal professional privilege was claimed. The respondent at that time accepted that the documents would be privileged and free from production, except for, as the respondent put it, that the applicant owed a prosecutorial duty to the respondent. 4 At that time I advised Mr Ats, who appeared for the respondent, that there was authority against the proposition which he advanced. I drew his attention to a decision of this Court in Visy Industries Holdings Pty Limited v Australian Competition and Consumer Commission [2007] FCAFC 147 and, in particular, [112] of that decision. That decision was a decision of the Full Court of this Court of which I was a member. In my reasons in that decision, I considered a submission which had been put to the primary judge and to the Full Court that, in a claim for a civil penalty, the applicant owed a prosecutorial duty. 5 I agreed with Heerey J that there was no obligation resting upon the Australian Competition and Consumer Commission (ACCC) of the kind that rests upon a prosecutor in a criminal trial. The proceedings were civil proceedings. The principles of prosecutorial fairness do not apply in civil penalty proceedings: Adler v Australian Securities and Investment Commission [2003] NSWCA 131 ; (2003) 179 FLR 1 at [678] per Giles J (Mason P and Beazley JA agreeing); Australian Securities and Investment Commission v Rich (2005) 53 ACSR 320 at [358]. Whether the ACCC had an obligation to discover and produce these documents fell to be considered under the ordinary rules relating to discovery. The other members of the Court agreed. 6 I advised the respondent's solicitor in this matter then, as I previously had advised the respondent's counsel, that that decision and the decisions of the Court of Appeal in New South Wales meant that as a judge at first instance, I could not accede to an argument that the applicant in this case owed the respondent any duty of the kind that a prosecutor owes in the criminal law. 7 When the matter was called on today for argument, Mr Griffin QC, who appeared for the respondent, accepted that I was bound by the decisions to which I have referred and that there was no authority contrary to those decisions. He has asked me to rule on his client's application for production. I do so and the application is dismissed. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | proceeding for a civil penalty respondent's application to be accorded prosecutorial fairness prosecutorial fairness does not apply to civil proceedings application dismissed. discovery |
They are husband and wife. 2 They applied to the Department of Immigration and Multicultural Affairs for Protection (Class XA) Visas on 24 August 2006. Those applications were refused on 3 November 2006. Review was sought and by way of a decision signed on 26 March 2007 the Refugee Review Tribunal affirmed the decision to refuse the visas. The Applicants did not appear before the Tribunal and the Tribunal proceeded to resolve the application pursuant to s 426A of the Migration Act 1958 (Cth). 3 An amended application as filed in the Federal Magistrates Court on 19 May 2008 contended that the Tribunal had failed to comply with s 425 of the 1958 Act. The First Applicant appeared before the Federal Magistrates Court on that date but the application was dismissed: SZLYO v Minister for Immigration [2008] FMCA 691. The application was dismissed under r 44.12(1)(a) of the Federal Magistrates Court Rules 2001 (Cth). 4 An Application for Leave to Appeal was filed in this Court on 3 July 2008. 5 There are two difficulties confronting the Applicants -- first, it is necessary to obtain leave to appeal; second, an extension of time is necessary in order to make any such application. 6 As is implicitly acknowledged in the Application as filed in this Court, leave is required because the decision of the Federal Magistrates Court is an interlocutory decision. The decision is unquestionably interlocutory, as is made apparent by the terms of r 44.12. 7 An appeal to this Court from an interlocutory decision of the Federal Magistrates Court requires leave: Federal Court of Australia Act 1976 (Cth), s 24(1A). 8 An extension of time is necessary because there is an implied time limit of 21 days after the date of the interlocutory judgment in which to file an application to this Court: SZDGN v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 1543 at [9] per Lindgren J. 9 It is considered that the Application for Leave to Appeal to this Court should be dismissed. 10 There has been no explanation forthcoming as to why the Application was not filed within time. The First Applicant appeared in person before this Court unrepresented, although he did have the benefit of an interpreter. He was not only present when the Federal Magistrate dismissed the application to that Court; he was also aware at that time that there was a time limit within which any application to this Court was to be filed. The only explanation for the delay which was advanced was his belief that his " lawyer " would do that which was necessary. The " lawyer ", however, was someone he had never met, but a person to whom a " fee " was apparently paid. 11 Without more, such is not considered to be a satisfactory explanation for the delay. It is, at the very least, invidious that a person professing to be a legal practitioner accepts a " fee " for professing to advise persons such as the present Applicants but a person who apparently has never seen the Applicants. 12 There is, in any event, no reason to question the decision of the Federal Magistrates Court. Some reservation is expressed as to whether or not it is sufficient compliance with s 425 of the Migration Act 1958 (Cth) for a notice pursuant to that section to be addressed to only one of the two applicants seeking review by the Tribunal. In the present case, however, there was a joint application for review as filed on behalf of both applicants and the husband was appointed to be the " authorised recipient ". It was this argument advanced by the Applicants which was rejected by the Federal Magistrates Court and is the matter sought to be pursued on appeal, should leave be granted. It is not a contention which it is considered warrants the granting of leave to appeal, even should time be extended. 13 The refusal of leave, it is further considered, does not operate any substantial injustice upon the Applicants. The Respondent Minister seeks an order for costs fixed pursuant to O 62 r 4(2)(c) of the Federal Court Rules in the sum of $1,300. It is appropriate that such an order be made. The Application for Leave to Appeal be dismissed. 2. The Applicants are to pay the costs of the First Respondent fixed in the sum of $1,300. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | application for leave to appeal interlocutory decision application filed out of time no explanation for delay application dismissed migration |
He lodged an application for a protection visa under the Migration Act 1958 (Cth) (the Act) with the Department of Immigration and Multicultural Affairs on 1 August 2005. The appellant claimed to have a well-founded fear of persecution due to his membership of the Shouters or Hui Fu Hui, an underground Christian Church in China. 2 In a written statement accompanying his visa application the appellant claimed that in 2003 nine policemen had broken up a meeting of his church group and had confiscated bibles, poetry and other publications. The appellant said that two members of the church group were arrested and accused of disseminating "the religion", and that the police threatened to arrest others if further meetings were held. After that, meetings of the church group continued to be held in different secret locations. The appellant said he became the "main deacon of ecclesiae" within the church group. The appellant went on to say that, notwithstanding their efforts to keep their meetings secret, on 12 May 2005 police had arrived at a meeting of the church group and tried to arrest those present. Further, the appellant said that five policemen broke into his home on 17 May 2005 intending to arrest him. He was not there at the time. The appellant said that he could not thereafter return to his house because he feared being arrested. He subsequently left China for Australia. The appellant stated that since his departure from China, his family has told him that he would be arrested and imprisoned should he return to China. 3 On 17 October 2005 a delegate of the first respondent refused the application for a protection visa. The delegate made adverse credibility findings in respect of the appellant. On 23 November 2005 the appellant applied to the Refugee Review Tribunal (the Tribunal) for a review of the delegate's decision. The appellant gave evidence at the hearing. At the conclusion of the hearing, the appellant's migration agent requested that she have an opportunity to provide the Tribunal with a post-hearing submission. It was agreed that any such submission be received by 6 March 2006, failing which the Tribunal would proceed to make its decision on the materials then before it. Under cover of a letter from his migration agent dated 6 March 2006, the appellant provided the Tribunal with a further statement and a copy of part of the decision made by the delegate. The covering letter stated "for your continue to process his case and make a decision, [the appellant] would like to proved another statement to you as requested" (sic). I know that in China if I persist in my religious belief I could never have my peaceful life and I would be arrested, beaten, tortured, and jailed like other brothers and sisters. There is evidence to prove what I said. In the course of its reasons, the Tribunal referred on a number of occasions to the statements made in the written statement accompanying the appellant's visa application, as well as to the evidence that the appellant gave before the Tribunal. 7 The Tribunal found that the appellant had a sparse knowledge of Christianity and that this was at odds with his claim that he was a "main deacon of ecclesiae" within the church group. The Tribunal could not, therefore, be satisfied that the appellant was a member of a Christian Church in China. Further, the Tribunal stated that in his evidence at the hearing, the appellant had said that the police had broken up a church meeting at his home. The Tribunal observed that he had failed to make such a claim in his original visa application. 8 The Tribunal also referred to a discrepancy in the appellant's visa application and his evidence as to the events of 17 May 2005. In his visa application he said that on that day five policemen broke in to his home and tried to arrest him, but in evidence he said nine policemen had gone to another church person's place to arrest people. 9 The Tribunal was not satisfied that the appellant had been arrested, or threatened with arrest, or that he had ever come to the adverse attention of the police in China because of his religious beliefs or practices. 11 The Federal Magistrate, in considering the Tribunal's decision in light of the claims made by the appellant, found that the appellant "republished by reference and reliance, and otherwise adopted the statement given in support of the visa application in its entirety by the letter and statement of 6 March 2006; and, in the absence of any other statement, he 'gave' the information to the Tribunal during the hearing by relying upon it as 'correct' ". 12 The Federal Magistrate held that the inconsistent statement in the visa application, referred to by the Tribunal in its reasons, came within the exemption provided by s 424A(3)(b) of the Act. Accordingly, there was no breach of s 424A of the Act. RRT made jurisdictional errors. The appeal should, therefore, on the basis of the grounds referred to in the notice of appeal, be dismissed. However, counsel for the first respondent treated the appellant's notice of appeal as contending that the Federal Magistrate erred in determining that the Tribunal had not contravened s 424A of the Act and I am content to deal with the appeal on this basis. 15 Since the hearing of this appeal, the High Court has handed down the decision of SZBYR v Minister for Immigration and Citizenship [2007] HCA 26. That decision is fatal to the case advanced by the appellant. However, in my view, for the following reasons, the appeal also fails on another ground. 16 In my view, the Federal Magistrate did not err in deciding that by submitting his post-hearing statement under cover of the letter of 6 March 2006, the appellant adopted and verified the information contained in the statement accompanying his visa application and that, accordingly, s 424A(3)(b) applied to the information in the first statement. 17 Before the Federal Magistrate it was contended that the appellant's reference to "my previous statements" in his post-hearing statement (see [5] above), did not refer to the written statement which accompanied the visa application and referred only to his evidence given before the Tribunal. In my view, the appellant did by his 6 March 2006 statement adopt and verify the information in the statement accompanying the visa application. I draw this inference by reason of the juxtaposition of the paragraph in the post-hearing statement which verifies the "previous statements" and the immediately preceding paragraphs which refer to the adverse findings of the delegate. I note also that the document which accompanied the visa application was headed "statement" and that there was no other written document signed by the appellant before the Tribunal. 18 In my view, in his post-hearing statement, the appellant referred to, and verified, his statement accompanying the visa application for the purpose of rebutting the adverse credibility findings made by the delegate and, also, to assuage the doubts expressed by the Tribunal as to the appellants credibility during the hearing. The submission was directed to excusing the appellant's poor performance whilst giving oral evidence at the Tribunal and resurrecting the veracity of the information contained in the statement accompanying the visa application. As in M55 [2005] FCA 131 , there can be little doubt that the appellant intended that the Tribunal should look at her protection visa application and its attachments. This is a sufficient basis to find that the appellant gave the date of her protection visa application to the Tribunal for the purposes of the review application. However, in my view, this is not a material difference because in both cases the information was given "for the purpose of the application" and so the requirements of s 424A(3)(b) of the Act were satisfied. 20 The appeal is dismissed with costs. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | tribunal referred to information in visa application as part of its reasons applicant delivered post hearing statement which verified the statements in visa application whether the information in visa application was information which the appellant gave for the purpose of the application migration |
On 7 August 2008, Len Boucher of TWB prepared and faxed to me and Mark Saltzman a document titled ' Furman/Gore Joint Venture: Basis of negotiated distribution of bank Account' ... That document reflected the final distribution figures that I had agreed with Gore. Although the Seaford development was not a project within the Earlsfield joint venture, I thought that it was appropriate to use this final account on the Earlsfield joint venture for that outstanding debt to be settled, and on the basis of the fax I received from TWB on 7 August 2008, I believed that Gore agreed to this; a payment of $4,565 in fees to TWB, Gore's accountant (which I agreed to, notwithstanding that I did not consider that the fees were rightly payable from Earlsfield's funds). Mr Furman relied on three affidavits sworn by him and two affidavits sworn by Mr Saltzman, his and Earlsfield's accountant. The second plaintiff (Mr Gore) relied on an affidavit sworn by him and one sworn by Mr Boucher of TWB Chartered Accountants, his accountant. All deponents were cross-examined. (b) Between 31 July and 7 August 2008 (inclusive) Mr Boucher and Mr Furman negotiated about a final distribution. Mr Saltzman was involved in the negotiations. Mr Gore did not have any significant direct role in the negotiations, which were almost exclusively conducted by Mr Boucher on his behalf. (c) During the period late July to 7 August 2008 Mr Gore was frequently changing his mind within a day and from day to day about features of a proposed settlement, in particular the $20,000 fee for the Seaford project referred to in the passage quoted at (b) in [2] (Seaford fee). Prior to 31 July he was prepared to agree to the fee in order to achieve a settlement. Early on 31 July he was not prepared to, though he realised he was going to have to make concessions if the matter were to be settled. Later that day he agreed to the $20,000 "extortion" in exchange for a full settlement. At a meeting between Mr Boucher, Mr Gore and Mr Saltzman on 6 August, it was apparent that Mr Gore would not agree to Mr Furman receiving the Seaford fee. On the morning of 7 August Mr Boucher told Mr Furman that Mr Gore had "instructed him" that the Seaford fee was "a great difficulty for him" in accepting the proposed distribution. Despite this Mr Boucher thought that Mr Gore would eventually agree to pay the fee. (d) Mr Gore was under financial and health pressures at the time. He needed funds, and realised he was in a weak negotiating position, in that he wanted to achieve a settlement which he could only do by making concessions he didn't want to make. (e) On 7 August Mr Boucher sent a fax to Messrs Furman, Gore and Saltzman. On the first page Mr Boucher referred to the attached pages as "the agreed basis for distribution of the funds held in the joint venture bank account for your approval". The second page was headed Furman/Gore Joint Venture: Basis of negotiated distribution of bank Account , and stated that Mr Gore would receive $415,786 and Mr Furman $279,650. The document explained how these amounts had been arrived at. After deduction from Earlsfield's funds at bank of its estimated GST liability and accounts outstanding, together with a refund of capital to Mr Gore, the balance was to be shared equally between Mr Furman and Mr Gore save for an adjustment of $20,000 in favour of the former in respect of the Seaford fee. (f) Mr Furman received the fax on the afternoon of 7 August. After considering it he rang Mr Boucher and said he agreed with the proposed distribution. (g) Mr Furman believed that because Mr Boucher was acting on Mr Gore's behalf in the negotiations, he had full authority from Mr Gore to arrange a final settlement. Accordingly, he understood that he and Mr Gore had settled the matter on the terms of the 7 August fax. Neither Mr Gore nor Mr Boucher told Mr Furman that Mr Boucher had authority to conclude an agreement on Mr Gore's behalf. (h) After Mr Gore's receipt of the 7 August fax he was very unhappy about the Seaford fee. He telephoned Mr Boucher on a number of occasions on the afternoon of 7 August and told him he was angry about the inclusion of the Seaford fee and would not accept it. Mr Boucher advised him to take a pragmatic view, to sleep on the proposal and let him know his decision in the morning. (i) On the morning of 8 August Mr Gore told Mr Boucher that he would not accept the proposal. Mr Boucher passed this on to Mr Furman and caused a proposed settlement meeting at Mr Saltzman's office to be cancelled. (j) On 11 August Mr Furman informed Mr Boucher that over the weekend he had found that Mr Gore had retained GST credits of over $100,000. Mr Furman did not in that conversation claim that an agreement had been concluded on 7 August. (k) On 22 and 26 August Mr Saltzman faxed letters to Mr Boucher relating to Mr Furman's GST discoveries. Mr Saltzman did not in those letters claim that an agreement had been concluded on 7 August. (l) On 26 August Mr Furman's then solicitors sent Mr Gore a letter demanding that the GST amounts discovered by Mr Furman be repaid to Earlsfield together with interest. The letter said that when this had been done, Earlsfield's accountant would be able to distribute the joint venture monies. The solicitors made no claim that a concluded agreement for distribution was already in existence. (m) On 28 August Mr Boucher wrote to Mr Furman recounting that Mr Gore had reluctantly agreed to GST adjustments requested by Mr Furman and then "withdrew his agreement". (n) On 2 September Mr Furman proposed to Mr Boucher that the balance of Earlsfield's funds be shared equally between the parties ($350,000 each). Mr Furman did not in that conversation claim that a concluded agreement had been reached on 7 August. (o) Mr Gore rejected the further proposal. (p) At no time between 7 August 2008 and 2 March 2009 did Mr Furman or anyone on his behalf assert to Mr Boucher that a concluded agreement had been reached. In Mr Furman's third affidavit (3 April 2009) he sought to correct one of the amounts in the proposed distribution accompanying the 7 August fax. In the form in which the fax was received by Messrs Saltzman, Furman and Gore, a refund of capital to Mr Gore of $245,945 was to be made from the $721,244 available following the deduction of various amounts. Mr Furman deposed that the amount of the refund was discussed in the course of various telephone calls with Mr Boucher leading up to and on 7 August. Mr Boucher proposed $245,945. Mr Saltzman had told Mr Furman the correct figure was $236,000. In Mr Furman's final conversation with Mr Boucher before the fax was sent on 7 August, he claimed Mr Boucher said $236,000 would be acceptable, and it was agreed that Mr Saltzman would make the appropriate adjustment at the meeting next morning. That adjustment would have increased the ultimate distribution to Mr Furman from $279,650 to $284,622 and decreased that to Mr Gore from $415,786 to $410,814. The primary case put by Mr Furman is that Mr Boucher had express authority from Mr Gore to send the 7 August fax and that Mr Furman accepted the offer it contained in his conversation with Mr Boucher on the afternoon of 7 August, in which he told Mr Boucher he agreed with the proposed distribution. In other words the case is put on the basis of a contract arising from an offer made by Mr Gore (through his agent) to Mr Furman and an acceptance by the latter. Mr Furman's alternative case was that, if he did not have express authority, Mr Boucher had ostensible authority to send the fax. The primary case assumes that the fax contained an offer that would ripen into a contract if accepted by Mr Furman. That is not the case. The fax was directed not only to Mr Furman but to Mr Gore (as well as Mr Saltzman, because the settlement related to Earlsfield's funds). The addressees were asked for their approval. Mr Boucher had every reason, as Mr Gore's agent, to insert those words. He had been closely involved with Mr Gore in lengthy and complicated exchanges with Mr Furman and Mr Saltzman. He knew Mr Gore was very "emotional" about his fallout with Mr Furman and his reluctance to allow Mr Furman the Seaford fee to which he thought he was not entitled. He also knew that Mr Gore had over recent days frequently changed his mind on whether to agree to the fee. In those circumstances it is unreasonable to treat the need for approval as specific to Mr Furman, so that his consent alone would give rise to a binding settlement. That is what is involved in Mr Furman's argument; that only his approval of the distribution was sought. The question is whether a reasonable observer, apprised of the factual matrix, would conclude that by their dealings the parties intended to make a concluded bargain so long as Mr Furman was happy with the terms of the proposal. In my view that observer would not so conclude, for the following reasons. First, the fax, addressed as it is, seeking the approval of the three addressees, points strongly against such a conclusion. The second relates to the factual matrix, which includes the matters referred to earlier in this paragraph in relation to Mr Boucher's appreciation of Mr Gore's state of mind and susceptibilities. The third related matter is that, having regard to Mr Gore's frequent changes of mind in relation to the Seaford fee, it would be unrealistic to treat Mr Boucher, an accountant of long experience, acting in this instance as Mr Gore's agent, as intending by sending the fax to bind his principal when he knew that Mr Gore was vacillating as to whether to agree to pay the Seaford fee and had not given him explicit instructions to agree to it. The reasonable observer's answer would be the same if the matter is approached more broadly than by way of the confines of offer and acceptance. While offer and acceptance may be the primary mode of ascertaining the existence of an agreement, in an appropriate case, including where there is no readily identifiable offer and acceptance, a court may look at the matter more broadly by asking whether, objectively and having regard to the totality of the dealings between the parties, they should be considered to have entered into a contractual relationship without inquiring too closely into the formalities of offer and acceptance: see Cheshire and Fifoot's Law of Contract (9th ed, LexisNexis, 2008) at 97 and Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 at 79-83. For the reasons given at [8], the objective observer would not conclude that the fax enabled Mr Furman's approval alone to bring a concluded agreement into existence. So called "post contractual" conduct is admissible on the question whether a contract has been formed: Howard Smith & Co Ltd v Varawa [1907] HCA 38 ; (1907) 5 CLR 68 at 77, Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 668-669, 672 and Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 ; (2001) 53 NSWLR 153 at [25] . On 11 August, three days after Mr Gore refused to approve the faxed proposal, Mr Furman told Mr Boucher he had discovered that Mr Gore had retained GST credits of over $100,000. He described his discovery as "a key issue that must now be taken into account in relation to any final distribution". He did not in his conversation with Mr Gore claim that an agreement had been concluded on 7 August. Rather he treated the GST issue as part of a continuing negotiation, which in fact went on for a considerable time. Mr Saltzman's letters to Mr Boucher of 22 and 26 August relating to Mr Furman's GST discoveries also made no claim that an agreement had been concluded on 7 August. I do not accept the submission by Mr Furman's Counsel that such a claim was made. This was based on a passage in the first letter, that whilst the "Supervision Fee in the amount of $22,000 was the catalyst for the basis of the negotiated distribution of bank account performed by you being set aside", the GST issue now had to be reconciled and brought back into the equation. Putting aside the fact that the $22,000 Supervision Fee had nothing to do with Mr Gore's refusal to approve the proposal, this passage is far from an assertion that any concluded agreement had been reached on 7 August. The observation that the negotiated distribution had been "set aside" is no more than a statement that it did not proceed. Counsel was only able to make the submission sound plausible by rendering the passage so that it included the words "Mr Gore had set aside ... the negotiated distribution". As with the 11 August conversation, Mr Furman's "key issue" relating to the GST had to be accommodated in any future distribution. Again it was part of a continuing negotiation. The 26 August 2008 letter demanding that the GST amounts together with interest be repaid to Earlsfield made no claim that a concluded agreement for distribution was already in existence. It too was part of the ongoing attempt by Mr Furman and Mr Saltzman to collect the GST "before there is a distribution of monies collected". The letter said that this had to happen before Mr Saltzman could distribute the joint venture monies. Mr Furman' s 2 September 2008 proposal that the balance of the funds be shared equally between the parties is another episode in the continuing negotiation to find an agreed distribution formula. Finally, Mr Furman agreed in cross-examination that neither he nor anyone on his behalf had, between 7 August 2008 and 2 March 2009, asserted that a concluded agreement had been reached on 7 August 2008. It is not simply that over a seven month period no claim was made that a concluded agreement had been reached on 7 August. Throughout their exchanges Mr Furman, Mr Saltzman and the former's solicitors were negotiating or dealing with Mr Boucher and Mr Gore in relation to the very topic on which Mr Furman later made the claim that a concluded agreement had been made on 7 August. Despite numerous opportunities when there was occasion to raise the matter, it was never mentioned. To my mind that points against a finding that Mr Furman believed that a binding agreement existed. These post-7 August matters reinforce the conclusion to which I would in any event have come, namely that no concluded agreement was reached on 7 August. Counsel for Mr Furman made submissions as to the extent of Mr Boucher's authority as an agent. He contended that the authority to negotiate with Mr Furman included power to send the 7 August fax. Assuming that is correct, it does not assist Mr Furman for, as I have said, the terms of the fax do not allow his approval to bring a concluded agreement into existence in the absence of Mr Gore's approval. Mr Furman's case was put in the alternative on the basis that Mr Boucher had ostensible authority to despatch the 7 August fax. Ostensible authority to act as Mr Boucher did would not assist Mr Furman to overcome the obstacle to the success of his primary case based on Mr Boucher's actual authority. The "final distribution figures" alleged in paragraph 37 of Mr Furman's affidavit of 27 February 2009 are those in the document in the form in which it was faxed. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg. | whether a concluded agreement reached offer and acceptance approach where no discernible offer and acceptance conduct subsequent to alleged conclusion of agreement relevance to whether concluded agreement made. contract |
Part XIC was introduced into the Act by the Trade Practices Amendment (Telecommunications) Act 1997 (No 58 of 1997) (see item 6 of Sch 1) with effect from 30 April 1997. It provides for a regulated access regime specific to telecommunications services. By way of contrast, Part IIIA of the Act provides for a general access regime not limited to a specific industry. Section 152CK of the Act provides for the interaction between the two regimes, but it is not of present relevance. 2 The proceedings relate to access to the High Frequency Unconditioned Local Loop Service, also known as the Line Sharing Service (LSS). The applicant (Telstra) owns the lines over which the LSS is provided. 3 There were access disputes between Telstra and the second respondents in the three proceedings in relation to access to the LSS. Arbitration takes place under Div 8 of Pt XIC. 4 Pursuant to the mechanism in Div 8, ACCC made a final determination in respect of each access dispute. Telstra seeks review of each of the final determinations. 5 The three proceedings were heard together, the evidence in each being evidence in the others, subject to all just exceptions on grounds of relevance. 6 In the table below, I identify, in summary form, the grounds of review referable to various paragraphs in s 5(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) on which Telstra relies, leaving until later the explanation of the grounds. Each "Ground No" is a reference to the number of the ground in the relevant amended application. The capitalised letters of the alphabet in bold in the left hand column indicate the grouping of those grounds that I use at [123]ff below. (An eleventh ground was raised in all three proceedings but, as noted at [26] below, it is no longer relevant. ) Accordingly, evidence was led in the Request proceeding on the basis that it would also be all the evidence relevant to the issues in the Chime proceeding and Primus proceeding. Conformably with that course, I will refer to the Request proceeding alone, but in doing so I will necessarily also be addressing the issues in the Chime proceeding and the Primus proceeding. 10 I agreed to the parties' request that I publish my reasons for judgment without making orders, and allow the parties the opportunity to make submissions on the orders to be made. Annexure A to these reasons is an alphabetical list of acronyms and technical terms and their meanings. 12 Telstra owns a variety of networks which it uses to provide telecommunication services. One such network is the Public Switched Telephone Network (PSTN). Through the PSTN, Telstra provides to end-users various telephony and data services such as local, long distance, national and international calls and dial-up internet connections. Another Telstra network is its "Broadband" network. The PSTN and the Broadband network use what is called the Customer Access Network (CAN). Generally speaking, the CAN can be understood to be the network of connections between end-users, whether business or private, and some aggregation point within the network, which is usually a local exchange building. 13 Connection between the end-user and that point within the network is normally achieved by way of "line" (or "metallic pair" or "twisted pair") of copper or aluminium wire, or where there is no fixed line, by radio. The copper or aluminium wire is often referred to as "unconditioned communications wire". It forms a continuous copper or aluminium path between the premises of end-users and exchanges and is commonly referred to as the Unconditioned Local Loop (ULL), "local loop" or, simply, "line". The word "unconditioned" signifies that the wire is bare or unqualified, that is, the equipment required to make it serviceable is not yet attached to it. 14 Both the LSS and another service referred to below, the Unconditioned Local Loop Service (ULLS), are provided over the CAN, and to a retail customer, or end-user, over a ULL. The CAN is the generic expression which applies to all of the ULLs: the ULLs, taken together, constitute the CAN. ● The Commission may declare carriage services and related services to be declared services. ● Carriers and carriage service providers who provide declared services are required to comply with standard access obligations in relation to those services. ● The standard access obligations facilitate the provision of access to declared services by service providers in order that service providers can provide carriage services and/or content services. ● The terms and conditions on which carriers and carriage service providers are required to comply with the standard access obligations are subject to agreement. ● If agreement cannot be reached, but the carrier or carriage service provider has given an access undertaking, the terms and conditions are as set out in the access undertaking. ● If agreement cannot be reached, but no access undertaking is in operation, the terms and conditions are to be determined by the Commission acting as an arbitrator. ● An access undertaking (other than a special access undertaking) may adopt the terms and conditions set out in a telecommunications access code. ● The Commission may conduct an arbitration of a dispute about access to declared services. The Commission's determination on the arbitration must not be inconsistent with the standard access obligations or an access undertaking. ● The Commission may register agreements about access to declared services. ● A carrier, carriage service provider or related body must not prevent or hinder the fulfilment of a standard access obligation. There is no access undertaking in operation relevant to these proceedings. 17 Section 152AB(1) sets out the single object of Pt XIC. Although the term "end-user" is not defined, it is convenient to think of it as referring to a retail customer or "consumer". There may be other persons who have a right to use a service, such as a member of the retail customer's household: see s 152CR(1)(c) (set out at [40] below). 18 The expressions "carrier" and "carriage service provider" are defined in s 152AC to have the same meaning as they have in the Telecommunications Act 1997 (Cth). I need not discuss those meanings. It suffices to say that Telstra is a carrier in relation to the LSS. 19 On the hearing there was a suggestion that there may be a difference between a legislative requirement to "take into account" something and a legislative requirement to "have regard" to something, one being more demanding than the other. I do not agree (see Re Michael; Ex parte Epic Energy (WA) Nominees Pty Ltd (2002) 25 WAR 511 ; (2002) 24 ATPR 41-886 ( Epic Energy ) at [55]). I am not persuaded by the fact that within Pt XIC itself the legislature has sometimes used one expression and sometimes the other (compare, for example, s 152AB(2) at [17] above and s 152CR at [40] below). I will use the expressions interchangeably. 20 It will be noted that subs (3) of s 152AB makes the list in subs (2) an exhaustive list of the matters to which regard may be had for the purpose of determining whether a particular thing promotes the LTIE. 21 Subsections (4) and (6) of s 152AB identify certain matters to which regard must be had in connection with the subs (2)(c) and (e) considerations respectively, but subss (5) and (7) respectively make it clear that subss (4) and (6) do not limit the matters to which regard may be had. 22 Section 152AC defines the terms "access", "access seeker", "declared service" and "standard access obligation". Those expressions are defined to have the meanings given by ss 152AF, 152AG, 152AL and 152AR respectively, discussed below. (2) For the purposes of this Part, anything done by a carrier or carriage service provider in fulfilment of a standard access obligation is taken to be an aspect of access to a declared service. 25 Division 2 (ss 152AL-152AQB) within Pt XIC deals with "Declared services". Section 152AL(3) provides that ACCC may, by written instrument, declare that a specified "eligible service" is a "declared service" if certain conditions identified in that subsection are satisfied. I need not discuss the meaning of "eligible service". The LSS is a declared service (see [28], [52] below). 26 At one time Telstra submitted that the declaration of the LSS was a legislative rather than an administrative act, and was invalid for failure to comply with certain provisions of the Legislative Instruments Act 2003 (Cth) (LI Act). However, following the enactment of the Trade Practices Amendment (Access Declarations) Act 2008 (Cth), this attack (expressed in an eleventh ground of review that was relied on by Telstra) has not been pressed. 27 Section 152ALA is important for Telstra's Ground 4 (which I address in Section B (Invalidity of Final Determination) at [239]ff below). (2) An expiry date must occur in the 5-year period beginning when the declaration was made. (3) Subsection (2) has effect subject to subsection (4). By a subsequent instrument dated 19 November 2003, which took effect on 3 December 2003, the day on which it was published in the Commonwealth of Australia Gazette (GN48, 3 December 2003), ACCC determined that s 152ALA of the Act had effect in relation to the LSS Declaration as if 31 October 2007 had been specified in the LSS Declaration as its expiry date. By an instrument dated 26 October 2007, which took effect on 29 October 2007, the day on which it was published in the Commonwealth of Australia Gazette (GN 5214), ACCC extended the period of the LSS Declaration to 31 July 2009 pursuant to s 152ALA(4) of the Act. 29 Section 152AQA assumes some importance in the present proceedings. It obliges ACCC to determine pricing principles relating to the price of access to a declared service. (2) The determination may also contain price-related terms and conditions relating to access to the declared service. 30 Section 152AQB provides that certain declared services are "core services". The LSS is not a core service. 31 Division 3 (ss 152AR-152BBD) within Pt XIC deals with "Standard access obligations" (SAOs). Therefore, Telstra is an access provider, the LSS is an active declared service, and the obligations specified in s 152AR(3) are enlivened. (Telstra does not concede that it provides the LSS to itself, but this does not matter for present purposes. ) Section 152AR contains fifteen subsections in all. Subsections (4) to (12) elaborate on the subs (3) obligations and provide for exemptions from them. For present purposes the detail does not matter. Section 152AC defines SAOs as having the meaning given by s 152AR. 32 The terms and conditions on which SAOs are complied with are determined in one of three ways. First, they can be agreed between the carrier or carriage service provider and the access seeker: s 152AY(2)(a). Second, failing agreement, if there is an "access undertaking" given by the carrier or carriage service provider that deals with the matter (see Div 5 discussed below), the relevant terms and conditions of that access undertaking apply: s 152AY(2)(b)(i). Third, in all other cases the terms and conditions are as determined by ACCC under Div 8 of Pt XIC (Div 8 provides for the arbitration of access disputes --- see [35]ff below): s 152AY(2)(b)(ii) and (iii). 33 Section 152AZ provides, relevantly, that a carrier licence held by a carrier is subject to a condition that the carrier must comply with any SAOs applicable to the provider. Section 152BB empowers this Court to make orders directed to the enforcement of the SAOs. 34 Division 5 (ss 152BS-152CGB) is headed "Access undertakings". It refers to written undertakings given by a carrier or carriage service provider to ACCC by which that carrier or carriage service provider undertakes to comply with the terms and conditions specified in the undertaking in relation to applicable SAOs. Section 152BU(2) requires ACCC to accept or reject a proffered undertaking. As will be noted below, ACCC rejected an undertaking relating to the LSS that was proffered by Telstra. Section 152BV provides that if a proffered access undertaking does not adopt a set of model terms and conditions set out in the telecommunications access code provided for in Div 4 of Pt XIC, ACCC must not accept the undertaking unless certain conditions are satisfied. One of these, s 152BV(2)(d), is that ACCC is satisfied that the terms and conditions specified in the undertaking are reasonable (see s 152AH(1) set out at [24] above). 35 Division 8 (ss 152CL-152EB) within Pt XIC is of central importance to the present proceedings. It is headed "Resolution of disputes about access". The Division's first section, s 152CL, contains definitions. A "determination" means a determination made by ACCC under Div 8, and includes both a "final determination" and an "interim determination" (ID). The present three proceedings relate to final determinations, although these were in fact preceded by IDs. 36 Section 152CLA provides in subs (1) that in exercising its powers under Div 8, ACCC must have regard to the desirability of access disputes being resolved in a timely manner. A note to the subsection draws attention to the fact that ACCC must also have regard to, relevantly, the matters set out in s 152CR (see [40] below) and the pricing principles under s 152AQA (see [29] above). 37 Section 152CM provides for notification by either an access seeker or the carrier or carriage service provider of an access dispute to ACCC in certain circumstances. Access disputes were notified to ACCC in relation to each of the present three proceedings. 38 Section 152CP(1) provides that unless ACCC terminates the arbitration, it must make a written determination on access by the access seeker to the declared service. Section 152CP(2) provides that the determination may deal with any matter relating to access including matters that were not the basis for notification of the dispute. ACCC must give to the parties a draft of its proposed determination (s 152CP(4)) and, when it makes the determination, its reasons for making it (s 152CP(5)). The final determination to which the Request proceeding relates was made by ACCC on 1 August 2007 (Final Determination). The Final Determination was accompanied by a statement of ACCC's reasons for making it (FD Statement of Reasons). 39 Section 152CPA deals with IDs. Section 152CPA(3) provides that ACCC is not required to observe any requirements of procedural fairness in relation to the making of an ID in the circumstances set out in that subsection. Similarly, ACCC is not required to observe any such requirements in relation to a variation of an ID in the circumstances set out in subs (12) of s 152CPA. However, the attacks made in the present proceedings are on final determinations to which, it is not disputed, the requirements of procedural fairness apply. As noted at [24] above, with the exception of para (e), the matters listed in s 152CR(1) are those also listed in s 152AH(1). The LTIE is the first mandatory consideration listed (a reflection of its importance as the object of Pt XIC (see s 152AB(1) set out at [17] above). Subsection (2) of s 152CR empowers, but does not oblige, ACCC to take into account any other matters that it thinks are relevant. 41 Section 152CRA deals with the publication of a determination and of ACCC's reasons for making it. The section empowers ACCC to publish, in whole or in part, a determination and its supporting statement of reasons in such manner as it considers appropriate. It must, however, first give the parties notice of its intention to do so and an invitation to make written submissions against publication. This provision assumes importance in relation to claims that a part or parts of a determination are and should remain confidential. Hearings should be conducted in a speedy manner, having regard to the matters affecting resolution of the dispute and may be conducted by telephone, closed circuit television or any other means of communication. The ACCC may also determine the length of time reasonably necessary for the parties to fairly and adequately present their cases and may require that the cases be present within that length of time. 43 Section 152DK provides for a party to an arbitration to inform ACCC that in that party's opinion, a specified part of a document contains confidential commercial information and to request ACCC not to give a copy of that part to another party. The section provides for the way in which ACCC is to deal with such a request, and empowers it to accede to the request. 44 Section 152DN provides that a final determination has effect 21 days after the determination is made. As noted above, the Final Determination was made on 1 August 2007 and so had effect on and from 22 August 2007. (2) The specified date must not be earlier than the date on which the parties to the determination commenced negotiations with a view to agreeing on the terms and conditions as mentioned in paragraph 152AY(2)(a). Section 152DNA(4) provides that a provision of a final determination may be expressed to cease to have effect on a specified date. 46 Section 152DNC is relevant to Telstra's ground of challenge based on the Final Determination's purporting to have an operation for a period that extended beyond the then expiration date of the LSS Declaration (Telstra's Ground 4 --- Section B (Invalidity of Final Determination)). The word "common" in that annexure indicates that the event referred to is relevant to all three proceedings. In Annexure B, the words Request, Chime and Primus indicate relevance to the Request, Chime and Primus proceedings respectively. 48 In the following paragraphs, I recount in various degrees of detail some of the more important events and associated documents. I will descend into greater detail as necessary when I come to consider Telstra's grounds of review. This was a guide to the approach that ACCC would adopt, in the usual case, when considering access pricing issues under Pt XIC. The publication of the paper followed the release of a draft of it in February 1997 and a public forum in relation to it held in April 1997. 50 Two points may be noted concerning the Access Pricing Principles guide. First, the document states that the expression "direct costs" was intended to exclude profits lost by an access provider (or any other party) in a dependent market as a result of the provision of access. The document stated that it was implied that "at a minimum, an access provider should cover the direct incremental costs incurred in providing access". This statement by ACCC is relevant to Telstra's Grounds 5(a), 5(b), 5(c) and 6 dealt with in Section C (Pooling and Allocation Method). Second, the document states that the access price chargeable by Telstra should, in general, be based on the total service long-run incremental cost (TSLRIC) of providing the service. It is the cost the firm would avoid in the long-term if it ceased to provide the service. As such, TSLRIC represents the costs the firm necessarily incurs in providing the service and captures the value of society's resources used in its production. ACCC was later to elaborate on the meaning of TSLRIC and its elements in the LSS Pricing Principles (see [63] below). 52 On 21 September 2001 ACCC announced that it would conduct an inquiry into whether or not an LSS should be declared under Pt XIC of the Act. ACCC undertook that inquiry and published its report in August 2002: Line Sharing Service: Final Decision on whether or not a Line Sharing Service should be declared under Pt XIC of the Trade Practices Act 1974 (LSS Declaration Final Report). ACCC declared the LSS a "declared service" by an instrument dated 7 October 2002. The LSS Declaration took effect on 16 October 2002 as noted at [28] above. It will be noted that the definition requires that an underlying voiceband PSTN service be already operating over the ULL. 53 The upper part of the available transmission spectrum of a ULL is the "non-voiceband frequency spectrum" (also referred to as broadband or high frequency spectrum), and the lower part of the spectrum is the voiceband or telephony frequency spectrum (also referred to as narrowband or low frequency spectrum). Access to the LSS is access to the upper part only of the available transmission spectrum of a ULL. Telstra retains the lower part of the spectrum of the ULL, over which voice services such as local calls and long distance calls can be provided. Access to the LSS allows a service provider or access seeker such as Request to provide any xDSL service (the "family" of Digital Subscriber Line (DSL) services including Assymetric DSL (ADSL)) over the high frequency spectrum of the ULL, once its own equipment is connected to the line. The documents and submissions referred to in these reasons use a combination of the terms DSL, xDSL and ADSL, and I will do likewise, but the terms can all be understood to refer to services provided over the high frequency spectrum of the ULL. ACCC declared the ULLS a declared service by an instrument dated 4 August 1999 which took effect on 11 August 1999, the date of publication of the declaration in the Commonwealth of Australia Gazette (GN 32, 11 August 1999). 56 Both the ULLS and the LSS involve the use of a ULL. However, while the LSS gives the access seeker the use of only part of a ULL (the high frequency spectrum), the ULLS gives the access seeker the use of the entirety of a ULL. In substance, the ULLS enables access seekers to supply both voice (telephony) and broadband services to end-users. Again, in order to do so, the access seeker's own equipment must be connected to the line. It observed that at that stage Telstra had indicated that it was likely to begin providing a LSS from 1 July 2002 but ACCC expressed concern about the competitive structure of the market, in particular, a concern that Telstra was unlikely to be constrained in its pricing and output decisions by the presence of effective substitutes. 58 ACCC also noted that even though Telstra had reached commercial agreements with some carriers in relation to the charges to be made for the LSS, ACCC considered that the amounts were likely to exceed those expected in a competitive market for a LSS. 59 ACCC stated that it believed there were two types of costs that could be included in the price of a LSS: first, incremental LSS-specific costs, and second, some allocation of the costs of a line over which a LSS was provided. 60 ACCC accepted that it was reasonable for an access provider (Telstra) to recover incremental LSS-specific costs through the access charge for a LSS, but stated that where it was already recovering its line costs from other revenue sources, it would be inappropriate to include any element of line costs in the price of a LSS. In this instance, therefore, the Commission believes the appropriate price for a LSS should be set with reference only to the LSS-specific costs of providing a LSS. However, were Telstra to alter its pricing structure such that it no longer recovered all of its line related costs through its various other revenue sources, the Commission believes it may be appropriate to include an allocation of line related costs in the price of a LSS. In this instance, whilst estimation of the efficient contribution that the price of a LSS should make to recover these costs would be difficult, the Commission believes a practical cost allocation rule could simply be the difference between the geographically de-averaged cost of the line over which a LSS is provided and the line rental revenue recovered from services provided over the remaining low-frequency portion of the line. 61 ACCC stated that it believed it was in a position to indicate what pricing principles were appropriate for a declared LSS (see s 152AQA of the Act set out at [29] above), although it was not in a position to know what price the application of those principles would yield. However, ACCC said it believed it did not need to know this in order to decide to declare a LSS, and that the exact amount would fall to be considered if Telstra proffered an undertaking in relation to the provision of a LSS (see Div 5 of Pt XIC discussed at [34] above) or if ACCC was required to arbitrate the terms and conditions on which a LSS was provided (see Div 8 of Pt XIC discussed at [35]ff above). 63 In the LSS Pricing Principles, ACCC stated that in the usual case it would apply the TSLRIC methodology for determining access prices. ACCC stated, inter alia, that TSLRIC was an "attributable cost concept" in that it referred only to those costs that could be attributed to the production of the particular service, in this case the LSS. Costs common to more than one service did not satisfy that description and therefore did not form part of TSLRIC. However, ACCC noted that in practice TSLRIC is sometimes defined to include a contribution to indirect and overhead costs (TSLRIC+), and sometimes an additional contribution is also included in recognition of an access deficit (TSLRIC++). 64 ACCC stated that while TSLRIC (and its variants) determine an access price using a "bottom-up" costing methodology, ACCC had also in the past considered "top-down" pricing methodologies, such as a retail-minus avoidable cost (RMAC) approach. 65 ACCC observed that technically the ULLS was the service closest to a LSS, and that it was useful to consider ACCC's approach to the pricing of the ULLS and to assess its applicability to a LSS. 66 ACCC expressed the belief that a TSLRIC pricing methodology was most appropriate for the pricing of a LSS and noted that submissions it had received broadly agreed. Telstra had not offered any alternatives and had rejected the RMAC approach. 67 ACCC noted that while it had not undertaken a full cost study regarding the size of LSS-specific costs, an independent consultant had estimated the ULLS-specific costs to be relatively small. 68 ACCC addressed the "key question", as ACCC described it, of whether or not any allocation of the cost of the line should be recovered through the price of a LSS. This issue is relevant to Section D (Line Costs Recovery) and I set out ACCC's discussion of the issue in more detail in that section. 69 The overall view expressed by ACCC was that if Telstra were to show that it was not fully recovering its line costs through its various other sources of revenue, it might be appropriate that the price of the LSS include some allocation of the cost of the line over which a LSS was provided. Telstra proposed an LSS access price of $15 per service in operation (SIO) per month. 71 In August 2004 ACCC published A final report on the assessment of Telstra's undertaking for the Line Sharing Service (LSS Undertaking Final Report), which asserted that ACCC's analysis still showed that Telstra was already fully recovering its line-related costs through revenue from other services. 72 Importantly, in section 7.1.3 ACCC addressed "LSS-specific costs --- an analysis of Telstra's LSS cost model". This cost model was not the version that Telstra was to supply to ACCC in May 2007 with which Section A (Telstra's Cost Model) is concerned. 73 In support of its proffered undertaking, Telstra had asserted that its model indicated that the efficient service-specific costs of the LSS exceeded $57 per LSS per month. However, ACCC observed that Telstra had proposed an access price of $15 per LSS per SIO for the period of the undertaking supposedly in order to prevent "rate shock". 74 ACCC expressed the view that Telstra's LSS cost model appeared to be technically sound, but ACCC had concerns with the specific input parameters and assumptions used in it and its treatment of depreciation and timing of cost recognition. ACCC referred to Telstra's LSS cost model as using a "tilted annuity approach for depreciation of capital". 75 ACCC's conclusion was that Telstra's LSS cost model would have to be modified to allow for the calculation of a more reasonable and appropriate access price. In this regard, ACCC stated that it had developed a modified LSS cost model which included a small modification to the model that ACCC had provided to interested parties following the release of ACCC's draft report (a reference to ACCC's A draft report on the assessment of Telstra's Undertaking for the Line Sharing Service of June 2004) to reflect a minor adjustment to the approach to depreciation. 76 On 13 December 2004 Telstra submitted further proposed monthly charge undertakings for the ULLS and the LSS, in which the proposed monthly charge for the LSS was reduced to $9 per LSS per month. 77 In March 2005 ACCC published two discussion papers: Telstra's Undertakings for the Line Sharing Service --- Discussion Paper (LSS Undertakings Discussion Paper) and Telstra's Undertaking for the Unconditioned Local Loop Service --- Discussion Paper (ULLS Undertakings Discussion Paper). 78 In August 2005 ACCC published its Assessment of Telstra's ULLS and LSS Monthly Charge Undertakings --- Draft Decision (ULLS and LLS Undertakings Draft Decision). 79 In December 2005 ACCC published its final decision in respect of the proffered ULLS and LSS monthly charge undertakings: Assessment of Telstra's ULLS and LSS monthly charge undertakings (ULLS and LLS Undertakings Final Report) . 81 Telstra applied under s 152CE(1) of the Act to the Australian Competition Tribunal (Tribunal) for review of ACCC's decision of 21 December 2005 to reject its proffered LSS access undertaking. On 2 June 2006 the Tribunal published its decision ( Telstra Corporation Limited [2006] ACompT 4 (Tribunal's 2006 Decision)), in which it addressed, inter alia, a pooling and allocation of LSS-specific costs (which is relevant to Section C (Pooling and Allocation Method)). The Tribunal affirmed ACCC's decision of 21 December 2005 rejecting Telstra's proffered LSS access undertaking of 13 December 2004. The dispute concerned both the LSS periodic charges and the LSS connection and disconnection charges. 83 On or about 15 September 2006 ACCC provided to the parties a draft ID (First Draft ID), an accompanying issues paper (First Draft ID Issues Paper) and associated papers which related to the LSS connection and disconnection charges, but not to the LSS periodic charges. 84 On or about 6 October 2006 ACCC provided to the parties a second draft ID (Second Draft ID), an accompanying issues paper (Second Draft ID Issues Paper) and associated papers in relation to Telstra's LSS periodic charges. 85 On or about 2 November 2006 ACCC made an ID (First ID), and gave reasons in support (First ID Statement of Reasons), with respect to LSS connection and disconnection charges and associated matters (but not the LSS periodic charges). Subsequently, on 21 December 2006, ACCC made a further ID (Second ID) and gave reasons in support (Second ID Statement of Reasons). The Second ID revoked the First ID, reproduced its provisions relating to the LSS connection and disconnection charges, and fixed LSS periodic charges. 86 By letter dated 2 February 2007, ACCC requested the parties to confirm, inter alia, the issues that remained in dispute for the purposes of the making of a final determination. The parties subsequently confirmed that they remained in dispute over both the LSS periodic charges and charges for LSS connections and disconnections. 87 By letter dated 6 March 2007, ACCC advised the parties that in coming to a final determination, it proposed to have regard to certain things which it listed, including the LSS Pricing Principles. 88 By letter dated 21 March 2007, ACCC wrote to Telstra in relation to access to confidential documents. 89 By letter dated 28 March 2007, ACCC advised the parties that a compact disc (CD) containing certain confidential documents would be couriered to the parties. 90 On or about 30 March 2007 ACCC provided the parties with its draft final determination (DFD) and consultation paper (DFD Consultation Paper) which set out issues on which ACCC sought submissions. Both Telstra and Request provided ACCC with primary and responsive submissions. 91 In a letter dated 26 April 2007 to ACCC, Telstra referred to the documents that it understood ACCC was intending to take into account in making a final determination. Telstra stated that it presumed that ACCC would "also consider the models which were attached to its [ACCC's] 21 March 2007 letter". 92 On 30 April 2007 ACCC responded, noting that Telstra's letter of 26 April 2007 did not contain a full list of relevant matters, and referring Telstra to letters from ACCC of 6 March 2007, 21 March 2007 and 30 March 2007. 93 In circumstances to be discussed below in Section A (Telstra's Cost Model), Telstra filed and served submissions in response to the DFD Consultation Paper in early May 2007. 94 As previously noted, on or about 1 August 2007 ACCC made the Final Determination which specified the ongoing LSS periodic charges and the LSS connection and disconnection charges to be paid by Request to Telstra. ACCC provided the parties with a copy of the Final Determination and FD Statement of Reasons by letter and email respectively on that day. 95 The Final Determination took effect on 22 August 2007, 21 days from the date on which it was made, and expired on 31 December 2007 --- a period of only a little over four months. It will be recalled that as at the date of the making of the Final Determination and the date that it took effect, the LSS Declaration was due to expire on 31 October 2007 (that is, prior to the date on which the Final Determination was due to expire). This is relevant to Telstra's Ground 4 which I address in Section B (Invalidity of Final Determination). 96 Telstra commenced the Request proceeding on 29 August 2007. ACCC concluded, following an inquiry (commenced in April 2007) in accordance with s 152ALA(7) of the Act, that the expiry date for the LSS Declaration should be extended until 31 July 2009. Chapter 3 of the Review of LSS Final Decision contained new pricing principles for the LSS (2007 LSS Pricing Principles). 98 As noted at [28] above, on 29 October 2007 ACCC extended the expiry date of the LSS Declaration to 31 July 2009. 99 On 13 February 2008, after the hearing had ended, Request filed a notice of motion seeking leave to reopen the proceeding in order to tender additional evidence. The proposed additional evidence comprised a final determination of ACCC made on 20 December 2007 (Adam Final Determination) in respect of ACCC's arbitration of an LSS access dispute between Telstra and Adam Internet Pty Ltd (Adam) and ACCC's accompanying statement of reasons for that final determination (Adam FD Statement of Reasons). The further evidence was sought to be tendered as relevant to Section A (Telstra's Cost Model) and Section E (Disconnection Charges, Churn Process and "Option 2"). I heard the motion on 4 March 2008 and reserved my decision on the basis that it and the reasons for it would be delivered as part of the final reasons for decision in the proceedings. It will be recalled that I have grouped Telstra's grounds into sections using letters. I have added to Request's closing submissions the letter to which each issue belongs. In any event, the summary was based upon a number of assumptions that were addressed and expressly rejected by the Commission. Accordingly the Commission was not obliged to take the cost model further into consideration because there is nothing to show that it might have made a difference. (b) There is no legal rule that requires the Commission to limit the period of a determination so that it does not extend beyond the expiry date of the relevant declaration. Indeed, the legislative scheme of Part XIC of the TPA points in the opposite direction. (c) Prior to the Final Determination, the question of Telstra's line costs has been considered on at least seven earlier occasions by the Australian Competition Tribunal and the Commission (including on at least four occasions during the arbitration that led to the Final Determination ("the LSS Arbitration")). Telstra was given the opportunity to make submissions on each occasion and often did so. Those submissions have not ever been accepted by the Tribunal or the Commission. Telstra is in substance seeking merits review by judicial determination of this issue, which it is not entitled to. Moreover, Telstra misunderstands what the Commission said it would do and in fact did. (d) Telstra's "pooling and allocation method" has been considered on at least eight occasions prior to the Final Determination. The position is similar to the line costs issue save that, whereas it might be argued that the question of recovering line costs was not directly addressed by Telstra in its submissions as part of the LSS Arbitration, Telstra did specifically address the "pooling and allocation method". Those submissions were considered and rejected by the Commission. Telstra is in substance seeking impermissible merits review by judicial determination of this issue also. (e) The nature of the issues relating to the LSS churn process, the history of the arbitration and the fact that the terms ultimately adopted by the Commission were, in many respects, more favourable to Telstra than the previously considered alternatives, mean that there was no obligation on the Commission to raise this issue with Telstra in any more detail than it was raised in the course of the arbitration. In any event, raising the issue with Telstra would not have made any difference to the Commission's determination and so it is not amenable to judicial review. (f) In relation to disconnection charges between the date of the interim determination and the final determination, Telstra misconceives the factors to which the Commission is required to have regarded when determining whether or not a charge should be backdated. Further, backdating could not have been done in the manner suggested by Telstra without rewarding Telstra for its tardiness in establishing an LSS churn process. The principal purpose of the backdating power is to compensate an access seeker for costs associated with delay, not to reward tardiness by the service provider. ACCC referred to the principles established in R v The Australian Broadcasting Tribunal; ex parte Hardiman [1980] HCA 13 ; (1980) 144 CLR 13 ( Hardiman ) at 35-36 as the reason for its limited participation. ACCC's submissions related to aspects of Section A (Telstra's Cost Model), Section B (Invalidity of Final Determination) and Section F (Disconnection Charges, Backdating and the "No Charge Period"). (ACCC also addressed submissions to Telstra's Ground 11, but, as noted previously, that ground is no longer relevant). 103 Request concedes that the Final Determination is amenable to review under the ADJR Act. No party addressed submissions independently to s 39B(1) of the Judiciary Act 1903 (Cth) (Judiciary Act). In its written closing submissions, Request for the first time submitted that it was "unlikely" that the Court had jurisdiction under s 39B(1) of the Judiciary Act on the ground that ACCC, as distinct from its Commissioners, was not an "officer of the Commonwealth". Nothing turns on the point. In addition to its jurisdiction under the ADJR Act, the Court has relevant jurisdiction under s 39B(1A)(c) of the Judiciary Act and s 163A of the Act. 105 The arbitration of access disputes between a carrier or provider of carriage services (in the present proceedings Telstra) and an access seeker (in the present proceedings, relevantly, Request) for which Div 8 provides, is of a special kind. It is necessary to understand the special kind of arbitration for which Div 8 provides and the breadth of the considerations that Div 8 requires or permits ACCC to take into account in order to assess the parties' submissions. 106 ACCC's role is not simply that of an arbitrator called upon to consider rival cases involving merely the competing commercial antagonists. ACCC is required to take into account the interests of persons who are not parties to the arbitration --- in particular, but not exclusively, end-users. 107 The object of Pt XIC is stated in s 152AB(1) as being simply to promote the LTIE of carriage services and of services provided by means of carriage services: s 152AB(1). Since Div 8 is within Pt XIC, that is its sole object too. Consistently with that object, of the considerations that s 152CR(1) requires ACCC to take into account when making a final determination, the first one mentioned is the LTIE. 108 Similarly, s 152AH lists the LTIE as the first matter to be considered when it is to be determined whether particular terms and conditions are reasonable for the purposes of the making of a telecommunications access code under Div 4, and for the purpose of accepting an access undertaking proffered under Div 5 (see [24] above). 109 In determining whether a particular thing promotes the LTIE, for any of the purposes of Pt XIC, the first matter listed to which regard must be had is the extent to which the thing is likely to achieve the promotion of competition in markets for listed services: s 152AB(2)(c). 110 It is true that ACCC must also take into account when making a final determination the business interests of the carrier or provider, but only its legitimate business interests and its investment in supply facilities (s 152CR(1)(b)). ACCC must also, however, take into account the interests of all persons who have rights to use the declared service (s 152CR(1)(c)). 111 The scheme that is revealed is one of investing in ACCC as arbitrator very broad policy orientated powers. It would be wrong to approach an arbitration by ACCC under Div 8 with preconceptions derived from ordinary commercial arbitration processes. The most notable of those provisions is s 152CR(1) (set out at [40] above) which lists matters that ACCC must take into account in making a final determination. Telstra submits that the provisions on which it relies required ACCC to take particular matters into account as "fundamental" elements in its decision making process or required ACCC to give those matters "fundamental weight" to considerations. This submission is relevant to many of Telstra's Grounds and I address it at once. 113 In support of this "fundamental weight" submission, Telstra relies on R v Hunt; ex parte Sean Investments Pty Ltd [1979] HCA 32 ; (1979) 180 CLR 322 ( Sean Investments ) which concerned s 40AA(7) of the National Health Act 1953 (Cth). That Act provided for the approval of premises as nursing homes, and made approval subject to a condition that the fees charged in respect of nursing home care of a "qualified nursing home patient" would not exceed fees payable in accordance with a scale determined by the Permanent Head of the relevant Department. Section 40AA(7) directed the Permanent Head to "have regard to costs necessarily incurred in providing nursing home care in the nursing home". 114 Mason J held that those words required the Permanent Head to take those costs into account and "to give weight to them as a fundamental element in making his determination" (at 329). His Honour gave two reasons for this conclusion. First, they were the only matter explicitly mentioned as a matter required to be taken into account, and second, the scheme of the provisions was that once premises were approved as a nursing home, the proprietor was bound by the conditions of approval not to exceed the scale of fees fixed. His Honour observed that in many cases it was to be expected that the scale of fees would be fixed by reference to the costs necessarily incurred plus a profit factor, and that in the nature of things the costs necessarily incurred were a fundamental matter for consideration. 115 Sean Investments is distinguishable. It is readily understandable that the fees to be fixed must cover the costs necessarily incurred in providing nursing home care in the particular nursing home. Approval of the particular nursing home would be frustrated if the level of fees permitted to be charged did not cover those costs. In the present case, there are a range of factors that ACCC is required to take into account. 116 Telstra refers to East Australian Pipeline Pty Ltd v Australian Competition and Consumer Commission [2007] HCA 44 ; (2007) 239 ALR 50. The factual context was not alien to that of the present case --- "a national access regime for gas pipeline systems within the framework of a national competition policy" (headnote, p 50). The facts and legislation are complex. Central to the issue for decision was s 8.10 of the National Third Party Access Code for Natural Gas Pipeline Systems contained in Schedule 2 to the Gas Pipelines Access (South Australia) Act 1997 (SA). Section 8.10 listed in paras (a) to (k) eleven factors that were required to be considered when the initial capital base of certain pipelines was being established by a "Relevant Regulator". 117 The High Court held that the Australian Competition Tribunal had not erred in taking as its starting point, and giving priority to, known valuation methodologies identified in the early paragraphs of paras (a) to (k). 118 The case is not authority for the proposition that para (d), for example, of s 152CR(1) must be accorded priority over the matters identified in the other paragraphs of that subsection. The most that can be said is that the case shows that the correct approach to a list of mandatory relevant considerations can lead to priority properly being given to particular matters in the list. 119 Telstra also referred to other authorities such as R v Toohey; ex parte Meneling Station Pty Ltd [1982] HCA 69 ; (1983) 158 CLR 327 ; Queensland Medical Laboratory v Blewett (1988) 84 ALR 615 and Epic Energy . 120 While I accept that the authorities establish that a decision-maker must give weight and genuine consideration to matters to which the decision-maker is required to "have regard" or which the decision-maker is required to "take into account", none of the cases suggest that one or some of those matters must necessarily be given "fundamental weight" as against the others. Everything depends on the natural meaning of the words, and the subject matter, scope and purpose of the particular legislation. 121 In Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 ( Peko-Wallsend ), Mason J emphasised (at 41) that it is generally a matter for the decision-maker and not for a court to determine the appropriate weight to be given to the respective matters that are required to be taken into account in the exercise of a statutory power. His Honour noted that in some circumstances a court may set aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to a relevant factor of no great importance, but that in such a case the relevant ground of review is not the failure to take into account a relevant consideration or the taking into account of an irrelevant one, but that the decision is "manifestly unreasonable". Telstra does not rely upon a ground of manifest unreasonableness. 122 Section 152CR(1) provides that in making a final determination ACCC must take into account the seven matters listed in paras (a)-(g) of that subsection and s 152CR(2) provides that ACCC may take into account any other matters that it thinks are relevant. Also, s 152AQA(6) provides that ACCC must have regard to the LSS Pricing Principles if it is required to arbitrate an access dispute. The factor that should be given "fundamental weight" as against the others is the LTIE mentioned in para (a) of s 152CR(1) because s 152AB(1) provides that the object of Part XIC is "to promote the [LTIE]...". Telstra provided the CD to ACCC. The words and figures on each of the two Spreadsheets constituted only a short vertical column or table. In the hard copy version in evidence, each occupied about half a page. 124 As will become apparent, while the Spreadsheets contained data and formulae, the ideas on which they were based were explained in the text of Telstra's submissions to ACCC. This raises a difficulty of nomenclature: the expression "Telstra's cost model" can be used to include or not to include the explanations as well as the two Spreadsheets (including the data and formulae in them). 125 According to Ground 1, Telstra's cost model was a relevant consideration that ACCC was bound, but failed, to take into account. Telstra submits that there are two reasons why ACCC was bound to take Telstra's cost model into account. First, it formed an important part of Telstra's submissions to ACCC. Second, consideration of the cost model was made mandatory by s 152CR(1)(d) of the Act. 126 Whether or not the expression "Telstra's cost model" be understood to include related discussion and argument in the text of Telstra's written submissions, Telstra's contention is that by reason of ACCC's failure to engage intellectually with the Spreadsheets on the CD, it denied itself the opportunity to take its cost model into account. 127 Telstra does not submit that ACCC did not address its mind to Telstra's submissions in relation to specific costs (which Telstra's cost model estimated --- see [123] above). There was, for example, much discussion of specific costs in the FD Statement of Reasons. Telstra does, however, submit that without intellectual engagement with the Spreadsheets, and, in particular, without manipulation and "sensitivity testing" of the formulae in them, ACCC could not properly address Telstra's submissions on specific costs. 128 According to Ground 2(a), ACCC failed to accord Telstra procedural fairness in respect of Telstra's cost model. Telstra's case in this respect is also put in various ways. It is said that by omitting to take Telstra's cost model into account, ACCC did not give Telstra the hearing to which it was entitled. Also, by failing to advise Telstra that it believed it had not received Telstra's cost model and was proceeding on that basis, ACCC misled Telstra as to what it needed to do to ensure that ACCC did take Telstra's cost model into account. 129 Finally, according to Ground 3, by failing to take Telstra's cost model into account ACCC failed to discharge the duty imposed on it by s 152DB(1)(b) of the Act to give the dispute "proper consideration" and to inquire into and investigate the dispute carefully. 130 The facts relevant Telstra's Grounds 1, 2(a) and 3 embrace facts leading up to ACCC's receipt of the CD containing the two Spreadsheets on or around Monday 7 May 2007. It also sent them the DFD, the DFD Consultation Paper, and directions concerning the format and timing of the parties' submissions. The DFD Consultation Paper explained, under the heading "Proposed cost model", aspects of the ACCC SC model that was attached, asserting that it implemented the approach described in the DFD Consultation Paper as ACCC's "preliminary view". 132 The DFD specified (in Schedule 1) an LSS annual charge for the period from 18 April 2006 to 31 December 2007 of $30.00 per annum ($2.50 per month). Schedule 2 specified LSS "single" connection charges and LSS "single" disconnection charges. Schedule 3, which dealt with managed network migrations (MNMs), is not relevant to this proceeding. 133 The accompanying directions required, relevantly, Request and Telstra to provide submissions to ACCC (with a copy to the other party) via email by 5.00 pm on Friday 20 April 2007 on the matters to be addressed as part of the joint arbitration hearing. 134 In response to ACCC's invitation, Mr Little, with the assistance of others, produced Telstra's cost model. 136 Telstra wrote a letter over the signature of Tony Warren, Telstra's Executive Director Regulatory Affairs, dated Friday 4 May 2007 to Robert Wright of ACCC. A CD of the supporting materials has also been couriered to the Commission and to Nicholls Legal. At the time of the writing of the letter, the CD had not in fact been couriered to ACCC or to Nicholls Legal. No doubt Mr Warren's expectation when he signed the letter was that despatch of the CD by courier would precede delivery of the letter. 137 Mr Warren's letter, Telstra's submissions, and the list of supporting materials referred to in the letter were emailed to ACCC in the form of a series of emails from Mallesons Stephen Jaques (Mallesons), the solicitors for Telstra, dated Saturday 5 May 2007 at 3.59 --- 4.00 am. That is to say, although Telstra's submissions were dated Friday 4 May 2007, they were emailed to ACCC in the early hours of the following day. 138 Because of the volume of the submissions, there were actually six emails. In those emails, Mallesons advised ACCC that they were enclosing Telstra's submissions and a list of supporting materials upon which Telstra relied. The emails stated that a CD of the supporting materials would be couriered to ACCC and Nicholls Legal "as soon as possible". The emails did not contain the tables that were in the Spreadsheets on the CD yet to be couriered. 139 ACCC admits that on or around Monday 7 May 2007 it received a CD that contained two readable Microsoft Excel Spreadsheet files. A copy of the CD and hard copies of the two Spreadsheet files were in evidence. 140 There is in evidence a further letter from Telstra to ACCC dated 4 May 2007 purporting to attach "a CD of the supporting materials referred to in Telstra's submissions". If that letter in fact accompanied the CD, it must have done so on or around Monday 7 May 2007 when the CD was delivered to ACCC. It may be, however, that it too was emailed to ACCC in the early hours of Saturday 5 May 2007 --- two days before the CD was delivered. 141 Included in or with Telstra's submissions of 4 May 2007 was an "Index of Documents Relied On in the Request Dispute". This appears to be the "list of documents upon which Telstra relies" to which Telstra had referred in its covering letter of Friday 4 May 2007. The emails did not contain either the cost model or a summary of it. Plainly, the "list of documents on which Telstra relies" or "Index of Documents Relied on in the Request Dispute" was pointing to the supporting materials on the promised CD. Accordingly, read with the covering letter from Telstra dated 4 May 2007, entries 93 and 94 were informing ACCC that it could expect to find "summaries" on the foreshadowed CD. 142 The CD that was received by ACCC on or around Monday 7 May 2007 also contained an index. It was headed "LSS INDEX --- ALL DOCS" (LSS Index). On the other hand, the actual Spreadsheets on the CD which, according to Telstra's submissions to this Court, constituted Telstra's cost model, bore headings that repeated the words "Summary of". 143 In sum, the words "Summary of" were present in the emailed list or index of documents relied on by Telstra and on the Spreadsheets that were on the CD said by Telstra to constitute its cost model, but they were absent from the LSS Index that was on the CD. 144 The Spreadsheets on the CD enabled manipulation or sensitivity testing. By this I mean that upon a change being made in one integer in the Spreadsheet, the computer program would automatically make consequential adjustments to the other items. It was open to ACCC to manipulate Telstra's cost model to that end, that is to say, to determine the effect of changes in individual integers on the "average cost" per LSS per month. Of course, this said nothing as to the correctness or reliability of the integers. 145 Telstra's submissions to ACCC addressed "SPECIFIC COSTS" in Section D of Part 2. 146 In para 54 on p 10 of Part 2, Telstra stated that it had "estimated the top down LSS specific costs using ' the Telstra model' ", and to this expression (in bold) there was a footnote reading "[ LSS Index: 93 ]; and [ LSS Index: 94 ] (using high WACC)". Clearly, this reference was to the LSS Index (on the CD), not to the emailed "Index of Documents Relied on in the Request Dispute". If an ACCC officer had read the footnote and gone to the LSS Index on the CD he or she would have seen references to the two top-down models without the words "Summary of", but if the officer had gone to those two models on the Spreadsheets, he or she would have seen the "Summary of". 147 Telstra's submission to ACCC was that its newly developed top-down model was to be preferred to the ACCC SC model for reasons that Telstra set out in its submissions. A reason given was that the ACCC SC model was a bottom-up model that suffered from an absence of comprehensive accurate bottom-up cost information. Telstra submitted (para 56) that its model was based on Telstra's Current Cost Accounts (CCA) maintained under the Record Keeping Rules (RKR) required under Div 6 of Pt XIB of the Act. 148 Telstra's submissions in Section D concluded (para 103) by referring to the "large discrepancy between the results of the [ACCC SC model and Telstra's cost model]" and arguing that ACCC should rely on Telstra's cost model in setting the LSS periodic charges. 149 On or about 8 May 2007 Telstra sent to ACCC a supplementary submission which referred to the impact on LSS monthly costs of using a single weighted average cost of capital (WACC) for all services provided over Telstra's CAN. In order to calculate that impact, Mr Little created and manipulated a duplicate of Telstra's cost model. The results of Mr Little's manipulation and calculations were included in the supplementary submission. 150 In the supplementary submission, Telstra referred to the fact that Telstra's cost model considered specific costs separately and distinctly from network costs, but urged that if ACCC proposed to adhere to its previously expressed preference for using a single WACC for all services provided over the CAN, it should take into account the CAN services WACC estimate made by "its" expert, Professor Bowman. 152 In the FD Statement of Reasons, section 4.1.8 addressed "Specific costs" over some 14 to 15 pages. Telstra did not supply this model to the Commission or to the parties. The reference to "Telstra, 4/5, Part 2, p10, Annexures 6, 7" was a reference to p 10 and Annexures 6 and 7 of Part 2 of Telstra's submissions to ACCC dated 4 May 2007. ACCC rejected Telstra's submission that if ACCC was to continue to use the ACCC SC model, adjustments should be made to it to restate capital values each year. [end c-i-c redaction] Different cost estimates within this range result from adopting alternative positions advanced in respect of the WACC. The contribution of each of Telstra's claims to the higher claimed cost is not able to be calculated without access to Telstra's newly-developed cost model (assuming that it permits such sensitivity testing to be undertaken). However, the Commission expects each of the following factors [to] influence (to varying degrees) the higher cost estimate: the inclusion of indirect capital costs, a higher WACC, the more granular approach to cost allocation, no levelisation, and revised LSS and ULLS demand. In the second paragraph ACCC was stating that it was not able calculate the contribution of each individual claim by Telstra as to its costs to the overall higher cost that Telstra claimed to incur. However, ACCC expected that the five integers mentioned contributed, to varying degrees, to that higher claimed cost. I will return to this matter below. 154 ACCC went on to note that the cost estimate that it had proposed to the parties of $2.43 was rounded to give a monthly charge of $2.50 per LSS per month (although I note that ACCC mistakenly referred to that amount as the "annual charge"). 156 Mr Little's affidavit shows that sensitivity testing was a reference to calculating the contribution of each of the integers to the per-unit cost of the LSS, and necessarily involved manipulating Telstra's cost model by the input of different numbers to calculate the contribution of the five integers. According to Telstra's submission, Telstra's cost model was designed to allow this very kind of sensitivity testing. Mr Little's affidavit set out three sample manipulations of Telstra's cost model by reference to three of the five factors referred to by ACCC, namely, capital costs, LSS demand, and post-tax WACC. For example, when all capital costs are eliminated from Telstra's cost model, the per-unit cost for the year 2006 is reduced from $4.63 to $3.49. In relation to LSS demand, an increase in LSS demand from 152,440 to 164,080 SOIs reduced the per-unit cost from $4.63 to $4.30. A lowering of the post-tax WACC from 17.14% to 15% reduced the per-unit cost from $4.63 to $4.51. 158 Section 152CR(2) allowed ACCC to take into account any matters it thought relevant. In Peko-Wallsend at 39-40, Mason J stated that where factors to be considered enumerated in a statute are not exhaustive, the Court should turn to the subject matter, scope and purpose of the statute in determining what matters a decision-maker is bound to take into account. Telstra submits that in the present case this approach leads to a conclusion that ACCC was bound to take into account Telstra's cost model because it was central to the issues that ACCC was required to determine and to matters that it was expressly obliged to take into account, for example Telstra's "direct cost" of providing access to the LSS (see s 152CR(1)(d)). 159 In its submissions, Telstra did not draw a clear distinction between the course of reasoning by which it contends that s 152CR(2) coupled with general law principles produced the result that ACCC was bound to take into account Telstra's cost model, and the course of reasoning by which it contends that s 152CR(1)(d) produced that result. 160 I turn now to the duty imposed by s 152DB(1)(b). Telstra submits that s 152DB(1)(b) (set out at [42] above) supports its case while Request submits that, if anything, it assists the respondents. Provisions such as s 152DB(1)(b) are troublesome. It is questionable whether ultimately they have any effect at all in shaping the duty incumbent on a decision-maker. The starting point in s 152DB(1)(b) is a legislative demand for speed, but apparently someone appreciated that speed can come at too great a cost, and so the demand for speed is reduced to a demand that ACCC "must act [only] as speedily as a proper consideration of the dispute allows". In order to make it plain that excessive speed is to be shunned, it is acknowledged that ACCC must inquire into and investigate the dispute "carefully". Apparently it is then thought that too much care may detract from the desideratum of speed, so the words "and quickly" are added after "carefully". Adding to the confusion is the legislature's comprehensive demand that ACCC "inquire into and investigate the dispute and all matters affecting the merits, and fair settlement, of the dispute" (my emphasis). The demand is that ACCC inquire into and investigate all matters affecting the merits of the dispute and all matters affecting the fair settlement of the dispute. 161 How ACCC can reasonably be expected to make sense of all this, I do not know. The provision is a jumble of broadly expressed goals, no doubt attractive in themselves, that are in tension with one another. If ACCC has not acted as "speedily" and "quickly" as it suits someone to suggest, it can be argued that it has not obeyed the legislative mandate. If, on the other hand, someone chooses to suggest that there has not been a "proper consideration of the dispute" or that ACCC has not "carefully" conducted its inquiry or investigated "all matters affecting the merits, and fair settlement, of the dispute", it can again be argued that it has not obeyed the legislative mandate. 162 To the first charge, ACCC can reply that it has been acting in accordance with the second mandate. To the second charge ACCC can respond that it has been acting in accordance with the first. 163 Predictably, in the present proceeding Telstra and Request have both pointed to aspects of s 152DB(1)(b) that they suggest support their respective positions. 164 I regard s 152DB(1) as a general exhortatory provision: it exhorts ACCC to strive to achieve broad objectives. Some of those broad objectives, at least if regarded in isolation, are antithetical to one another. The notions of "speed", "proper consideration of the dispute", "careful inquiry and investigation", "quick inquiry and investigation", "inquiry into and investigation of ... all matters affecting the merits" (my emphasis) and "fairness" pull in different directions: cf the discussion of ss 420 and 476 of the Migration Act 1958 (Cth) in Sun Zhan Qui v Minister for Immigration and Ethnic Affairs (unreported, Federal Court of Australia, 6 May 1997, Lindgren J) at 39-41, and see Minister for Immigration v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611 at [49] per Gleeson CJ and McHugh J. 165 It may be noted in passing that achievement of the objectives depends not only on the diligence, awareness and qualifications of ACCC officers: it also depends on the levels of funding and workload of ACCC as they respectively exist at any particular time and from time to time. I do not imply, however, that these extraneous considerations have the potential to give rise to a fluctuating construction of s 152DB(1)(b). 166 I find it difficult to conceive of circumstances in which a court would find that a failure to achieve the goal of speed or that of carefulness would, without more, provide a ground for the granting of relief in respect of an administrative decision. Surely the person aggrieved would have to show that the failure had had consequences in terms of one of the recognised grounds of judicial review. For example, absence of care (perhaps arising indirectly from excessive speed) could give rise to an overlooking of a relevant consideration or a failure to accord procedural fairness. It is not obvious what ground of judicial review, if any, might arise directly from a failure to act "speedily" or to inquire "quickly". It is another question whether the decision-maker could invoke the requirement of speed "in defence" against the consequences, in terms of grounds of judicial review, of a lack of care, but it is to be doubted. 167 In so far as Telstra relies on an alleged failure by ACCC to seek further material from Telstra, Request submits that ACCC's decision would be vulnerable to attack under the ADJR Act for a failure in this respect only if the failure was so unreasonable that no reasonable decision-maker would have failed to make the inquiry (Request cites Prasad v Minister for Immigration & Ethnic Affairs [1985] FCA 47 ; (1985) 6 FCR 155 at 169-170). First, it submits that it should be inferred that ACCC did in fact read the Spreadsheets on the CD, but did not appreciate that they were the complete or final version of Telstra's cost model that was referred to in Telstra's submissions. Second, it submits that the FD Statement of Reasons shows that ACCC took into account the essential features of Telstra's cost model that were reflected in the Spreadsheets, even if it did not read the Spreadsheets themselves. 169 Request submits that the passages from the FD Statement of Reasons on which Telstra relies (section 4.1.8, the relevant extracts from which were set out at [152] and [153] above) show only that ACCC considered that it had not received from Telstra the complete or full version of Telstra's cost model that it was expecting to receive. Request argues that Telstra ignores the heading's use of the word "Summary" and the simplistic nature of the two Spreadsheets which Telstra now characterises as constituting the cost model. 170 Request contends that ACCC was entitled to understand that the two Spreadsheets were only a summary and were not Telstra's "newly-developed cost model, populated with its preferred approach and inputs". In support of this submission, Request refers to the contrast between the Spreadsheets and previous cost models that had been before ACCC and Telstra. For example, there was the ACCC SC cost model that formed part of the DFD Consultation Paper. It comprises six landscape pages of figures. Second, there were cost models (in evidence) that Telstra had provided to ACCC in 2002 and 2006 in connection with other applications. Telstra's cost model of 4 July 2002 consisted of five pages. Telstra's "ULLS Specific Costs FINAL (ACCC) xls" model submitted to ACCC on 14 March 2006 consisted of five landscape pages. 171 Telstra's cost model to which Telstra's Grounds 1, 2(a) and 3 refer is limited to the two Spreadsheets that were on the CD. In the hard copy form in evidence, they consisted of two half pages of vertical columns of words and figures, as mentioned at [123] above. 172 To my mind, by reference to the three cost models to which I have referred, Telstra's cost model has the appearance of a summary, and the title to it confirms that it was indeed so. It is very brief and does not approach the degree of density and complexity of any of the other three cost models mentioned. I agree that ACCC was entitled to treat the two Spreadsheets as a summary of something larger and more detailed that existed, in whatever form, elsewhere. 173 I referred at [152] above to the reference in section 4.1.8 of the FD Statement of Reasons to Telstra's submission of 4 May 2007, Part 2, p 10 Annexures 6, 7. As I noted (at [146] above) para 54 on p 10 of Part 2 of Telstra's submissions referred to Telstra's cost model, and a footnote to that para referred to the two Spreadsheets on the CD. Accordingly, it may well be that when ACCC referred to p 10 of Part 2 of Telstra's submissions, it was indicating that it had read the two Spreadsheets. If so, it must have considered that when Telstra had referred to its newly developed cost model it had been referring to something more substantial. 174 Similarly, the first paragraph in Annexure 6 to Telstra's submissions of 4 May 2007 stated that Telstra had prepared a top-down model of LSS non-network costs, which it termed "the Telstra Model". Again there was a footnote reference to LSS Index: 93 and LSS Index: 94. Accordingly, it may well be that when ACCC referred to Annexure 6, it was incorporating a reference to the two Spreadsheets on the CD that were referred to in items 93 and 94 of the LSS Index. 175 In addition to references in the FD Statement of Reasons, there is other evidence suggesting that ACCC did have regard to the underlying features of Telstra's cost model. This is relevant to the second way in which Request puts its case. 176 There is in evidence an ACCC internal memorandum dated 25 May 2007 from Sean Riordan to Graeme Samuel and Ed Willett. According to that memorandum ACCC had proposed a cost model that updated models Telstra had supplied in prior regulatory consideration of LSS and ULLS annual charges, but Telstra was proposing "an entirely new cost model". In the alternative, according to the memorandum, Telstra was asking for "indirect capital costs" to be included in ACCC's own model; for the costs of Telstra's "ADSL systems" to be recognised; for the WACC to be increased; and for LSS demand to be revised down to reflect most recent actual and forecast data. This is then unitised over LSS-only demand to give an annual charge. Telstra provides no analysis of the efficiency of its cost claims, other than to point to TFP studies for the entirety of Telstra's business and certain US telecoms. Telstra's proposed model is contrary to the ACT's [Australian Competition Tribunal's] LSS ruling: it allocates and unitises incremental costs on a LSS only basis [that is, it does not adopt the a pooling and allocation approach]: it does not adopt a levelisation approach; and the TFP study provides little if any comfort that the claimed costs were efficiently incurred or forward-looking. For instance, a $[CONFIDENTIAL] million current asset comprising unpaid LSS charges (>[CONFIDENTIAL]% claimed asset base) has not been adjusted down to reflect the pending reduction in LSS charges. While there could be a basis to include an allowance for indirect capital costs, Telstra hasn't provided information that allows us to calculate the cost that should be allowed. We propose to not make any allowance, rather than give another opportunity to substantiate a proper claim. 177 It is clear that the writer of the memorandum considered that he knew the features of Telstra's proposed "entirely new cost model". It will be appreciated that by the date of this memorandum, ACCC had been in possession of the CD containing the two Spreadsheets for some two and a half weeks. The memorandum shows that the writer saw shortcomings in the features of Telstra's cost model. Telstra does not suggest that the features that Mr Riordan criticised were not in fact features of its cost model that underlay the two Spreadsheets. 178 A second internal ACCC memorandum on which Request relies is one dated 19 July 2007, only 13 days before the date of the Final Determination, again from Mr Riordan to Messrs Samuel and Willett. Telstra did not provide any details of its internal equivalent capital costs that would have allowed a more precise estimate to be made. We consider that Telstra's claimed CCA cost base is not representative of a forward-looking, efficient access provider; and the method of calculating a LSS annual charge from this cost base is inconsistent with the Tribunal ruling on cost allocation and levelisation. And so, we do not propose to adopt it. This paragraph quoted does not establish that ACCC had actually read the two Spreadsheets. It does, however, again show that ACCC was aware of an aspect of their contents, whatever the source of that knowledge may have been, and therefore engaged with Telstra's cost model in the broader sense. 179 Telstra points to the fact that no officer of ACCC was called to give evidence that regard was had to the two Spreadsheets. Telstra refers to the "rule of evidence" associated with Jones v Dunkel (1959) 101 CLR 298 at 305, 308, 320-321. That rule has been recognised as having scope for operation in applications for judicial review of administrative decisions: see the authorities cited in Minister for Aboriginal and Torres Strait Islander Affairs v State of Western Australia (1996) 67 FCR 40 at 61. The failure of the Minister to call evidence does not provide positive evidence that he did not consider the representation but, unexplained, it leaves the Court in a position where opposing inferences can be more confidently drawn because they stand uncontradicted by the person who could say something about the true state of the facts: Jones v Dunkel at 308. The question then is what inferences were open on the evidence. 180 Request responds by referring to the limited role permitted to a decision-maker such as ACCC in defending its decisions: see Hardiman at 35-36. The role of ACCC is one of arbitrating an access dispute between a carrier or carriage service provider and an access seeker. 181 In my opinion, the counsel given to administrative tribunals by the High Court in Hardiman applied to ACCC in that role. As noted at [102] above, ACCC has led no evidence, and has made submissions only on particular issues that it has perceived to be of general importance in relation to its powers and procedures. ACCC informed Request and Telstra prior to the hearing that it would act in accordance with Hardiman . It was open to Telstra or Request to subpoena ACCC officers to attend to give evidence or to produce documents. The absence of more direct evidence of the course of ACCC's deliberations is not to count against either of them more than it is against the other. 182 I therefore do not think the principle recognised in Jones v Dunkel is appropriately invoked in the present circumstances. Minister for Aboriginal and Torres Strait Islander Affairs v Western Australia is distinguishable. Unlike ACCC, the Minister was not arbitrating a dispute pursuant to an arbitration regime laid down by statute. I am not satisfied as to whether ACCC did or did not read the Spreadsheets. In support, Telstra refers to Tickner v Chapman (1995) 57 FCR 451 at 462, 464 per Black CJ and Tobacco Institute of Australia v National Health and Medical Research Council (1996) 71 FCR 265 at 277-279 per Finn J. 185 As Black CJ observed in Tickner v Chapman (at 462-463), "[t]he degree of effort that the consideration of a particular representation may involve will of course vary according to its length, its content and its degree of relevance". 186 The question arises whether, in the light of my factual conclusions above, ACCC's consideration of Telstra's cost model was sufficient to amount to an "active intellectual process". More specifically, did an "active intellectual process" require ACCC to manipulate or sensitivity test Telstra's cost model? 187 Telstra points to statements made by ACCC in the context of ACCC's consideration of similar cost models in regulatory matters, which Telstra says demonstrate the importance that ACCC places on sensitivity testing in order to gauge the value of cost models. In my view, evidence of this kind shows only that in the circumstances of those matters and those models ACCC considered that sensitivity testing assumed some importance. 188 As the extract from ACCC's internal memoranda set out at [176] and [178] above show, ACCC knew, and engaged with, the features of Telstra's cost model. In reliance on those features, as understood by ACCC, ACCC rejected that model. In other words ACCC rejected the underlying basis of Telstra's cost model by rejecting the assumptions and, at least to some extent, the data, on which Telstra's cost model, and thus the Spreadsheets, were based. In section 4.1.8 of the FD Statement of Reasons, ACCC adhered to the view that it had expressed in its DFD Consultation Paper in favour of a pooling of LSS- and ULLS-specific costs, and Telstra's own internal equivalent costs, followed by an allocation of those pooled costs to a demand base that included all downstream ADSL services (I address this pooling and allocation of costs in Section C (Pooling and Allocation Method)). Telstra's cost model lacked this feature. (b) Telstra's cost model was based on figures for six months only (the second half of the financial year ended 30 June 2006). (Although the model refers to 2007, it does so only by reference to assumed inflation and a productivity deflator applied to the 2006 figures. ) ACCC referred to levelisation in the DFD Consultation Paper and adopted an eight-year levelisation approach in the FD Statement of Reasons. Telstra's cost model did not provide for levelisation. (c) ACCC and the Tribunal had previously referred to the need for access providers to prove that their costs were forward looking and efficient (a requirement of the TSLRIC methodology which was adopted in the LSS Pricing Principles), and stated that this could not be assumed to be so simply because the access providers were operating in a competitive market. In the present case, Telstra was a monopoly supplier: there was no competitive market for the supply of the LSS. Telstra provided no evidence of the efficiency of its claimed costs, other than by pointing to so-called "Total Factor Productivity" (TFP) studies from Telstra's business and from certain businesses of the United States of America. ACCC was not convinced that Telstra's claimed costs were efficiently incurred. 189 The five "factors" that were identified in the passage from the FD Statement of Reasons set out at [153] above had all been addressed in detail in the immediately preceding pages of the FD Statement of Reasons. Revised LSS and ULLS demand. Telstra does not suggest that those five factors, taken as a whole, do not substantially explain the difference between its monthly per-unit figure of $4.56 and ACCC's $2.50. Its complaint is that ACCC denied itself the opportunity of measuring the extent of the contribution of the individual factors, and the possible contribution of other factors, to that difference. But I am not convinced that this matters. 190 By dealing with the features of Telstra's cost model in the way in which it did, ACCC "had genuine regard" and gave "positive consideration" to essential features of Telstra's cost model, although it rejected them. I do not accept that ACCC was required to undertake manipulation or sensitivity testing and thereby to quantify the contributions of the individual factors in order to take Telstra's cost model into account. Might the Final Determination have been different if ACCC had manipulated or sensitivity tested the Telstra cost model? A factor might be so insignificant that the failure to take it into account could not have materially affected the decision. It is enough that it cannot be said that the failure to have regard to the report was so insignificant that it could not have materially affected the decision. 193 Telstra submits that none of the features of its cost model referred to above tell against the assistance that ACCC would have obtained by interrogating Telstra's cost model and conducting sensitivity testing of it. It submits that these processes would have enabled ACCC to understand better the differences between Telstra's cost model and the ACCC SC model. Thus, ACCC could have used Telstra's cost model as an important check on the ACCC SC model and on the factors leading to the different cost estimates. Telstra contends that Telstra's cost model may have suggested that the ACCC SC model was not capturing all relevant costs. Telstra correctly points out that ACCC itself, in the passage from the FD Statement of Reasons set out at [153] above, implies that it would or might have been assisted by sensitivity testing of Telstra's cost model. 194 At the first blush there appears to be force in Telstra's submission: why would ACCC have referred to the absence of a capacity for sensitivity testing if its availability could not have made any difference? 195 This question requires that close attention be given to the passage set out at [153] above. The first sentence in the second paragraph is introductory to the second. The word "However" which introduces the second sentence means: "ACCC's incapacity to calculate the contribution of Telstra's various claims does not prevent ACCC from proceeding because the contributions, to varying degrees, can be expected, in the nature of things, to be made by the five factors listed". I do not think ACCC can be understood as implying that manipulation and sensitivity testing would or could have made a difference. Rather, ACCC is implying that it could not have done so. 196 Nor do I think there is any other reason to think that manipulation and sensitivity testing could have made a difference in view of the rejection by ACCC of Telstra's cost model based on its underlying features. (I discuss the principles in relation to procedural fairness in relation to Telstra's Grounds 9(a) and 9(b) at [482]ff below. ) It is uncontested that ACCC did not ask Telstra whether its cost model had been provided, or whether the two Spreadsheets on the CD were only a "summary" of something more substantial that was yet to come. 198 Telstra submits that ACCC could have cleared up any confusion as to whether the model supplied was only a "summary" of something larger by a simple phone call to Telstra. This is true. But the statement assumes that there was or should have been confusion on the part of ACCC. There is no evidence that a more ample model existed, and Telstra's case is that the two Spreadsheets on the CD were Telstra's cost model. It follows that on the evidence it cannot be said that ACCC would have been furnished with any additional information had inquiries been made. Telstra apparently asks me to accept that it would have told ACCC that the two Spreadsheets on the CD were Telstra's cost model, and perhaps that they could be manipulated and sensitivity tested. But because ACCC rejected the underlying features of Telstra's cost model, the furnishing of this information would have made no difference in the result. 199 Telstra further submits that if ACCC failed to consider Telstra's cost model, Telstra was denied procedural fairness. However, ACCC gave due attention to Telstra's submissions in so far is they related to the features of Telstra's cost model. I do not think that natural justice required it to do more. 202 Request submits that the additional evidence shows that ACCC's consideration, manipulation and sensitivity testing of Telstra's cost model by ACCC and disclosure of "Option 2" to Telstra could not have made any difference in the result ("Option 2" is relevant to Section E (Disconnection Charges, Churn Process and "Option 2"). 203 I will refer to the "Request/Telstra" access dispute and arbitration and the "Adam/Telstra" access dispute and arbitration in order to distinguish between them. 204 Request's submission is that after full argument in the Adam/Telstra arbitration, ACCC rejected Telstra's cost model and adopted "Option 2". I will defer dealing with the motion to reopen in so far as it relates to "Option 2" until Section E (Disconnection Charges, Churn Process and "Option 2") below, and will say nothing further of it here. 205 Request submits that ACCC's rejection of Telstra's cost model in the Adam/Telstra arbitration is relevant as to whether the Court in its discretion should grant or decline relief in the present proceeding. 207 Telstra could not have adduced the evidence in question during the hearing: it did not come into existence until 20 December 2007 --- some 13 days after the last day of the hearing. 208 The ultimate question for the Court is whether it is in the interests of justice that the further evidence be admitted (see, for example, Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 at [24] ; Daniel v State of Western Australia [2004] FCA 849 ; (2004) 138 FCR 254 ( Daniel ) at 269; Urban Transit Authority of NSW v Nweiser (1992) 28 NSWLR 471 at 478-479 (per Clarke JA, Mahoney & Meagher JJA agreeing); Dumitrov v SC Johnson and Son Superannuation Pty Ltd (No 2) [2007] NSWSC 42 at [7] ). 209 The particular criterion relevant to the present circumstances is whether it is probable to the required degree that the additional evidence will affect the result. There is not a single formulation in the cases as to the degree of probability required. 210 In Idonz Pty Ltd v National Capital Development Commission (1986) 13 FCR 70 ( Idonz ), the Court refused an application by the respondents to an appeal to reopen the hearing of the appeal to allow them to call fresh evidence. One reason given by Fox J, with whom Everett J agreed, was that the evidence had been available when the appeal was heard. Other reasons given by Woodward J (in relation to the application by the second and third respondents) were that the evidence would be complex, contested and not appropriate for consideration by an appellate court, and that the evidence would have added little probative value to material already before the Court and would have related only to the possible exercise of discretion against the appellant if it were otherwise successful in its appeal. 211 Idonz is both different from and similar to the present case. In the present case, the evidence is sought to be tendered at trial, was not available at the time of hearing, and consists simply of two documents. On the other hand, the evidence relates to the possible exercise of discretion against Telstra if it were otherwise successful on Telstra's Cost Model G\rounds. Moreover, as appears below, complex questions as to the probative value of those documents are raised. Telstra submits that to ask whether it "would have made any difference" if that ground had not existed involves legal error. 213 Telstra submits that where there is a failure to take into account a relevant consideration, relief will be refused only if that consideration was so insignificant that the failure to take it into account could not have materially affected the decision. I referred to the relevant authorities in relation to a failure to take into account a relevant consideration at [192] above. All that the appellant needed to show was that the denial of natural justice deprived him of the possibility of a successful outcome. In order to negate that possibility, it was, as we have said, necessary for the Full Court to find that a properly conducted trial could not possibly have produced a different result. 215 In oral submissions, counsel for Request conceded that at times Request had described the relevant test loosely. Request concedes that the correct test is the "possibility of a different result" test. 217 As in the Request/Telstra arbitration, a cost model was used to determine the amount of the periodic charge. The Adam FD Statement of Reasons reveal that Telstra had proposed an alternative cost model to that proposed by ACCC. The cost model proposed by Telstra in the Adam/Telstra arbitration was, for all intents and purposes, the same as Telstra's cost model in the Request/Telstra arbitration which, in the present proceeding, Telstra complains that ACCC failed to take into account. 218 There were differences in figures, for example in respect of the WACC, the debt ratio and the interest rate, in respect of the two models. Those differences, however, are of no relevance. There is evidence that after the figures for the WACC, the debt ratio and the interest rate in the cost model proposed by Telstra in the Adam/Telstra arbitration are brought into line with those in Telstra's cost model in the Request/Telstra arbitration, the two outcomes generated are identical. The cost model structure proposed by the Commission in respect of LSS annual charges works, is relatively well understood, and is transparent and flexible. It adopts the structure and formulas and same level of detail that Telstra developed in submitting TSLRIC+ models to the Commission for consideration in prior regulatory proceedings, and which have subsequently been scrutinised by industry during regulatory proceedings before the Commission and the Tribunal. The result is that Telstra's newly-developed model cannot be readily modified to adopt other modelling approaches, including the approach that the Commission advised the parties that it was likely to adopt in these proceedings. The Commission has reached the view that it should proceed to calculate the TSLRIC+ of the LSS 'specific-costs' in accordance with the approach outlined to the parties. As explained above, the Commission has reached this view after considering the parties' submissions and the section 152CR criteria and 2007 LSS pricing principles. Specifically, the Telstra model cannot be adjusted in this way to reflect the approach that was outlined (and which has been adopted) in respect of cost allocation and levelisation. This would require the introduction of many additional data, the replication of existing formulas and introduction of new formulas, and would essentially result in a new model. The model's outputs would also need to be directed towards financial years rather than calendar years. The development of this third model is unnecessary in these proceedings, as the model that the Commission distributed to the parties is already configured in a way that allows the implementation of the approach that the Commission has chosen to adopt. ACCC also noted Telstra's submission that capital values should be restated for each year and that the amounts of allowances, such as for capital costs, should be increased. 220 ACCC gave reasons for not adopting Telstra's submissions. In particular, ACCC noted that ACCC's approach to levelisation meant that it was not appropriate to restate capital values each year within the single regulatory period being considered. 221 At para 653, ACCC identified the following factors as influencing (to varying degrees) the higher cost estimate that Telstra supported: (1) the inclusion of all claimed capital costs and expenses on a CCA (FDC) basis; (2) a higher WACC; (3) the approach to cost allocation; (4) the approach to levelisation; and (5) revised figures for LSS and ULLS demand. ACCC observed that these "issues of principle" had been discussed in detail elsewhere in its Adam FD Statement of Reasons. These were the same five factors that had been identified by ACCC in the FD Statement of Reasons in relation to Telstra's cost model in the Request/Telstra LSS arbitration --- see [153] above. 222 ACCC noted (at para 654) that the contribution of each of Telstra's claims to the higher claimed cost could not be calculated because Telstra's cost model did not support "the calculation of TSLRIC+ measures for the relevant counter factual scenarios". ACCC stated that while changes could be made to correct for certain input values, the output from the cost model proposed by Telstra would remain informed by the remainder of its modelling assumptions that could not readily be varied, specifically as to the approach to levelisation and cost allocation. 223 ACCC went on to note (at para 655) that while it was not possible to reconcile precisely the output of each model, ACCC had manipulated (that is, sensitivity tested) the cost model proposed by Telstra in various ways. Having done so, ACCC concluded (at para 656) that it was satisfied that there were "no factors that materially contribute[d] to the difference in the competing cost measures in addition to those identified and discussed at length in [the Adam FD Statement of Reasons]". 224 Telstra does not submit that the cost model it proposed in the Adam/Telstra arbitration was different from that which it had proposed in the Request/Telstra arbitration. Nor does Telstra submit that it did not have an opportunity to be heard in relation to the model in the Adam/Telstra arbitration. In its application for judicial review of the Adam Final Determination, Telstra does not raise a ground based on the rejection of its cost model. Telstra contends, however, that the evidence of ACCC's dealing with the matter in that arbitration should not be admitted because it lacks the required degree of probative value. The Adam Final Determination is itself the subject of a judicial review proceeding in this Court (NSD 70 of 2008) in which Telstra seeks to call into question aspects of the Adam FD Statement of Reasons. 225 I will briefly discuss these submissions in turn. I say "briefly" because I have reached the conclusion that leave to reopen to put the two documents into evidence should be granted but that the documents should be accorded no weight. 226 The reason is that I reached the conclusion expressed at [200] above strictly on the evidence and submissions as they existed at the conclusion of the hearing on 7 December 2007, and prior to considering, and without any reference whatever to, the Adam Final Determination and the Adam FD Statement of Reasons. I came to consider Request's motion and those documents in that state of affairs. In these circumstances, the only purpose that could be served by admitting the additional evidence would be to provide a further and alternative discretionary basis to support my decision. I am not obliged to address that further and alternative discretionary basis to support my decision (and would not have been obliged to do so even if the documents had been tendered by Request during the course of the hearing). 227 The issues that are raised by the motion are complex as the brief summary of the parties' submissions in the following paragraphs shows. In circumstances in which it is not necessary that I deal with the discretionary ground, I have decided not to do so, but to admit the evidence and accord it no weight. 1. Each arbitration must be decided on its own merits and there is no principle of stare decisis in administrative decision making. Telstra cites statements by Tobias JA in Segal v Waverley Council (2005) 64 NSWLR 177 at [96] and by Deane J in Nevistic v Minister for Immigration & Ethnic Affairs (1981) 34 ALR 639 at 646-647, generally to the effect that an administrative decision-maker must decide each case on its facts and merits, and must not blindly follow a fixed policy. It seems to be inherent in the submission that it should be accepted that ACCC may properly determine different charges for the supply of the (identical) LSS by Telstra to different access seekers, such as Request and Adam. 229 Telstra submits that if it succeeds in either this proceeding or the Adam/Telstra proceeding, it is not "inconceivable" that ACCC might take a different view of Telstra's cost model from that which it adopted in the FD Statement of Reasons based on what has transpired in this proceeding and the Court's reasons for judgment. As well, according to Telstra, any subsequent consideration of Telstra's cost model may be affected by the outcome of other grounds of review, in particular, those relating to the Pooling and Allocation Method (see Section C (Pooling and Allocation Method)) which might be relevant to a consideration of Telstra's cost model. 230 On the other hand, the reasons that ACCC gave for not adopting cost model proposed by Telstra in the Adam/Telstra arbitration appear to relate exclusively to questions of economic principle having industry-wide relevance, which, prima facie, would be equally applicable to the circumstances of the Request/Telstra arbitration. It is in the interests of justice and sound decision-making that a decision-maker decide consistently. 231 ACCC made the Final Determination on 1 August 2007 and the Adam Final Determination on 20 December 2007. The period of the Final Determination expired on 31 December 2007, whereas the period of the Adam Final Determination began on 10 January 2008. I infer that Telstra advanced its best case for the adoption of the Telstra cost model in the Adam/Telstra arbitration. 2. It will be recalled that the LSS Pricing Principles were contained in Ch 7 of ACCC's LSS Declaration Final Report of August 2002. As mentioned at [97] above, in October 2007, ACCC made (or purported to make --- Telstra's challenge to their validity and its relevance is discussed below) new pricing principles under s 152AQA of the Act --- the 2007 LSS Pricing Principles. As Telstra observes, this was some months after ACCC made the Final Determination on 1 August 2007, but before the making of the Adam Final Determination on 20 December 2007. 234 I accept that in the Adam/Telstra arbitration ACCC had regard to the 2007 LSS Pricing Principles as it was required to do by s 152AQA(6) of the Act (assuming that the 2007 Pricing Principles were valid). Telstra refers to references to the 2007 LSS Pricing Principles in paras 59, 74, 318, 394, 522, 753, 884 and fn 38 on p 102 of the Adam FD Statement of Reasons. I have read all of those passages. In my view, the only one that has any significance for present purposes is para 522, where ACCC states that there are "particular aspects of Telstra's modelling that would be inappropriate to adopt, having regard to the 2007 LSS pricing principles and the section 152CR criteria" (my emphasis). 235 Telstra draws attention to statements in the Adam FD Statement of Reasons to the effect that certain submissions by Telstra on certain particular issues were inconsistent with the 2007 LSS Pricing Principles. For example, in para 587 ACCC refers to the fact that Telstra's approach on a particular issue was inconsistent with the requirement in the 2007 LSS Pricing Principles that the Pooling and Allocation Method be adopted. Paragraphs 446 and 617 also refer to that requirement of the 2007 LSS Pricing Principles. 3. If they are held to be invalid it will be shown that s 152AQA(6) did not require ACCC to have regard to them, including the Pooling and Allocation Method. If the Adam Final Determination is set aside as a result, then the Adam Final Determination can hardly provide a sound basis for exercising a discretion against granting relief in respect of the Final Determination with which I am concerned. However, the circumstances of that case are far removed from those of the present one. Importantly, it was not possible for Request to tender the additional documents during the hearing, and I had not delivered judgment when the notice of motion seeking leave to reopen was filed. 238 For the reasons I gave at [226], the Adam Final Determination will be admitted as Exhibit JEA1 and the Adam FD Statement of Reasons will be admitted as Exhibit JEA2 but they are accorded no weight. 240 Telstra argues that the Act confers jurisdiction on ACCC only to make a determination on access to a "declared service" and that to the extent that the Final Determination purported to apply to a period after 31 October 2007 (the date on which the LSS Declaration was due to expire), it was made in excess of jurisdiction. Telstra contends that the Final Determination is therefore invalid to the extent that it purports to apply in respect of any period after that date. (In written submissions Telstra had claimed that the Final Determination was also invalid in respect of the period prior to and after 31 October 2007. However, in oral submissions, Telstra accepted that the Final Determination would be pro tanto valid down 31 October 2007: see s 46(2) of the Acts Interpretation Act 1901 (Cth). 242 On 7 October 2002 ACCC declared the LSS to be a declared service (with effect on 16 October 2002) pursuant to s 152AL(3) of the Act. 243 On 19 November 2003 ACCC made a determination, taking effect on 3 December 2003, that the LSS Declaration would expire on 31 October 2007. 244 On 18 April 2006 ACCC received Request's written notice of 13 April 2006 that an access dispute existed. 245 On 1 August 2007 ACCC made the Final Determination, taking effect on 22 August 2007 pursuant to s 152DN. The Final Determination was expressed to expire on 31 December 2007, a date that post-dated the expiry date of the LSS Declaration as it then stood. 246 On 26 October 2007 ACCC extended the expiry date of the LSS Declaration (with effect on 29 October 2007) until 31 July 2009 pursuant to s 152ALA(4) of the Act. An extension of the expiry date of a specified declaration under s 152AL by ACCC pursuant to s 152ALA(4) has the effect that the extended expiry date becomes the expiry date of the declaration. Accordingly, s 152ALA(5) had the effect here that as from 29 October 2007, the LSS Declaration would not cease to be in force on 31 October 2007 but would do so on 31 July 2009. 248 ACCC's jurisdiction to make a final determination in respect of an access dispute is activated by notification to ACCC in writing that an access dispute exists (s 152CM of the Act). In the present case, it is s 152CM(1) that is relevant. 250 Section 152DNA(4) provides that a provision of a final determination may be expressed to cease to have effect on a specified date. Indeed, s 152DNC(1) expressly contemplates that a final determination may be of an indefinite duration (see para (c)). 252 Telstra's argument is that in the context of Pt XIC, s 152CP does not authorise ACCC to make a final determination on access except in relation to a declared service. However, so the argument proceeds, to the extent that the Final Determination was to apply in respect of a period after 31 October 2007, it was to apply in respect of a service that was not a declared service and was therefore made beyond ACCC's jurisdiction. Accordingly, ACCC's jurisdiction to arbitrate the dispute is limited by reference to the continued subsistence of a declared service. • Section 152CP(2): This section provides that a determination "may deal with any matter relating to access by the access seeker to the declared service including matters that were not the basis of the notification of the dispute". Accordingly, ACCC's jurisdiction is confined to matters relating to access by an access seeker to a declared service: matters relating to access to a service that has ceased to be declared fall outside that scope. The Final Determination, in so far as it related to the period after 31 October 2007, did not deal with matters relating to access by an access seeker to a declared service. Furthermore, paras (a) to (e) of s 152CP(2) provide examples of matters with which a determination may deal, and relate to the present supply of a declared service and assume that SAOs apply. These matters have no place where a service has ceased to be declared. It could not have been intended that ACCC have jurisdiction in circumstances in which a determination would have no operational effect. • Section 152ALA: This section provides that a declaration of a service (under s 152AL) must specify an expiry date for the declaration (s 152ALA(1)) within the five year period beginning when the declaration was made (s 152ALA(2)). ACCC must conduct a public inquiry within the 12 months prior to the expiry date of a declaration to determine whether, inter alia, the declaration should be extended, revoked, varied or allowed to expire (s 152ALA(7)). A determination which pre-empts ACCC's decision on the future of a declaration would undermine the legislative intention that declarations be reviewed at regular intervals. 254 Request, on the other hand, submits that the only requirement to enliven ACCC's jurisdiction is that the service be a declared service at the time when ACCC is notified that an access dispute exists. Section 152CM requires only that a service be "a declared service" at the time of the notification of the dispute. The reference to " the declared service" (my emphasis) in s 152CP(1) refers, so Request's submission goes, to the declared service that was the subject of the notification under s 152CM. There is no requirement limiting ACCC's power to make a determination that the service be a declared service at any other time. • Section 152ALA(1) and (2): By these provisions, the legislature expressly imposed restrictions on expiry dates for, and the duration of, declarations. It can not be assumed that the legislature intended a similar restriction in respect of final determinations where none is expressed. • Section 152DNA: This section permits ACCC to backdate a determination, although only to a time no earlier than when the parties commenced negotiations and therefore to a time after the service became a declared service. It follows that a final determination may have a role to play even though a declaration has expired and that a final determination is therefore not dependent on the continued subsistence of the declaration, so long as the service was declared at the time of notification. 256 Request also draws attention to the practical consequences of the limitation on ACCC's power inherent in Telstra's argument. Request submits that it would provide an undesirable incentive for access providers (such as Telstra) to delay the outcome of an arbitration for as long as possible, and ideally until after the service ceased to be a declared service. Telstra responds to this particular submission by arguing that it is ACCC, not the access provider, that controls the conduct, and therefore the pace, of an arbitration. Telstra refers to such provisions as ss 152CLA, 152CT and 152DB as illustrations of provisions that give ACCC control over arbitrations under Div 8. 257 Any practical dilemma of the Final Determination extending beyond the expiry date of the LSS Declaration did not eventuate in the present case because the LSS Declaration was extended before its original expiry date (of 31 October 2007) arrived. However, the parties appear to be in agreement that absent such an extension, and subject to the operation of s 152DNC (discussed below), the Final Determination would have ceased to be effective once the LSS Declaration expired. The reason is that once the LSS ceased to be a "declared service", the SAOs would no longer apply and the Final Determination, the role of which is to determine the terms and conditions on which the SAOs would apply, would be rendered redundant. 258 As Request and ACCC explain, the situation just described is no different from that in which a final determination did not specify an end date. 259 ACCC submits that this situation demonstrates the desirability as a practical matter of the construction of the Act's provisions supported by Request. Given the prospect that a declaration may be extended (pursuant to s 152ALA(4)), the jurisdiction to make a final determination that extends beyond the current life of a declaration may avoid a costly reagitation of the dispute by the parties in the event that the declaration is in fact extended. 260 Something further should be said about s 152DNC(1). Section 152DNC(1) was inserted into the Act at the same time as s 152ALA which provides that a declaration must have an expiry date being not more than five years from the date on which it was made (see Telecommunications Competition Act 2002 (Cth)). It is clear, and the parties agree, that s 152DNC(1) had no work to do in the circumstances of the present case because, as events transpired, the LSS Declaration did not in fact expire on 31 October 2007 (see s 152DNC(1)(a)). However, submissions addressed the question whether the provision lent support to the view as to the extent of ACCC's power put forward by the respective parties. 261 Request and ACCC say that this provision presupposes that a determination might have an end date that extends beyond the end date of a declaration. Therefore, so their argument continues, Telstra's proposition (that a limitation on ACCC's power to make final determinations must be implied in order to preserve the harmony of Pt XIC) is incompatible with s 152DNC. Telstra, on the other hand, submits that s 152DNC(1) assumes that in the absence of such a provision, a determination would cease to have effect on the date when a declaration expires. Telstra contends that this "powerfully indicates" that ACCC has no jurisdiction to make a determination that extends beyond the expiry date of the declaration because it cannot have been the legislative intention that ACCC have jurisdiction to make a determination in the knowledge that it may cease to have effect prior to its stated expiry date. Telstra also contends that s 152DNC was introduced only as a savings provision and applies only to determinations that were current at the time of its introduction. 262 It is not necessary for me to decide whether s 152DNC is merely a savings provision or not. In my opinion, s 152DNC addresses only the question of the operation of a final determination for particular limited purposes after a declaration has expired. If it says anything about the power of ACCC to make a final determination extending beyond the then current expiry date of the declaration, which is the question before me, it seems to assume the existence of such a power. I refer in particular to the recognition in s 152DNC(1) of the possibility of a determination's having an indefinite duration. The indefinite duration of a final determination would necessarily travel beyond the maximum five-year life of the declaration of a service under ss 152AL and 152ALA. 264 There is no policy reason that I can see that militates against the view that the Final Determination could have an operation from 31 October 2007 down to its own end date of 31 December 2007, once the expiry date of the LSS Declaration was extended on 26 October 2007 (with effect from 29 October 2007) to 31 July 2009. I do not think that the provisions to which Telstra points suggest otherwise. I see nothing in the structure of Part XIC suggesting that the declared service must be a declared service other than at the time of the notification of the access dispute to ACCC. If the declaration expires prior to the date on which the final determination expires, the final determination will simply have no work to do beyond the expiry of the declaration (subject to s 152DNC). 265 When a final determination is made, the access provider and the access seeker know that it will operate to its own end date subject to the service in question being a declared service in respect of which the final determination can, in accordance with its terms, have an effect. So, to take the present circumstances, all parties must be taken to have known that the Final Determination would have work to do to 31 December 2007 if the existing expiry date of the LSS Declaration, namely 31 October 2007, was extended to cover the period down to 31 December 2007. 266 A final determination may have an indefinite duration yet a declaration of a service under s 152AL must specify an expiry date in the five year period beginning when the declaration was made, and if the expiry date is extended or further extended the extension or further extension must not be for more than five years (see s 152ALA(1)-(5)). Accordingly, the Act accepts that at least in the case of a final determination of indefinite duration, a final determination is not rendered invalid by reason of the fact that its life exceeds that of the declared service. 267 For the reasons given above, Telstra's Ground 4 is not sustained. 269 In section 3.3.4 of the FD Statement of Reasons headed "Section 152CR(1)(d) the direct cost of providing access to the declared service", ACCC stated that it considered that the direct costs of providing access to a declared service were those incurred (or caused) by the provision of access, and included the incremental costs of providing access. 270 In the both the DFD Consultation Paper and the FD Statement of Reasons, ACCC noted that the expression "specific costs" when used in relation to the LSS refers to the incremental cost of providing the LSS and includes "the costs associated with ordering, provisioning and qualifying a line sharing service". Obviously, there are costs that Telstra will incur where it is required to give access to the LSS that it would not incur if it were itself to provide (through its Bigpond business division) the services in question to the same end-user. ACCC referred to "IT system development and operational costs; connection costs; wholesale management costs; and indirect costs" as examples of LSS-specific costs. However, ACCC conceded that some of those cost categories were recovered through LSS connection charges and would therefore not be relevant to LSS periodic charges. 271 In section 4.1.8 of the FD Statement of Reasons entitled "Specific costs", under the heading "Cost allocation", ACCC adhered to a view that it had expressed in section 4.1.8 of the DFD Consultation Paper. That view was that for the purposes of the calculation of the LSS annual charge, the "specific costs" associated with (i) the LSS, (ii) the ULLS, and (iii) Telstra's own internal costs of a nature equivalent to the specific costs associated with the LSS and ULLS, should all be pooled, and that the pool should be allocated to a demand base that included all downstream ADSL services, not just the LSS (Pooling and Allocation Method). 272 ACCC noted that Telstra opposed the concept of a pooling and allocation of specific costs while Request supported it. 274 A first possibility is that Telstra itself (through its Bigpond business division) may use the line to provide broadband services to its retail customers. 275 A second possibility involves the LSS. In this case Telstra makes available the high frequency spectrum of the line to another entity such as Request which uses it to provide broadband services to a customer. 276 A third possibility is the ULLS. In this case Telstra makes available both the high frequency spectrum and the low frequency spectrum of the line to the same other entity which uses them to provide services to a customer, while no part of the spectrum remains available for Telstra or another entity to use. 277 The Pooling and Allocation Method is best illustrated by way of a simplified example (which, no doubt, does not take into account certain complexities that exist in the real world). Assume that there are 100 lines (from the Telstra exchange to end-users' premises) that are being used for xDSL purposes. Assume that five of the 100 are being used for LSS, another five for ULLS, and the remaining 90 by Telstra (Bigpond) to provide xDSL services to its retail customers. Assume that the LSS-specific costs are $10.00 per line per month, that the ULLS-specific costs are also $10.00 per line per month, and that Telstra's own internal costs of a nature equivalent to LSS-specific costs are $5 per line per month. The total of these monthly costs for the 100 lines is therefore $550. According to Telstra's proposal, the LSS-specific cost in respect of each line used to provide a LSS would be passed on to the LSS access seeker. That access seeker would therefore bear a cost of $10 per line per month, whereas Telstra's own costs for providing xDSL services would be only $5.00 per line per month. However, under ACCC's Pooling and Allocation Method, the total pooled cost of $550 would be allocated across all 100 lines, giving a cost of $5.50 per line per month. Accordingly, the costs to be borne by an access seeker in the case of the LSS would be reduced from $10.00 to $5.50 per line per month. 278 It can be seen from the above example that the Pooling and Allocation Method aligns more closely the cost base of the access seeker with that of Telstra for the provision of an xDSL service to an end-user. Of course, the extent to which each access seeker or Telstra chooses to pass on costs to an end-user is a matter for its decision. By contrast, Telstra's approach is concerned solely with the specific costs of the LSS alone. Secondly, the ACCC divides the relevant cost pool by all downstream ADSL lines. That is, in general terms, those costs are allocated to all lines being used to provide broadband services. Those lines may be being used by Telstra itself to provide retail broadband services to its retail customers. They may be being supplied by way of the ULLS or the LSS by access seekers to provide broadband services to their customers. Telstra's approach allocates the costs of the LSS to LSS lines only. This is, of course, a smaller demand base than that adopted by the ACCC. 280 The Pooling and Allocation Method results in a lower charge for the LSS than Telstra's approach would do (see [296] below). However, this of itself says nothing as to the appropriateness of the approach. 282 Telstra submits (Ground 5(a)) that by adopting the Pooling and Allocation Method ACCC failed to take into account a mandatory relevant consideration, namely, "the direct costs of providing access to the declared service" (s 152CR(1)(d) of the Act). Telstra argues that its own approach involves the recovery from LSS access seekers of those direct costs in the LSS periodic charge, whereas the Pooling and Allocation Method involves an under-recovery of those costs in the LSS periodic charge. 283 Telstra's Ground 6 also depends on s 152CR(1)(d) of the Act. It is that ACCC made an error of law in its construction of that provision. Telstra argues that, properly construed, s 152CR(1)(d) requires ACCC to take into account "the direct cost of providing access to the declared service [through the access charge for that declared service]". In support, Telstra refers to the Access Pricing Principles guide; a decision of the Tribunal in Application by Optus Mobile Pty Limited & Optus Networks Pty Limited (2006) 205 FLR 29 ( Optus Mobile ) at [137]-[138]; and the LTIE. Telstra submits that ACCC's conclusion that the Pooling and Allocation Method allows Telstra to recover its direct costs of providing Request with access to the LSS (see [299] below) involves a misconstruction of s 152CR(1)(d) and therefore an error of law. 284 Telstra emphasises that its submission is not that s 152CR(1)(d) requires ACCC to ensure that Telstra's direct costs are in fact recovered via the access charge for the LSS, but rather that ACCC is required to take into account the correct matter when determining the access charge for the LSS, which is the direct costs of providing access to that service. By concluding that the direct costs criterion of s 152CR(1)(d) was satisfied when Telstra did not recover the direct costs of providing Request with access to the LSS through the access charge to be made for the LSS alone, ACCC did not take into account the correct consideration made mandatory by s 152CR(1)(d). 285 Telstra submits (Ground 5(b)) that ACCC failed to take into account another mandatory relevant consideration, namely, whether the Final Determination would promote the LTIE (s 152CR(1)(a)). As a particular of this ground, Telstra contends that ACCC failed to have regard, as the Act required it to do, to the extent to which the Pooling and Allocation Method was likely to result in the achievement of the objective of encouraging the economically efficient use of, and the economically efficient investment in, the infrastructure by which the LSS was supplied (s 152AB(2)(e)), and, in particular, Telstra's legitimate commercial interests, including its ability to exploit economies of scale and scope (s 152AB(6)(b)). 286 Telstra submits that s 152AB(6)(b) recognises that the supplier of a declared service has a legitimate interest in being able, as a vertically integrated firm, to exploit economies of scale and scope, and that ACCC and the Tribunal have accepted that this is so. Telstra refers again to the Access Pricing Principles guide and Optus Mobile at [122] to [124]. 287 Telstra gives examples of economies of scope and scale. A firm that is vertically integrated may be able to supply a service more cheaply than one that operates at a one functional dimension because a particular cost item, such as an ordering system for a wholesale input, is not a cost that the vertically integrated firm incurs. The capacity of the vertically integrated firm to avoid that cost, and so to produce and sell the retail service at a lower price, may be regarded as an "economy of scope". 288 Similarly, a company with a larger market share than its competitors may be able to supply a service more cheaply than those competitors, and this may give rise to economies of scale. 289 Telstra argues that the Pooling and Allocation Method prevents it from exploiting any relevant economies of scope and scale that it might otherwise enjoy. According to Telstra, Request had not addressed the application of s 152AB(6)(b) to the matters in dispute in its submissions to ACCC, whereas Telstra had provided "detailed submissions" on that issue. ACCC failed, so the argument goes, to have regard to s 152AB(6)(b) and to Telstra's submissions to ACCC on that provision. 290 Telstra submits (Ground 5(c)) that ACCC failed to have regard to the LSS Pricing Principles (s 152AQA(6) of the Act). In the LSS Pricing Principles, ACCC adopted a TSLRIC pricing methodology (specifically, a TSLRIC+ pricing methodology) for the LSS. In addition to the requirement imposed on ACCC by s 152AQA(6) of the Act to have regard to the LSS Pricing Principles, ACCC indicated in the DFD Consultation Paper that it was minded to apply the LSS Pricing Principles in making the Final Determination. In the FD Statement of Reasons, moreover, ACCC stated that it accepted the TSLRIC pricing methodology. 291 However, according to Telstra, the Pooling and Allocation Method is "radically inconsistent" with the TSLRIC pricing methodology because it does not base the calculation of the LSS annual charge on the TSLIRC of the LSS. It submits that ACCC made only "mere formalistic reference" to TSLRIC in the FD Statement of Reasons, and, importantly, did not refer to that aspect of the LSS Pricing Principles that stipulates that it is reasonable for an access provider to recover incremental LSS-specific costs through the LSS access charge. The eight instances are referred to in the following paragraphs. (1) The first instance is ACCC's October 2004 Assessment of Telstra's undertakings for PSTM, ULLS and LCS: Draft Decision . ACCC distinguished between "the first regulatory period" when the ULLS was established as a new service and future regulatory periods. ACCC accepted that there would be ULLS-specific costs in the initial regulatory period, "in particular development costs, staffing costs and operational costs in the period during which the optimal design was determined". ACCC expressed the view (at 64) that in the case of subsequent regulatory periods efficiency dictated that there would be costs common to a number of related services which should be pooled then allocated and recovered across those services. (2) The second instance is ACCC's March 2005 ULLS Undertakings Discussion Paper. ACCC noted (at p 19) that since the declaration of the ULLS, there had been debate over which services should contribute to the ULLS-specific costs. ACCC had initially stated that ULLS-specific costs should be recovered solely from ULLS access seekers, but several ULSS access seekers had argued that they should be recovered over a wider range of services. ACCC noted Telstra's submission to the contrary. ACCC outlined three perspectives from which the issues could be viewed (namely, the width of the definition of "service" within the concept of TSLRIC; the perspective of competitive neutrality found in s 152AR of the Act; and the perspective of integration of systems) and invited comments on them. (3) The third instance is ACCC's August 2005 ULLS and LSS Undertakings Draft Decision, sections 6.2 and 7.2 and Appendix A. At para 6.2.1, ACCC summarised its conclusions in relation to ULLS-specific costs, including its view that it was appropriate that specific costs be recovered from a larger customer base than that proposed by Telstra, and that ideally they should be recovered from the largest customer base possible, including Telstra's own customer base. In relation to LSS-specific costs, ACCC stated (at para 7.2) that, as with ULLS-specific costs, there are "compelling arguments under the statutory criteria" to spread the costs across a broader range of services, and that for the reasons set out in Appendix A, ACCC believed it would be preferable to move to a broader cost recovery base. (4) The fourth instance is ACCC's December 2005 ULLS and LSS Undertakings Final Report. ACCC repeated the views referred to in [292](3) above, and concluded (at [7.2]), in relation to the LSS periodic charge proposed by Telstra, that it was not necessary to come to a definitive view on the cost recovery base because under any method chosen the charges referred to in Telstra's proffered undertaking were not reasonable (see s 152BV(2)(d) of the Act). (5) The fifth instance is the Tribunal's 2006 Decision at [121]---[166]. The proceeding before the Tribunal was an application by Telstra pursuant to s 152CE(1) of the Act for review of ACCC's decision under s 152BU(2) rejecting Telstra's proffered access undertaking in respect of the LSS. In addressing "cost allocation", the Tribunal stated (at [131]) that the allocation method supported by Telstra imposed all of the specific costs of providing the LSS onto its competitors, thereby raising their costs, in terms of competing with Telstra, as providers of retail DSL services. According to the Tribunal, it followed that it was necessary to consider whether, having regard to the matters identified in ss 152AH and 152AB of the Act, it was reasonable for Telstra to restrict its allocation of what it claimed to be its LSS-specific costs to lines used, or forecast to be used, to provide the LSS (at [132]). It will be recalled that the s 152AH mandatory considerations are, subject to one exception not presently relevant, identical to the s 152CR mandatory considerations that are of present concern (see [24] and [40] above). The Tribunal decided (at [134]), inter alia, that where Telstra was competing with access seekers in the retail DSL market, it was not in Telstra's "legitimate business interests" to impose all its LSS-specific costs on those access seekers and to bear none of them itself. In relation to economies of scope and scale, the Tribunal stated (at [160]) that it was not necessary for Telstra to recover its LSS costs from LSS lines only, in order for it to be able to take advantage of these economies. The Tribunal made the point that even with LSS-specific costs spread over a broader demand allocation base, Telstra would still be likely to have more retail customers and to provide more retail services than its rivals, with consequent advantages of economies of scope and scale. (6) The sixth instance is the Second Draft ID Issues Paper of October 2006 at pp 3-5 in which ACCC noted that the Tribunal's 2006 Decision confirmed that there should be a pooling of LSS-specific costs. (7) The seventh instance is the Second ID Statement of Reasons of 21 December 2006. ACCC discussed the measurement of LSS-specific costs, and in particular whether they would approximate ULLS-specific costs. (8) The eighth instance is found in the DFD Consultation Paper of 30 March 2007. As noted above, the issue of Pooling and Allocation Method was dealt with in section 4.1.8 headed "Specific costs". I noted at [270] above ACCC's explanation of the expression "specific costs" in the DFD Consultation Paper. In section 4.1.8 ACCC referred to a pooling and allocation approach having been adopted by ACCC in the December 2005 ULLS and LSS Undertakings Final Report, and stated that it was consistent with the reasoning of the Tribunal in the Tribunal's 2006 Decision. ACCC concluded that it was important to note that it was only the like-for-like incremental costs associated with a Telstra internal request for line sharing (when a retail or wholesale ADSL service was requested) or a request for line sharing, or access to the full spectrum on the line from an external service provider (LSS or ULLS), that are to be pooled and allocated. Costs associated with the conversion of line sharing into a downstream service are not included. 293 Telstra submits that consideration of a pooling and allocation approach in other contexts, such as the eight instances referred to above, provides no assistance in relation to the question whether ACCC fell into reviewable error in making the Final Determination. Telstra points to the fact that in other contexts ACCC may not have been required to have regard to the s 152CR(1) criteria, or may have been required to have regard to additional considerations. As an example, Telstra refers to the Tribunal's 2006 Decision (see [292](5) above). The power exercised by ACCC to which the Tribunal's finding was directed required ACCC to have regard to the direct costs of providing access to a declared service, but subject to an overarching test of reasonableness, and with no express obligation to have regard to the LSS Pricing Principles in which ACCC accepted that LSS-specific costs should be recoverable in the LSS access charge (see [336] and [337] below). 294 I agree with Telstra that the consideration of a pooling and allocation approach as against various criteria in other contexts does not provide "direct and authoritative guidance" as to whether ACCC fell into reviewable error by adopting the Pooling and Allocation Method in the Final Determination. I do not rely on them for that purpose. Their relevance is limited. In so far as particular passages in the FD Statement of Reasons refer to them or to any of them, those passages may, properly understood, incorporate the reasoning processes in the passages referred to. In addition, they may be relevant as showing a commonly understood background against which the FD Statement of Reasons is to be read. They also negate any suggestion that the Pooling and Allocation Method was a novel idea introduced at the Final Determination stage. Finally, the previous eight instances show the context in which certain earlier statements relied on by Telstra that were made by ACCC prior to the eight instances are to be viewed. 296 ACCC noted three approaches to pooling: that of Telstra which was opposed to pooling; that of Request (and Chime) which supported pooling but proposed that the allocation should occur over all copper lines, not only ADSL lines; and that which ACCC proposed (see above). ACCC noted that adopting Telstra's position would result in a higher access charge, while adopting Request's position would lead to a lesser access charge. ACCC also noted that its approach was consistent with the reasoning of the Tribunal in the Tribunal's 2006 Decision at [150] to the effect that a spreading of the LSS-specific costs over a broader range of services would be more likely to promote competition between the providers of those services. ACCC announced that having considered the parties' submissions, it remained of the view that the approach it had proposed was "to be preferred having regard to the s 152CR(1) criteria". This supply has to date brought benefits to end-users in relevant service areas, in particular, by supporting higher quality, ADSL 2+, services. 298 ACCC went on to reject both the approach supported by the access seekers and that supported by Telstra. As associated costs would only be met from access seekers, Telstra would have less incentive to ensure that investments were necessary and implemented at efficient cost levels. Higher resulting unit costs for access seekers would discourage use of LSS and ULLS below efficient levels. These inefficiencies would flow through to downstream services. Theses [sic] interests are currently being met, and there is little if any potential that adopting any of the three proposed approaches [those of Telstra, the access seekers, and ACCC] would prevent Telstra from continuing to do so. The access seekers [sic] interest lies in being able to enter markets and compete on their relative merits. The Commission considers that in this context it is access seekers' ability to enter downstream DSL markets that should be assessed. The Commission considers that its approach satisfies these interests. Telstra's proposed approach would not, as it would necessarily inflate LSS access seekers' cost base relative to Telstra's. The approach advanced by access seeker's [sic] would also be consistent with their interests, but the Commission considers moving to this position is unnecessary to ensure those interests are met. 301 Telstra's submission is that in order to "take into account" "the direct costs of providing access to the declared service", ACCC must take those costs into account "through the access charge for that declared service". In finding that Telstra will recover its direct costs by application of the [Pooling and Allocation Method], the ACCC misconstrued s 152CR(1)(d). Rather, the criteria are intended to support efficient cost based pricing of a declared service. This has been recognised both by the Tribunal and the ACCC on repeated occasions. If the statutory criteria were intended to endorse the pricing of a service below cost, so that access providers had to subsidise the operations of access seekers, one would have expected that such an unlikely consequence would have been expressly mandated. 302 ACCC explained its approach to the s 152CR(1)(d) criterion in section 3.3.4 of the FD Statement of Reasons. It addressed the Pooling and Allocation Method separately in section 4.1.8 headed "Specific costs" under the sub-heading "Cost allocation". The reference should have been to the Tribunal's 2006 Decision ([2006] ACompT 4) at [92] . In the Tribunal's 2006 Decision at [92], the Tribunal stated in passing that "a consideration of direct costs in [s 152AH(1)(d)] is concerned with ensuring that the costs of providing the service are recovered", without saying anything about the source of the recovery. However, while direct costs will be incurred by Telstra in order to provide the declared service, there are a number of cost allocation methods other than that adopted by Telstra (including those suggested by the Commission and other interveners in this matter) that would enable it to recover the direct costs of investment in infrastructure necessary to provide a LSS. (Re Telstra Corporation Ltd [2006] ACompT 4 at [139] ). The explanation may be that ACCC had wrongly thought that the Tribunal's statement concerning recovery of costs had been made in a decision given in 2001 rather than, as was the case, in 2006. In any event, as noted above, the Tribunal's statement said nothing about the source of recovery. 305 Be all this as it may, ACCC correctly understood that the Tribunal did not see para (d)'s notion of "the direct cost of providing access to the declared service" as dictating "recovery" of those costs in any particular manner or from any particular source. In substance, my reason is that the requirement to "take into account" in s 152CR(1), in its application to the matters listed in paras (a) to (g), some of which may be seen to point in opposite directions, allows much latitude to ACCC, and is not a requirement that ACCC take the matters or any of them into account in one particular way or with one particular result. 307 The expression "direct costs" was explained in the Explanatory Memorandum for the Trade Practices Amendment (Telecommunications ) Bill 1996 (at p 44) as excluding "consequential costs which the provider may incur as a result of increased competition in an upstream or downstream market". The expression was chosen to mark costs that were not to be taken into account. The present ground does not raise a question as to the scope of the expression "direct costs". 308 It is true, as Telstra points out, that soon after Pt XIC was inserted into the Act, ACCC made a statement in conformity with Telstra's present submission. In July 1997, in the Access Pricing Principles guide (at p 10) ACCC stated that the requirement of s 152CR(1)(d) implied that "at a minimum, an access price should cover the direct incremental costs incurred in providing access". However, beginning in October 2004, ACCC came to abandon that view as the eight instances referred to at [292] above show. In any event, neither the earlier statement by ACCC on which Telstra relies, nor the subsequent eight instances, is of much relevance to the issue of construction presently of concern. Likewise, the Tribunal's statement in Optus Mobile to which Telstra referred is not helpful if for no other reason than because it related to something that was not in issue between the parties. In this way, some question as to recovery is inevitably raised by the very notion of direct costs. ACCC accepted that this is so when, in its discussion of the inclusion of a contribution to line costs in the LSS periodic charge, it stated (at 4.1.7) that para (d) "calls for consideration of Telstra's ability to recover these costs". 310 In my opinion, there is no basis for saying, however, that ACCC misconstrued s 152CR(1)(d) by not assessing recoverability exclusively through the charge to be made by Telstra for the LSS alone. I do not accept that s 152CR(1)(d), on its proper construction, requires such an approach. 311 There are countervailing considerations that s 152CR(1) requires ACCC to take into account. In particular, it must take into account the LTIE of carriage services or of services supplied by means of carriage services (para (a) of s 152CR(1)). In fact, this broad consideration includes not only the LTIE of the LSS, but also the LTIE of "carriage services or, of services provided by means of carriage services". It is difficult to conceive of a broader concept. Paragraph (a) embraces the LTIE of all services provided over the ULL, including, of course, the LSS. In determining whether a particular thing promotes the long-term interests of those various end-users, ACCC is required to have regard to various matters, including the extent to which the thing is likely to result in the achievement of the objective of promoting competition in markets for those services (s 152AB(2)(c)). 312 There is therefore a potential tension between the criteria of the LTIE referred to in para (a) and Telstra's recovering its direct costs of providing access referred to in para (d). They must be weighed and balanced. I am not persuaded that para (d) of s 152CR(1) should be construed in accordance with Telstra's submission. All that para (d) requires is that ACCC genuinely take Telstra's direct costs of providing access into account, and to resolve the potential tension with para (a) (and other paras of s 152CR(1)) having regard to the object of Pt XIC. That object stated in s 152AB(1) was, again, the promotion of the LTIE. 313 I agree that the Pooling and Allocation Method involves "cross-subsidisation" as Telstra contends, however, such cross-subsidisation may serve the object of Pt XIC, namely the LTIE, and I do not think that s 152CR(1)(d) is to be construed so as to preclude it. 314 In the result, I do not accept that ACCC misconstrued s 152CR(1)(d) or that taking that provision, on its proper construction, into account is inconsistent with ACCC's adoption of the Pooling and Allocation Method. 316 ACCC did take into account and give genuine consideration to Telstra's direct costs of providing access to the LSS. It is not to the point that its doing so did not result in Telstra recovering its direct costs through the LSS annual charge alone. 317 Until 2005, ACCC used the method supported by Telstra, that is to say, it treated service-specific costs as recoverable solely from the access seekers of each service. In its March 2005 ULLS Undertakings Discussion Paper (to which I referred at [292](2) above), ACCC noted that this approach had been called into question and invited submissions on the issue. 318 ACCC subsequently adopted an approach that pooled and allocated costs, and the rationale for doing so has been explained in the documents referred to at [292] above. 319 Essentially, in ACCC's view, there was a problem associated with the existing method of charging the access seekers alone. This was that because Telstra (Bigpond) did not purchase the particular declared service from Telstra, it did not incur certain service-specific costs that were incurred by its competitor access seekers. If all of those costs were passed on to the access seekers, they could be expected to pass them on to their customers and would be placed at a competitive disadvantage vis-à-vis Telstra. This would not be in the LTIE because end-users, acting rationally, would purchase from Telstra and not from the access seekers, with the result that the latter would disappear from the market and Telstra would be left without competitors. 320 As noted above, in the FD Statement of Reasons ACCC explained its reason for adopting the Pooling and Allocation Method. ACCC gave serious consideration to Telstra's direct costs. However, it remained of the view that its Pooling and Allocation Method in respect of those costs was preferable to Telstra's approach, having regard to all of the criteria of s 152CR(1). 321 ACCC considered that under the Pooling and Allocation Method, Telstra would be able to recover in full its LSS-specific costs, albeit not from the LSS access seekers alone. As noted at [17], this required ACCC to have regard, inter alia, to the objective of encouraging the economically efficient use of, and the economically efficient investment in infrastructure (s 152AB(2)(e)). In determining the extent to which a particular thing was likely to result in the achievement of this objective, ACCC was required to have regard to, inter alia, Telstra's legitimate commercial interests including its ability to exploit economies of scale and scope (s 152AB(6)(b)). Telstra criticises ACCC for not making specific reference to s 152AB(6)(b) in the FD Statement of Reasons in its discussion of the Pooling and Allocation Method. 325 When discussing "Cost allocation" in the FD Statement of Reasons, ACCC stated that its Pooling and Allocation Method was to be preferred having regard to the s 152CR(1) criteria (see [296] above). ACCC went on to discuss several of those criteria specifically. Although ACCC did not expressly refer to Telstra's ability to exploit economies of scale and scope in its discussion under the heading "Cost allocation", its broad reference to having had regard to the s 152CR(1) criteria needs to be read in light of the FD Statement of Reasons as a whole. 326 Prior to its discussion of "Cost allocation", ACCC had discussed its general view of the s 152CR(1) criteria in some detail. In this way, ACCC adopted (although it did not specifically refer to) the Tribunal's conclusion (at [160]) that a pooling and allocation approach still allowed Telstra to exploit its economies of scope and scale at the retail level when competing in the provision of telecommunication services provided over its CAN to end-users (I referred to the Tribunal's 2006 Decision at [160] at [292](5) above). 328 No doubt ACCC might have discussed the issue of economies of scale and scope in greater detail. The question, however, is whether it is established that ACCC failed to "take into account" economies of scale and scope. In my opinion that is not established. 329 I think that ACCC's broad comment that it had considered the s 152CR(1) criteria, when read in light of its earlier discussion of ss 152CR(1)(a) and 152AB(2)(e), and its reference to the Tribunal's 2006 Decision, provides sufficient evidence that although it did not explicitly discuss Telstra's ability to exploit economies of scale and scope in relation to cost allocation, ACCC did have genuine regard to that consideration and to Telstra's submissions in relation to it. Telstra's contention is that by adopting the Pooling and Allocation Method, ACCC failed to do so because that Method was inconsistent with the TSLRIC pricing methodology adopted in the LSS Pricing Principles. 331 Chapter 7 of the LSS Declaration Final Report comprises pp 79-102 of that document. At p 79, ACCC stated that Ch 7 represented its thinking "at [that] stage" on the form that pricing principles should take for a declared LSS, but immediately continued: "In this regard, the chapter constitutes the Commission's final pricing principles for a LSS". It follows that Ch 7 constitutes the LSS Pricing Principles. However, Ch 7 contains much more than a succinct setting out of pricing principles. 333 In section 7.2 ACCC noted that in the 1997 Access Pricing Principles guide it had concluded that in the usual case ACCC would apply the TSLRIC methodology in determining access prices. However, with respect to carriage services, it is usually expressed on a per-minute (or per line) basis by dividing the annual total service cost by the number of minutes or lines carried. • 'Long run' refers to it being a long-run cost concept in contrast to a short-run one. In the short run the amount of at least one factor of production (usually capital equipment) is fixed, while in the long run all factors of production can be varied. • 'Incremental cost' means that it is a form of 'marginal cost', although not the more familiar 'marginal cost' of the change in cost incurred through a change in the amount of output produced. Costs common to more than one service cannot be attributed to a particular service and therefore do not form part of TSLRIC. However, in practice, it is sometimes defined to include a contribution to indirect and overhead costs ('TSLRIC+). Sometimes an additional supplement is also included in recognition of an access deficit ('TSLRIC++'). After discussion of the parties' submissions ACCC expressed its belief that, as for the ULLS, so for the LSS, a TSLRIC methodology was the most appropriate (p 84). 334 In section 7.3, ACCC began by noting that choosing the general type of pricing principle was only the first stage in developing pricing principles for a declared service, and that "many variations" were possible depending on the specific features of the declared service. Most of section 7.3 was devoted to the question of a contribution to line costs --- a matter not presently relevant. 335 Section 7.4 is not of present relevance either. 336 Most of section 7.5, headed "Summary of pricing principles", was devoted to ACCC's rejection of the inclusion of a contribution to line costs. The Commission believes that it is reasonable for an access provider to recover incremental LSS-specific costs through the access charge for a LSS. ... Hence, the price of Telstra's LSS should only equal its LSS-specific costs. The Commission believes these costs should not vary according to different geographic regions. 338 However, the requirement to have regard to the LSS Pricing Principles (and the principles therein) did not require ACCC to adhere to those principles as if they had the force of legislation. The question, rather, is whether ACCC had genuine regard to them. Did ACCC appreciate that it was formulating a final determination that was inconsistent with them, in the respect mentioned? I think that it did. 339 In section 4.1.8 of the FD Statement of Reasons under the heading "Specific costs", ACCC noted that in accordance with the LSS Pricing Principles, "LSS prices should be cost based, with necessary cost estimates derived from a TSLRIC+ methodology". These are discussed in turn below. For those matters considered to have a material bearing on TSLRIC+, and hence the LSS annual charges set in this arbitration, and where alternative approaches that could be practically implemented have been advanced, the Commission has considered these approaches against the section 152CR(1) criteria. The Commission then assesses against the section 152CR(1) criteria the LSS annual charges that would follow from the adoption of the various approaches to these particular issues. 340 This extract shows that ACCC used a TSLRIC+ methodology, as specified in the LSS Pricing Principles, as a starting point, and then proceeded to balance the requirements of the LSS Pricing Principles with the other mandatory considerations that it was required to take into account. 341 In expressing the "Commission's views" in section 4.1.8 of the FD Statement of Reasons, ACCC referred to ACCC's having adopted a pooling and allocation approach in its December 2005 ULLS and LSS Undertakings Final Report and to the statement made in the Tribunal's 2006 Decision at [150] in which the Tribunal noted that a "spreading" of LSS-specific costs over a broader range of services would be more likely to better promote competition. 342 In the December 2005 ULLS and LSS Undertakings Final Decision, ACCC addressed over 18 pages the possible means of recovery of ULLS- and LSS-specific costs. I need not discuss the course of reasoning. It suffices to say that ACCC's final view was that the price terms and conditions proposed by Telstra in its proffered undertaking by which the ULLS- and LSS-specific costs would be recovered in its charges to the ULLS and LSS access seekers alone was rejected because it did not promote competition and was not in the LTIE. 343 At [150] of the Tribunal decision to which the FD Statement of Reasons referred, the Tribunal stated that while it was not concerned to inquire whether any other cost allocation method was more reasonable than the method proposed by Telstra, the spreading of the LSS-specific costs over a broader range of services would be more likely to promote competition between providers of those services and therefore the LTIE, subject to those costs being pooled with other specific costs relevant to the provision of DSL services in downstream markets (for example Telstra's own internal costs of a nature similar to those of the LSS- and ULLS-specific costs). 344 By referring to the LSS Pricing Principles and adopting the approach referred to at [340] above, and subsequently referring to the ULLS and LSS Undertakings Final Decision and to para [150] of the Tribunal's 2006 Decision, I think ACCC made it clear that it was aware of the fact that the Pooling and Allocation Method was inconsistent with the relevant aspect of the LSS Pricing Principles, but in light of other considerations, should nevertheless be adopted . 347 Before I refer to that statement and to Telstra's submission to ACCC in respect of line costs, I will note references to line costs that had previously occurred. I will (as the parties have done) use the terms ULL, local loop or line interchangeably (see [13] above) to refer to the copper or aluminium wire that links the end-user's premises to the local Telstra exchange. To answer this question, ACCC proposed a two-stage process: first, determine an appropriate methodology for costing a line used to provide a LSS, and second, determine how much of that cost should be attributed to the price of a LSS. 349 In relation to the first stage of the process, ACCC's view was that if a TSLRIC methodology was used to determine the cost of a line used to provide a LSS, it was appropriate that the specific application of TSLRIC be TSLRIC+. The difference between TSLRIC and TSLRIC+ is that the latter allows a contribution to indirect costs, whereas the former does not. ACCC was not of the view that a TSLRIC++ application, in which TSLRIC+ is supplemented with an additional access deficit contribution (ADC), was appropriate. Telstra has traditionally retrieved the resulting access deficit (AD) through a mark-up to its service or call prices. In contrast to the case of the PSTN, this was because the full cost of the line is recovered in the ULLS access price. Therefore, an access deficit does not arise in respect of the lines taken by access seekers. The Commission was also satisfied that the access deficit associated with the provision of voice services is fully acquitted by the totality of PSTN wholesale and retail pricing, and that the ability to do this would not be appreciably affected by the absence of an ADC in the price of the ULLS. Similarly, the Commission does not believe that the cost of a line used to provide a LSS should be supplemented by an ADC. 350 In relation to the second stage of the process, ACCC noted three possibilities: a zero allocation of the line cost to the price of a LSS; an allocation of the entire line cost to the price of a LSS; or an allocation of part of the line cost to the price of a LSS. After considering the parties' submissions as to how the cost of a line should be apportioned between services that use the high frequency spectrum and low frequency spectrum of the line, ACCC expressed its own views. The price charged to access seekers for the ULLS (ACCC footnoted that for those lines used to provide the ULLS, Telstra was able to recover fully the cost of the line under ACCC's pricing principles for the ULLS). With the advent of a LSS, however, it would appear there is scope for a fifth potential source of revenue to help recover the costs of an ULL. That is, any revenue gathered from the price of a LSS in excess of that needed to cover the LSS---specific costs could be considered to be revenue that was helping to recover the costs of the ULL used to provide the LSS. Accordingly, for the purposes of these pricing principles, a key issue is whether or not Telstra's LSS should be used as an additional source for recovering the costs of an ULL used to provide a LLS and, if so, what implications would this have for the current ways in which the costs of a line are recovered. 353 ACCC went on to agree with a submission that in circumstances in which Telstra already fully recovered its line costs through a combination of other charges, it would be inappropriate to allocate any part of the cost of an ULL to the price of a LSS since this would lead, in the absence of adjustments to the existing arrangements, to an over-recovery of the line costs and provide Telstra with an unfair competitive advantage over access seekers. 354 ACCC then outlined the case for a line cost allocation. ACCC conceded that from an allocative efficiency perspective, it may be more appropriate for the price of a LSS to include some recovery of the costs of the line used to provide the LSS. In relation to the question of the amount, if any, that should be allocated to the price of a LSS, ACCC emphasised that there must not be an over-recovery and that line cost recovery from the revenue from the price of the LSS would have to be deducted from one or more of the four sources referred to at [351] above. In particular, a contribution to line costs in the price of a LSS would occur only if: the price of a LSS was greater than zero; an adjustment was made to reduce the ADC levied on other interconnection services; and an adjustment was made to decrease the price of other services. However, its powers are limited with regard to specifying the price of these other services. Accordingly, in assessing an undertaking or determining a price for a LSS, the Commission can only have regard to the prices an access provider sets for these other services. Thus, even though it may be preferable from an efficiency in use perspective for there to be some allocation of the cost of an ULL over which a LSS is provided to be included in the price of a LSS, this would have to be dependent on changes to the price of other services. Hence, to the extent that an access provider was recovering all of its line-related costs from other revenue sources, the Commission believes it would be inappropriate for the access provider to recover an additional amount of its line costs in the price of a LSS. If, however, Telstra were to show it was not fully recovering its ULL line costs through its various other sources of revenue, it may be appropriate to consider including some allocation of the cost of the ULL over which a LSS is provided in the price of this service. 356 A similar approach was taken by ACCC in the LSS Undertaking Final Report of August 2004, the LSS Undertakings Discussion Paper of March 2005, the ULLS and LLS Undertakings Draft Decision of August 2005, and the ULLS and LSS Undertakings Final Report of December 2005. That approach may be described as one of: (1) proceeding on the basis that Telstra was already recovering its line costs in full; (2) eschewing the over-recovery that would occur in the light of (1) if a component for line costs were to be included in the price of the LSS; and (3) leaving it open to Telstra to prove to the contrary of (1) following a change in the prices it was charging for other services. This is because efficient line costs are being recovered through other charges imposed in respect of the line, such as line rental charges, and, in the absence of reductions in these other charges, to recognise a contribution to line costs as a cost component in LSS annual charges would lead to an over-recovery of efficient line costs [a footnote referred to the confidential versions of the LSS Undertaking Final Report and ULLS and LSS Undertakings Final Report]. The Second Draft ID Issues Paper went on to invite the parties to make submissions on a number of issues, including whether it was "appropriate for the purposes of an ID for the Commission to not include a contribution to line costs". The service definition does not require that the LSS access seeker who provides the broadband data services to end-users also be the provider of the voiceband PSTN services. ... This raises a material issue regarding how the costs of providing the local loop should be most efficiently and equitably shared between the services that make use of it. Pursuant to this pricing construct, Telstra would no longer seek to recover all of its line related costs through its services other than LSS, but would instead seek to recover a portion of those costs from broadband service providers that utilise a portion of the [ULL] to provision data services to end user customers. 361 Telstra outlined the new pricing construct, which, briefly, provided for a contribution to the costs of a local loop to be included in the price of a LSS, and a rebate to the retail provider of the voiceband PSTN service to the end-user. It will be recalled that the definition of LSS (set out at [52] above) requires that a PSTN service be already provided over the line over which LSS was provided. The PSTN service might be provided either by Telstra itself or by an access seeker pursuant to the wholesale line rental service (WLR). Generally speaking, the WLR allows the access seeker to use the lower frequency spectrum of the line. Since WLR relates only to the lower frequency spectrum (voiceband spectrum) of the line, Telstra remains free to use the higher frequency spectrum (broadband spectrum) of the line, for example by providing the LSS. Telstra stated that its new pricing construct sought to ensure that Telstra did not over-recover the cost of a local loop from lines over which a LSS was provided. 362 The First ID (of 2 November 2006) did not provide for LSS periodic charges, and therefore did not address the question of inclusion in them of a contribution to line costs. 363 In ACCC's letter to the parties dated 21 December 2006 enclosing the Second ID and the Second ID Statement of Reasons, ACCC referred to Telstra's new pricing construct and noted that it would have consequences for the pricing of the LSS and the WLR. 364 In its letter, ACCC stated that although "the actual price terms that Telstra suggested for the LSS and WLR [were] unlikely to be reasonable", it encouraged the parties to negotiate and seek to agree on various issues, including the proportion of line costs that should be recovered in the price of the LSS and the consequent rebalancing of charges as between the LSS and the WLR, and the date from which the rebalanced charges should apply. No contribution to line costs was included in the LSS periodic charges specified in the Second ID. ACCC's encouragement to the parties was directed to future negotiations. ACCC stated in the letter that its "long standing (2002) LSS pricing principles provide[d] that a contribution to line costs in LSS charges [was] only appropriate where line costs [were] not already fully recovered from other charges". ACCC again noted Telstra's submission in relation to the Second ID in which it proposed a new pricing construct that would reduce WLR charges on the proviso that a contribution to line costs was recognised in LSS periodic charges. ACCC characterised this as a "rebalancing" as between LSS and WLR charges so that each would contribute to the recovery of the costs of the line over which the respective services were provided. ACCC noted that it had considered that it was not appropriate to adopt Telstra's particular rebalancing proposal and did not include a contribution to line costs in the LSS periodic charges specified in the Second ID. ACCC also noted Request's contention supporting that result. 366 ACCC continued in its letter by stating that it was willing to consider the question whether a contribution to line costs should be included in the LSS periodic charges. However, ACCC made the point that on the assumption that ACCC's preliminary view was maintained, the Final Determination would expire as early as 31 December 2007 and so two issues arose on which submissions were sought: (1) whether, at a practical level, a rebalancing of LSS and WLR charges could be implemented within that time frame, and, (2) if it could, what the likely effect of the rebalancing would be on the LTIE. Accordingly, the Commission will advise the parties if it will call for these further submissions after it has considered the parties' views on the issues described. ACCC was describing a two stage process. The first comprised the two issues mentioned. The second, which might never arise depending on the outcome of the first stage, concerned the "extent of rebalancing that would be appropriate", an issue that would entail questions of quantification. 367 ACCC advised the parties that in coming to its final decision, it intended to have reference to, inter alia, the LSS Pricing Principles, the LSS Undertaking Final Report of August 2004, the ULLS and LSS Undertakings Final Report of December 2005, the Tribunal's 2006 Decision and information made available by the parties during the arbitration on the final determination. In this way, ACCC was advising the parties that it intended to have regard to the approach described at [356] above. ACCC also noted the possibility that further matters to which it would have regard might be identified in the course of consultations. 368 I note that although Telstra's letter of 26 April 2007 to ACCC, which listed the documents Telstra understood ACCC was intending to take into account in making the Final Determination, did not include a reference to the LSS Undertaking Final Report of August 2004 or the ULLS and LSS Undertakings Final Report of December 2005, ACCC confirmed in its letter of 30 April 2007 to Telstra that it would indeed have regard to, inter alia, those documents that it had specified in its letter of 6 March 2007 (that is to say, the documents specified at [367] above). The Commission is at this time seeking submissions on this issue only to the extent necessary to reach a view as to whether or not it would be appropriate for the Commission to include a contribution to line costs in LSS annual charges to apply for the period of the final determination. The Commission's preliminary view is that, if any such contribution is to be recognised, it would only be recognised prospectively from the time following a rebalancing of LSS and WLR charges. [my emphasis] The Commission is not seeking submissions on how any such contribution should be calculated --- it will seek these submissions in this proceeding only if it first forms a view that such a contribution should be recognised. The particular matters that submissions should address are: (i) Whether at a practical level, a rebalancing of LSS and WLR charges could be implemented during the period of the final determination. Redistributing line costs away from fixed voice services is a pre-requisite to recognition of a contribution to line costs in LSS annual charges. ... Parties are asked to provide their views on how the requisite changes to wholesale line rental charges would be implemented, and the likely timeframe by which these changes would be made. [emphasis in original] (ii) The likely effect of the LTIE, and the other section 152CR(1) criteria, of implementing the rebalancing of LSS and WLR charges during the period of the final determination, including the consequences for the LTIE of not adopting the transition path approach. The Commission has not previously recognised a contribution to line costs in LSS annual charges. ... Parties are asked to consider a rebalancing of WLR and LSS charges within the period of the final determination against the section 152CR(1) criteria, including its effect on the LTIE. ... These passages repeated the two stage process to which ACCC had referred in its letter of 6 March 2007 (see [366] above). 370 ACCC's proposal was that any contribution to line costs would be included prospectively only from a time following a rebalancing of the LSS and WLR charges down to 31 December 2007 (the contemplated expiry date of the Final Determination). Although it was not then known that the Final Determination would be made on 1 August 2007, on any reckoning, the period envisaged was going to be short. 371 In Telstra's submissions of 4 May 2007 in response to the DFD Consultation Paper, Telstra addressed the issue of line costs. Telstra proposed LSS monthly prices of between $16.53 and $16.72 (excluding GST) per LSS per month, provided that Telstra was to pay a rebate of at least $11.97 on any WLR service supplied on the same line. This was the "rebalancing" that Telstra was proposing. The $11.97 can be understood as comprising the line cost allocation component that Telstra was seeking to have included in the LSS monthly price. If there was to be no rebate, Telstra proposed LSS monthly prices of between $4.56 (being $16.53 less $11.97) to $4.75 (being $16.72 less $11.97) (excluding GST) per LSS per month. 372 In Telstra's submissions in response to the DFD Consultation Paper, Telstra explained how it calculated the line cost allocation component. Telstra took as a starting point ACCC's "final indicative prices for WLR". Next, Telstra "allocated" 50% of this price to the price of a LSS because a 50% allocation "broadly reflects the ratio of voice to broadband revenue on lines over which both services are provided". Effectively, the price of the WLR is reduced by 50% by way of a rebate whenever Telstra provides both the LSS and WLR over the same line. Telstra collects a line cost contribution from the LSS access seeker and rebates the full amount of that contribution to the WLR access seeker. 373 Telstra explained its reason for choosing the WLR price as the basis for calculating the line cost contribution from LSS access seekers. Telstra submitted that ideally the loop cost allocation should be based on Telstra's forward-looking cost of supplying loops rather than the WLR price, but Telstra proposed to base the allocation on ACCC's "final indicative prices for WLR because it [was] simple and avoid[ed] having to directly address the issue of what Telstra's loop costs actually [were]". Telstra's loop costs are higher than the Commission's WLR prices. Telstra emphasised that ACCC should not conclude that Telstra agreed with the final indicative WLR prices. Telstra stated that in fact it did not agree with them and believed that they were well below Telstra's actual cost of providing the WLR. 374 At no stage did Telstra submit evidence to ACCC in respect of its actual loop costs. Matthew William Cole, Telstra's Group Manager, Regulatory, testified that Telstra was in a position to supply additional evidence of its actual loop costs but had refrained from doing so because of the two stage process that ACCC said it would adopt. 375 On the question of practicability, Telstra claimed that it could implement the rebate mechanism "within as little as two weeks of confirmation of [the rebate mechanism] from the Commission". Telstra added: "[o]bviously the more notice over and above two weeks that Telstra is able to provide to its WLR customers of the proposed rebate, the better able Telstra's customers will be to plan for and manage the receipt of the rebate, and to understand its implications". ACCC referred to the two "first stage" issues on which it had invited submissions (see [366] above). ACCC noted Telstra's submission that LSS and WLR charges could be rebalanced within a matter of weeks of ACCC's advising its view on the amount of line costs that should be allocated to each service, and that the minimum period would be two weeks, although six weeks would be preferable. ACCC also noted Request's submission that no contribution to line costs should be included in the LSS periodic charges. 377 Under the heading "Commission's views" ACCC began by noting that neither party suggested that a contribution to line costs should be considered other than to apply prospectively and following a rebalancing. If there is no prospect of implementing the rebalanced charges ahead of 31 December 2007, then there is little practical benefit in considering the issue further in these proceedings. The Commission is conducting a separate, industry-wide inquiry into LSS regulation for the period following October 2007 [at the time of the Final Determination the LSS Declaration was due to expire on 31 October 2007]. ACCC accepted Telstra's advice that a rebalancing could be implemented in a number of weeks following determination of how and in what amount to rebalance, but noted that the timing of the determination remained problematic, without a consensus from industry as to how to rebalance. 378 ACCC addressed in turn the various mandatory criteria specified in s 152CR(1) of the Act. Whether a contribution to line costs is included in the LSS annual charges to be paid by Request and Chime until then is unlikely to materially affect this. However, should an immediate implementation of rebalancing dampen LSS demand, efficient use and investment in the LSS ordering system would likely follow, with flow on consequences for efficient use and investment in downstream services. If it could, the Commission considers that an immediate implementation of rebalancing within this period would be contrary to the section 152CR(1) criteria. Having regard to these matters, the Commission has determined not to further consider in these proceedings the inclusion of a contribution to line costs in LSS annual charges payable by Chime and Request for the period up until 31 December 2007. The Commission will give further consideration to this matter during the separate, industry-wide inquiry into LSS regulation for the period following October 2007. 379 Request rightly concedes that the Final Determination contained a finding that Telstra was already recovering its line costs. Telstra asserts that ACCC advised the parties that it did not seek submissions on the question of whether Telstra was in fact fully recovering its line costs, but then proceeded to make a positive finding that it was doing so. That finding, according to Telstra's submission, was based on ACCC's making a preliminary finding as to how line costs are calculated, and ACCC's then applying that method of calculation, leading it to the conclusion that Telstra was recovering its line costs in full. 381 In my view, Telstra's complaint mischaracterises the two stage approach proposed by ACCC. ACCC did not advise the parties that it did not seek submissions on whether Telstra was already recovering its line costs in full through other sources of revenue. ACCC neither required nor excluded submissions addressed to the "first stage" issues set out at [366] and [369] above. It was open to Telstra to put before ACCC evidence of what its line costs were if Telstra thought that the amount and content of them were relevant to those issues. 382 Telstra was aware that ACCC considered that it would be appropriate to include a contribution to line costs in the LSS periodic charges only if Telstra was not already recovering its line costs from other sources of revenue. Both prior to and during the arbitration, ACCC made it clear that it considered, and was proceeding on the basis, that Telstra was already fully recovering its line costs from other sources of revenue. Telstra was also aware that ACCC's position was that if this ceased to be so, the issue of inclusion of a contribution to line costs in the LSS periodic charges could be revisited. 383 Telstra represented to ACCC that it was prepared to agree that it was in fact already recovering its line costs in full from other sources (see [360] above). That is why it introduced its new pricing construct involving a rebate in respect of the WLR charge if a component for line costs was included in the LSS periodic charges. 384 In any event, Telstra indicated that it was content to proceed, at least in the arbitration, on the assumption, without admissions, that the WLR was equal to the average cost of a line. Telstra's proposal for an LSS loop cost contribution in this arbitration would not change the extent to which Telstra recovers loop costs, so may therefore be regarded as neutral to Telstra's legitimate business interests. 386 In these passages Telstra indicated that in the arbitration, it was content to proceed on a basis that did not involve establishing what Telstra's line costs actually were. Rather, it was content for ACCC to proceed on the basis that the final indicative prices for WLR represented the average cost of a line. In my view, Telstra was content to proceed on the basis that recovery of that amount, whether through the WLR charge alone or through a combination of the LSS and WLR charge (if the rebalancing was implemented) would allow Telstra to recover its line costs in full. 387 In cross-examination, Mr Cole conceded that Telstra was "proceeding on the assumption that just for the purposes of this arbitration that [Telstra would] set the line cost contribution on the assumption that the Commission's indicative price for WLR was accurate ...". 388 ACCC gave Telstra the opportunity to present its case during the arbitration as to whether Telstra was in fact recovering its line costs, but Telstra explicitly eschewed that opportunity. 389 In my view, Telstra's Ground 2(b) is not made out. A second answer to Telstra's Ground 2(b) is dealt with at [408]ff below. 391 Both parties refer to Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 ( Bond ) in which Mason CJ discussed whether a finding of fact can constitute a reviewable decision, and when a finding of fact can constitute an error of law that contributes to a reviewable decision. Of course an ultimate determination which depends upon a finding of fact vitiated by error of law or made without evidence is reviewable: see s. 5(1)(f) and (h) [of the ADJR Act]. In such a case the finding of fact may be challenged as an element in the review of the ultimate determination. The critical question on this aspect of the case is whether, but for the alleged error of law ... the decision might have been different by reason of the possibility that the Tribunal would not have made the findings of fact ... [that] were made. 394 Later in his Honour's reasons, the Chief Justice stated (at 355) that findings of fact, including inferences, will have involved an error of law where there was no evidence or other material to justify the making of the finding (see s 5(1)(h) of the ADJR Act). His Honour noted (again at 355) that the question whether there is any evidence of a particular fact, or whether a particular inference can be drawn from facts found or agreed, is a question of law, and that in the context of judicial review it has been accepted that the making of findings and the drawing of inferences in the absence of evidence is an error of law. After quoting from Menzies J in Reg v District Court; Ex parte White [1966] HCA 69 ; (1966) 116 CLR 644 at 654, Mason CJ concluded (at 356) that according to the Australian authorities, at common law want of logic is not synonymous with error of law, and that so long as an inference is reasonably open, even if drawn as a result of illogical reasoning, there is no place for judicial review for error of law. 395 In oral submissions, senior counsel for Telstra stated that Telstra relied on the "common law no evidence" ground as expressed by Mason CJ in Bond . 396 As mentioned previously, Telstra submits that there was no evidence to support ACCC's finding that Telstra was already fully recovering its line costs. 397 Although Telstra accepts that ACCC had expressed its view that Telstra was recovering its line costs at various times prior to the making of the Final Determination, it contends that it would be unsafe to assume that the support for that view continued to be available at the time of the Final Determination. For example, Telstra notes that the ADC (referred to at [351] above) had been "discontinued" (see ACCC's Final Determination for model price terms and conditions of the PSTN, ULLS and LCS services of October 2003, section 8.8, pp 60-61). Although at the time of its discontinuance, ACCC concluded that Telstra would still recover its line costs even without the ADC, Telstra's point is that Telstra operates in a "dynamic industry" and that its line costs and sources of recovery may change over time. 398 Request submits that in the context in which the arbitration took place, ACCC made it clear that it considered that Telstra fully recovered its line costs, and that Telstra took a deliberate decision not to challenge that view. 399 In my opinion, Telstra's Ground 7 is not made out. The first reason is that in the circumstances there was evidence or other material entitling ACCC to find that Telstra was recovering its line costs in full. 400 In the context in which the arbitration took place, the conduct of Telstra (statements and acquiescence) in relation to the issue of line costs itself constituted evidence or other material that supported the making of the finding by ACCC that Telstra was already recovering its line costs from other sources. 401 As noted above, ACCC had consistently claimed that Telstra was already recovering its line costs in full from other sources. ACCC had alerted Telstra to the fact that it would take documents expressing ACCC's view that Telstra was already recovering its line costs in full into account in making the Final Determination (see [367] above). 402 Perhaps the most striking evidence consists of the statements concerning the proposed alteration to Telstra's pricing structure by way of a rebate contained in Telstra's submissions in response to the Second Draft ID Issues Paper, in particular, the statement that it would no longer seek to recover all of its line related costs through non-LSS services (see [360] above). This was the same alteration to its pricing structure that Telstra proposed at the Final Determination stage. 403 Mr Cole accepted that he was aware, when they were made, of various assertions made by ACCC that in its belief Telstra was already fully recovering its line costs, but was not aware of any response from Telstra denying that that was so. Mr Cole also agreed that no one said to him or in his presence that it was necessary for Telstra to attempt to convince ACCC that its long held and long expressed view that Telstra was already recovering line costs was wrong. 404 Mr Cole could not explain why Telstra had never challenged ACCC's oft-stated view that Telstra was already recovering its line costs in full. Interestingly, he said that Telstra had "agreed to disagree" with ACCC on the issue and to "take the path of least resistance". I accept Request's submission that this testimony is not consistent with Telstra's present assertion that it would have sought to challenge ACCC's finding on line costs if it had known that that finding was to be made. Mr Cole's evidence is to the effect that Telstra chose to follow a strategy of not proving the amount of its line costs. 405 While the earlier documents and decisions referred to did not entitle ACCC simply to reproduce in the Final Determination a finding on line costs made in association with those earlier decisions, in the context of Telstra's conduct, including acquiescence, in respect of those findings, they provided material supporting a conclusion by ACCC that Telstra was fully recovering its line costs at the time of the Final Determination. 407 In reaching this conclusion that Telstra's Ground 7 is not made out, I have not found it necessary to refer to a submission made by Request in reliance on Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389. 409 If I had found that Telstra was denied procedural fairness, or that ACCC had made an error of law, Telstra would still need to show that there was at least a possibility that a different result might have been reached: Bond at 353; ex parte Aala at [80]. 410 There are two things that show that ACCC's finding was inconsequential. 411 The first is that ACCC was not persuaded that a rebalancing could, as a practical matter, occur before 31 December 2007 or, if it could, that it would be consistent with the s 152CR(1) criteria, in particular the LTIE: see [377], [378] above. These were the two practical issues that had been at the forefront of ACCC's mind at the first stage. Telstra made a submission expressly addressing those matters (see, for example, [375] above) but ACCC was not persuaded by that submission. ACCC's decision was to defer consideration of the question of inclusion of a contribution to line costs. 412 ACCC's view that a rebalancing was not practicable having regard to the shortness of the period of the Final Determination and its associated decision to defer further consideration of the question of inclusion of a contribution to line costs were uninfluenced by the finding that Telstra was already fully recovering those costs. 413 The second matter which shows that ACCC's finding on line costs was inconsequential is that there was evidence before the Court as to what would have happened if Telstra had made submissions and provided material on whether it was recovering its line costs and ACCC had decided the question. Telstra made such submissions in 2007 as part of ACCC's enquiry into whether the LSS Declaration should be extended. The submissions were considered by ACCC in its Review of the Line Sharing Service Declaration --- Final Decision of October 2007 in Chapter 3: "Pricing Principles". ACCC concluded that "[b]ased on its assessment, the ACCC considers that Telstra is currently recovering its line costs and will continue to recover its line costs for at least the period of the declaration". ACCC referred once again to that conclusion in relation to the pricing principles for the ULLS determined in November 2007: Unconditioned Local Loop Service --- Final pricing principles . 414 Telstra submits that events which occurred between the making of the Final Determination on 1 August 2007 and the hearing in December 2007 which involved the exercise of a different power to that of making the Final Determination do not provide a basis for concluding that ACCC would have made the same finding as to recovery of line costs in making the Final Determination. Telstra says also that it can not be assumed that Telstra would have presented and relied upon the same evidence as in that different context. 415 I do not accept Telstra's submission. Whether Telstra was already fully recovering its line costs is an issue on which it must be assumed Telstra put forward its best case in the other two contexts. There is no basis for thinking that Telstra would or might have presented different or better evidence or made different submissions in relation to the Final Determination. In my opinion, ACCC's conclusion that Telstra was fully recovering its line costs in those other contexts, reached at times shortly after the date of the Final Determination, provides cogent evidence that ACCC would have made the same finding and the same Final Determination had Telstra made submissions and put material before ACCC on the question of recovery of line costs as part of the arbitration. 416 A further reason, therefore, why Telstra's Grounds 2(b) and 7 are not established is that neither ACCC's failure to follow the procedure that Telstra submits it should have followed nor ACCC's having made the finding of fact impugned influenced or contributed to the Final Determination. Telstra's complaint relates only to the disconnection charges for "single" LSS disconnections, and not MNM disconnections. Except where the parties subsequently agree otherwise, and subject to clause 5A, the charge payable for the disconnection of a LSS outside of a managed network migration is as follows: 2005-06 $34.70 (per disconnection) 2006-07 $35.10 (per disconnection) 2007-08 $36.70 (per disconnection) 5A. The charges specified in clause 5 are not to apply to disconnections in Band 4. 7. Clauses 5, 5A and 6 are not to apply to disconnections that were made before 1 February 2006 or after 31 December 2007. 420 The Final Determination allows Telstra to make disconnection charges on all LSS disconnections that occurred prior to 15 November 2006 (and after 1 February 2006). The reason was that ACCC thought it reasonable for Telstra not to have implemented a LSS churn process (see below) prior to that date. Telstra makes no complaint about the period prior to 15 November 2006. 421 By reason of cl 5A(i), however, Telstra was not permitted to charge for a disconnection occurring between 15 November 2006 and the date on which the Final Determination came into effect (22 August 2007) (No Charge Period). The No Charge Period imposed by cl 5A(i) is challenged in Telstra's Grounds 10(a), 10(b) and 10(c) discussed in Section F (Disconnection Charges, Backdating and the "No Charge Period"). No more need be said of it here. Of present concern is cl 5A(ii), and, in particular, para (b) of that subclause. 423 "Churning" occurs when an end-user decides to switch from one service provider (the losing service provider) to another (the gaining service provider) in respect of a particular service, such as the LSS, as opposed to an end-user's simply deciding to cancel the service altogether. For example, an end-user might switch from Telstra (Bigpond) (in this example, the losing service provider) to Request (in this example, the gaining service provider) or vice versa. There would need to be a disconnection from Telstra (Bigpond) and a connection to Request. Of course, the churn might not involve Telstra (Bigpond) at all. It might, for example, be from Request to Chime. 424 The disconnection occurs by the removal of jumpers , which can be thought of as wires, and the connection occurs by the installation of jumpers. A churn process can allow for the disconnection of the losing service provider and the connection of the gaining service provider to form part of the one operation. 425 Where disconnection and connection take place on the one occasion and as part of the one operation, the cost to Telstra is substantially less than what it would be if they were effected on different occasions and independently of each other. In substance, the cost of the technician's effecting both on the one occasion is little if any greater than the cost of his or her effecting one alone. In such a case it is efficient for the cost of effecting both to be recovered from one or other of the two service providers, and it is practicable that it should be recovered from the gaining service provider. In substance, such minor additional cost as Telstra may have of disconnecting the losing service provider is absorbed into the charge it makes for connecting the gaining service provider. One would expect, however, that a disconnection associated with a simple cancellation of a service not part of a switch would attract a disconnection charge by Telstra to the losing service provider. 426 By the time of the Final Determination, there was no substantial dispute between Telstra on the one hand and ACCC and Request on the other that Telstra should have in place a regime under which it would not charge for at least some disconnections where the end-user was churning. In fact, prior to ACCC's making of the Final Determination, Telstra itself had implemented a "LSS Transfer Process" which incorporated that feature. I discuss the details of the LSS Transfer Process in more detail below. 427 The area of difficulty has been in defining the circumstances when Telstra should be allowed to charge for a disconnection, even though the end-user is churning. The dispute arose out of two considerations: first, Telstra's LSS Transfer Process (which is in fact the "Telstra LSS churn process" referred to in cl 5A(ii)(a) of Schedule 2 to the Final Determination) required that in order for no disconnection charge to be levied, both the losing and gaining service providers must have agreed prior to the transfer to participate in that Process; and, second, a substantial provider of the LSS was Telstra's own Bigpond business division which, as at the date of the Final Determination, had not agreed to participate in the LSS Transfer Process. According to Telstra, Telstra (Bigpond) provided around 47% of all retail broadband services. 428 Because of Telstra (Bigpond)'s choice not to participate in the LSS Transfer Process, in the case of churns in which Telstra (Bigpond) was either the losing or gaining service provider a disconnection charge was payable to Telstra. But because Telstra (Bigpond) is a business division of Telstra, in effect in those circumstances in which Telstra (Bigpond) would otherwise be liable to pay a disconnection charge, none would in fact be paid. In this way, Telstra's LSS Transfer Process gave Telstra a competitive advantage over competing LSS providers, such as Request. All that Telstra had to do to retain that advantage was to continue to require that both the losing and gaining service providers be participants in the LSS Transfer process and to ensure that Telstra (Bigpond) continued not to participate in it. 429 Against this background it is convenient to refer again to cl 5A(ii) (set out at [419] above). Paragraph (a) of cl 5A(ii) is straightforward. It refers to Telstra's existing LSS Transfer Process. It involves a transfer or switch where both the losing and gaining service providers have previously agreed to participate in the LSS Transfer Process. Telstra makes no complaint about para (a). 430 Paragraph (b), however, raises a complication. While para (b), like the rest of cll 5 to 7, predicates a disconnection where Request is the losing service provider, para (b) is not limited to cases in which Telstra (Bigpond) is the gaining service provider. Even if, for example, Request is a participant and the gaining service provider is Chime, a disconnection charge is not payable by Request to Telstra if Telstra (Bigpond) has not signed up to the Telstra LSS churn process. Indeed, under para (b) a disconnection charge is not payable by Request to Telstra where it is a participant and Telstra (Bigpond) is not, even if the disconnection of Request marks a cancellation of the service and does not take place as part of a switch at all. 431 Paragraph (b) is calculated to operate as a strong inducement to Telstra (Bigpond) to sign up. 432 Paragraph (b) was referred to as "Option 2" in ACCC's FD Statement of Reasons. "Option 1", which was not adopted, was simply to allow disconnection charges on all disconnections not processed through the Telstra LSS churn process. This was para (a) of cl 5A(ii), and, absent para (b), would have represented no more than a continuation of Telstra's LSS Transfer Process. 433 As observed at [451] below, ACCC noted that although Option 2 would not "emulate" all outcomes expected if both the losing and gaining service providers had agreed to participate in the Telstra LSS churn process, there would be "practical difficulties" in the use of a more precise test. I will discuss below what ACCC meant by this statement. 434 Telstra complains that ACCC did not inform it that it was considering Option 2, and did not make enquiries of Telstra as to the "practical difficulties" that ACCC had in mind. Paragraph 12 of the First Draft ID distinguished between three situations. The Commission considers that to charge an additional amount (which the Commission understands is currently $90) to the 'losing' disconnection service provider, on top of the connection charge levied to the 'gaining' service provider, would be an over-recovery of costs. This is because when the disconnection is performed as part of the connection of a new service, the incremental or discrete cost of performing the disconnection is so small and incidental to the connection process that it can be deemed to be recovered in the charge for the new connection. In its final decision on Telstra's LSS connection/disconnection charges access undertaking (section 6.4.6), the Commission identified a LSS disconnection occasioned by a customer churning the ADSL service to a new provider (including Telstra retail) as being an instance in which the LSS disconnection could be performed in conjunction with a new connection on the line. The Commission proposes for the purposes of the interim determination that new orders which are received sufficiently proximate to the disconnection request are to be taken to be occasioned by a customer churning the ADSL service, and hence the relevant disconnection is not to be charged for. In this regard, the Commission considers that it is appropriate for a period of 30 calendar days from the date of the request for the disconnection of the LSS to be allowed. While a period such as this is necessary to facilitate the matching of new orders with an LSS disconnection, were a new order to be received more than 30 calendar days from the date of the disconnection request then it is unlikely that the LSS had been disconnected as part of a customer churn process. A longer period would also appear to have the potential to unduly complicate the order matching process. The Commission considers that this particular aspect of the proposed LSS disconnection charge terms should only apply to LSS disconnections that are made after 15 November 2006. This is to permit any necessary systems changes to be effected by Telstra so as to coordinate disconnections and connection orders from other service providers. This date has been proposed as it has been previously nominated by the Commission to Telstra as the date by when it would be reasonable for Telstra to have this functionality available. Another instance in which the disconnection could be performed in conjunction with a new connection on the line is where the LSS disconnection is performed as part of a migration from the LSS to the ULLS (either as part of or outside an MNM). Prior agreement of the parties to participate in any "churn process" was irrelevant. This is because the Commission considers that an efficient operator would wait this period to see if the disconnection of the jumpers can be combined with the new jumpering on the relevant line. Telstra nominated 15 November 2006 as the date by when it would make any necessary changed to its processes to implement the arrangement. It noted that a disconnection could be undertaken under that Process only if both the losing and gaining service providers had signed up to it, and that Request was one of a number of major LSS service providers that had not done so. Telstra submitted that ACCC must not disentitle Telstra to charge Request for disconnections in these circumstances. Telstra did not disclose whether Telstra (Bigpond) had signed up to the LSS Transfer Process. 443 Telstra noted that further details of the LSS Transfer Process were set out in a statement by Ashwini Pradhan, a Product Manager in "Telstra Wholesale", which was Annexure B to Telstra's DFD Submissions. In that statement, Mr Pradhan explained why it was that the LSS Transfer Process required that both the gaining and losing service provider have signed up. To do so would be to mandate the use of that particular process. This is to force onto [service providers] a choice which has concomitant commercial and legal requirements. For the [LSS Transfer Process] to operate the [service provider] must provide its "pre-consent" to the transfer of any of its customers to another [service provider]. In fact the new transfer process works by expediting the disconnection and connection process by the reliance on the pre-existing authority of both the gaining [service provider] and the losing [service provider]. Under the current disconnection process, authority must be obtained from the losing [service provider] for each individual disconnection and from the gaining [service provider] for each connection. In both cases the authority to disconnect and connect ultimately comes from the end-user. 19 Telstra cannot mandate the [LSS Transfer Process] for all [service providers]. Absent an industry code, Telstra would have to negotiate arrangements with all LSS [service providers] and potentially notify access disputes against all these [service providers]) to allow for this process to be implemented. Apparently this was the first time that Telstra had provided ACCC with details about its LSS Transfer Process (see below). 444 Telstra's submissions in response to the DFD Consultation Paper identified what it said constituted significant practical difficulties that would be associated with ACCC's proposal that Telstra hold back a disconnection for 30 days. Mr Pradhan's statement also addressed these practical difficulties. One of these, from which some of the others flowed, was that the existing LSS remained physically active for the 30-day period. 445 Telstra submitted that to devise and implement a system that would recognise a disconnection where in fact the LSS remained active (because the physical disconnection had not occurred) would itself involve cost. In this respect Telstra relied on a report of Dick Prince, Civil Engineer, who concluded : "For reasons of business efficacy, risk management and equity, I remain of the opinion that a network provider such as Telstra should remove jumpers upon disconnection of an LSS". 446 In summary, the disconnection issue to which Telstra's submissions to ACCC were directed was the proposed 30-day waiting period. Telstra was prepared not to charge for a disconnection where it was processed within its LSS Transfer Process. This required that there be a request for both connection and disconnection, and that both the losing and gaining service providers had previously agreed to participate in the LSS Transfer Process. 447 As will be seen below, because, inter alia, of Telstra (Bigpond)'s non-participation, this did not allow ACCC to achieve its objective of ensuring that a losing service provider would not pay a disconnection charge in all cases where the end-user was changing service providers (as opposed to simply cancelling the LSS service). 449 It will be noted that the concept of a 30-day waiting period was not repeated in the Final Determination. Apparently ACCC accepted Telstra's submission that it was impracticable. Paragraph (a) of cl 5A(ii) implements Telstra's LSS Transfer Process, referring to it as the "Telstra LSS churn process" (I will use, as I have done above, the terms interchangeably, depending on the context). It will be recalled that under the LSS Transfer Process there was no 30-day waiting period and the prior agreement of both losing and gaining service providers to participate was essential. 450 Under para (b) of cl 5A(ii), if Request is participating in the Telstra LSS churn process no disconnection charge is chargeable by Telstra to Request as a losing service provider regardless of the identity of the gaining service provider unless and until Telstra (Bigpond) agrees to participate in the Telstra LSS churn process. On the other hand, Telstra is entitled to make such a charge to Request if Request is not participating in the Telstra LSS churn process whether Telstra (Bigpond) is participating in it or not. Paragraph (b) is an inducement to both Telstra and Request to sign up to the Telstra LSS churn process, or at least eliminates any advantage to them of not doing so. It also appears consistent with the DSL churn process, which has gained acceptance from a number of service providers; and represents a least cost option by which to introduce a churn process for LSS, given it avoids reconfiguration of Telstra's ordering systems. Accordingly, the Commission considers that it should harmonise its approach to LSS disconnection charges with the implemented Telstra churn process. The Commission has revised its 'churn' definition to encompass only service transfers processed within the Telstra LSS churn process. The Commission is concerned, though, as to whether the Telstra LSS churn process will be fully effective in ensuring that LSS access seekers do not pay avoidable costs. Primus has provided a media article in which Telstra (Bigpond) is reported as not intending to participate in the Telstra LSS churn process. The most recent listing that Telstra has published concerning participants in its broadband churn processes (May 2007) confirms that Telstra (Bigpond) was participating in the DSL churn process, but not the LSS churn process. It is possible this position may have since changed, but for the purposes of this discussion, the Commission has proceeded on the basis that Telstra (Bigpond) is not a participant in the LSS churn process. The Telstra LSS churn process is available only where the gaining and losing service providers are participants, and it appears that Bigpond (which has the largest share of DSL services) is not a participant. And so, a number of churns could attract a disconnection charge, even though Telstra could avoid the underlying costs. Accordingly, the Commission has considered whether LSS disconnection charges should also be avoided where the Telstra LSS churn process could be unavailable due to Bigpond's non-participation. The two options considered by the Commission against the section 152CR(1) criteria are: (i) allowing disconnection charges on all LSS disconnections that are not processed via the Telstra LSS churn process [Option 1]; and (ii) disallowing LSS disconnection charges otherwise payable under option (1) where the LSS access seeker is a participant in the Telstra LSS churn process, but Telstra (Bigpond) is not [Option 2]. Option (2) will not emulate all outcomes expected if both the losing service provider and Telstra (Bigpond) were participants in the Telstra LSS churn process, as there is the potential for additional disconnection charges being disallowed under this option. However, there would be practical difficulties in use of a more precise test, and this option provides slightly stronger incentives on Telstra (Bigpond) to participate. Bigpond currently has relatively weak incentives to participate. Unlike other service providers, Bigpond does not itself face these disconnection charges, and has a larger share of the retail market. For instance, further consideration may become necessary if a significant number of services remain outside the ambit of the LSS churn process, or any problems or limitations in the process that could be identified in the process in future are not able to be resolved. 453 It is useful to analyse cl 5A(ii) of the Final Determination in more detail. In any case where both Request and the other provider have agreed to participate in the Telstra LSS churn process, para (a) applies. It is only where either Request or the other service provider has not done so that there is a possibility of a disconnection charge being made and that para (b) has to be considered. 454 Where the parties to the churn are Request and Telstra (Bigpond), the position is straightforward: if both are participants, para (a) applies to deny Telstra a disconnection charge; if Telstra (Bigpond) is participating but Request is not, para (b) leaves Telstra entitled to make a disconnection charge; if Telstra (Bigpond) is not participating but Request is, para (b) denies Telstra a disconnection charge; if neither Telstra (Bigpond) nor Request is participating, para (b) leaves Telstra free to make a disconnection charge. 455 However, para (b) also has the potential to deny Telstra a disconnection charge where Telstra (Bigpond) is not a party to the churn, or there is no churn but simply a cancellation of the service. Assume a switch from Request to Chime, with Request participating in the Telstra LSS churn process and Chime not participating in it: para (a) does not apply but para (b) does if Telstra (Bigpond), a non-party to the particular churn, is not participating in the Telstra LSS churn process. Paragraph (b) would also disentitle Telstra to charge even where there was a simple cancellation, without transfer, of a LSS service provided by Request, where Request had signed up to the Telstra LSS churn process but Telstra (Bigpond) had not. 456 As Telstra correctly points out, neither the First ID, the Second ID, the DFD Consultation Paper nor the DFD itself had contained any reference to Option 2 and the participation of Telstra (Bigpond) as a requirement of Telstra's being able to make a disconnection charge. In those documents, ACCC had stipulated only the requirement of a 30-day waiting period in which Telstra had to wait to see if a connection request over the same line was made. If no connection request was made, Telstra could disconnect and make a charge to the losing service provider for doing so. If a new connection eventuated subsequently, Telstra would charge the gaining service provider for that new connection as well. The agreement of the losing and gaining service providers to participate in any churn process was irrelevant. ACCC has admitted for the purpose of this proceeding that it did not disclose to Telstra, or make enquiries of Telstra as to, the practical difficulties that ACCC said existed in the use of a more precise test than Option 2. 458 Section 152DB(1) was set out at [42] above, and I discussed s 152DB(1)(b) in Section A (Telstra's Cost Model) at [160]ff. Telstra submits that ACCC knew or ought reasonably to have known that information on this issue was readily available from Telstra. This differs from Option 2 in that it would exclude the disconnection charge only where the churn is from Request to Telstra (Bigpond). Unlike Option 2, it does not have the potential to disentitle Telstra to a disconnection charge on a churn from Request to Primus, for example, or on a simple cancellation of a LSS provided by Request. 462 Request submits that s 152DB(1)(b) does not assist Telstra. • By the time the Final Determination was made (on 1 August 2007 with effect on and from 22 August 2007), the LSS Declaration had only two to three months left to run (until 31 October 2007, although it was later extended), and the Final Determination itself was to operate for only a little more than four months (from 22 August 2007 to 31 December 2007), so that the impact of Option 2 would be felt by Telstra for only that period. Furthermore, Mr Pradhan's statement showed that the number of single disconnections in which Request was the losing service provider was likely to be small. • The relatively limited nature of this part of the Final Determination was recognised by ACCC when it referred in its FD Statement of Reasons to potential changes to the system in the future (see [452] above). • Option 2 was in fact more favourable to Telstra than other models that had been considered by ACCC up to that time (although, as Telstra points out, it is less favourable with respect to quantum than the "Request Access Agreement" dated 30 August 2000 which had been in place between the parties and which allowed Telstra to charge Request in respect of all LSS disconnections). Section 152CLA(1) requires that ACCC must, in exercising its powers in resolving access disputes, have regard to the desirability of their being resolved in a timely manner. Request submits that s 152CLA(1) and s 152DB(1)(b) require a balancing exercise between speed and the need to enquire, and that in the circumstances ACCC did not fail to discharge its statutory obligation under s 152DB(1)(b) by not making enquiries of Telstra in relation to the practical difficulties in adopting a more precise test than Option 2. As noted above, Telstra submits that the provision had the effect of requiring ACCC to enquire of Telstra specifically concerning the practical difficulties of adopting a more precise test than Option 2. 465 As I indicated in Section A (Telstra's Cost Model) at [160]ff, I have considerable difficulty with s 152DB(1)(b). The desiderata that it identifies conflict if they are considered in isolation and free from any moderating influence. That moderating influence is found in the requirement of a "proper consideration of the dispute" (although this requirement may exclude any meaningful role for the desiderata ). Did a proper consideration of the dispute between Telstra and Request demand that ACCC enquire of Telstra concerning the proposed para (b) of cl 5A(ii)? 466 In order to answer this question it is necessary to return to the circumstances of the case. These include, in particular, the timing of the notification to ACCC of the implementation of the Telstra LSS Transfer Process and certain features of the Telstra LSS Transfer Process, including whether Telstra (Bigpond) was participating in it. 467 In Telstra's submission of February 2006 in response to ACCC's draft decision in respect of Telstra's LSS undertaking relating to connection and disconnection charges, Telstra advised ACCC that it intended to "trial" a LSS churn system in 2006, noting that it would be necessary for all relevant parties to agree to appropriate transfer arrangements to allow end-users to move between access seekers. 468 In ACCC's Assessment of Telstra's LSS undertaking relating to connection and disconnection charges: Final Decision of April 2006, ACCC expressed the view that Telstra's expression of intent did not seem to imply that a churn system would be especially difficult for Telstra to develop and invited Telstra to supply information concerning the nature of the process being trialled. 469 On 28 March 2007 ACCC supplied to the parties a number of documents, including a report by Consultel BWP Pty Ltd (Consultel) dated 23 February 2006. 470 The Consultel report stated, inter alia, that the absence of a transfer process was "inefficient". It concluded that a LSS transfer process would provide an efficient mechanism for end-users to move between service providers and that the lack of one was causing access seekers to incur costs over and above the efficient costs to which they would be subject if a LSS transfer process was in place. 471 During the LSS arbitration, Telstra said nothing further in relation to the Telstra LSS Transfer Process prior to filing its submissions in response to the DFD Consultation Paper on 4 May 2007. Even then, it did not disclose that Telstra (Bigpond) was not a participant. In fact, as noted in the FD Statement of Reasons (see [451] above) it was Primus that informed ACCC of reported statements that Telstra (Bigpond) would not participate in the Telstra LSS Transfer Process. 472 In the absence of information from Telstra, ACCC concentrated on the question of whether Telstra should be allowed to charge for disconnections that occurred as part of a churn at all: thus, the 30-day waiting period required at the First ID, the Second ID and the DFD stages. The effect was that Telstra would not be entitled to make a disconnection charge in any case of a new connection occurring within 30 days of an end-user's request for disconnection. Essentially, ACCC determined that outside the 30-day period, the end-user was taken not to be churning, and Telstra would be entitled to make a disconnection charge. 473 Option 2 was directed to achieving the same objective of ensuring that in the case of a churn there was no disconnection charge, but it went further in the two respects mentioned earlier (at [430] and [455]). 474 In an internal ACCC memorandum dated 25 May 2007 from Mr Riordan to Messrs Samuel and Willett, Mr Riordan noted expert advice that ACCC had received to the effect that the "technical concerns" raised by Telstra in relation to ACCC's proposed approach to disconnection charges (which was the approach that referred to the 30-day waiting period) were overstated and that ACCC officers were proposing that ACCC maintain that approach. 475 In a later internal ACCC memorandum dated 19 July 2007 to the same addressees Mr Riordan observed that Telstra had now implemented a churn process that included the LSS. He recommended that as far as possible the Final Determination be harmonised with that churn process. Mr Riordan indicated his concern, however, that Telstra (Bigpond), which he noted had the largest share of DSL services, was not a participant in that churn process, and so a number of churns would attract a disconnection charge even though this could be avoided if Telstra (Bigpond) was a participant. Mr Riordan suggested that the problem that Telstra (Bigpond) did not itself face disconnection charges and so had weak incentives to participate, could be overcome by a provision that access seekers should not pay a disconnection charge so long as they were participating in the Telstra LSS churn process and Telstra (Bigpond) was not. An alternative would be to signal in the reasons that we may intervene in future if Bigpond remains outside the Telstra LSS churn process, but not go so far as to intervene in this way now. ACCC did "single out" Telstra by adopting (as Option 2) the mechanism described in Mr Riordan's memo of 19 July 2007. 476 Telstra does not suggest, and could not reasonably suggest, that ACCC was obliged to give it an opportunity to be heard on any form of final determination that ACCC proposed to make. In my opinion, ACCC's adoption of Option 2 without making further inquiries of Telstra was not inconsistent with a proper consideration of the dispute, whether or not ACCC's obligation to reach a decision speedily is taken into account. 477 It was clear to Telstra that ACCC wished to ensure that transfers between service providers by an end-user be free of any disconnection charge to the access seeker. Telstra was not forthcoming as to the nature of its own LSS Transfer Process. ACCC learned of it late in the day as the above account shows. ACCC decided to change its proposed approach to disconnection charges by building on Telstra's own LSS Transfer Process with modifications directed to ensuring that both Telstra (Bigpond) and Request would sign up to the LSS Transfer Process so that there would be no escaping the exemption from the disconnection charge in the case of an end-user switching service providers. 478 Accepting, as ACCC did, that Telstra's existing LSS Transfer Process depended on the agreement of both the losing and gaining service providers to participate, an appropriate way of ACCC's achieving its objective was to take that LSS Transfer Process as the starting point and to apply commercial pressure to Telstra (through its Bigpond business division) and Request to agree to participate. In the arbitration between Telstra and Request, ACCC could impose terms on them alone, and not on other service providers who were not a party to the arbitration. While other courses could have been chosen, one that was open was to deny Telstra a disconnection charge in the case of all disconnections of a Request LSS so long as Telstra (Bigpond) had not signed up and Request had signed up, and to deny Request, as losing service provider, the benefit of the "no disconnection charge" aspect of a churn so long as it (Request) had not signed up. 479 The alternative option suggested by Telstra in its present submissions (see [461] above) was obvious and may be taken to have been rejected by ACCC. 480 In my opinion, Telstra's Ground 8 is not made out. 482 As the parties agree, the Act does not dispense with ACCC's obligation to accord Telstra procedural fairness. 483 Telstra submits that procedural fairness requires a decision-maker to disclose to an interested party the substance of material that is significant, relevant, credible and obtained from a source other than that party (citing Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 ( Kioa v West) and Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; (2005) 225 CLR 88 ( VEAL )). As formulated, the submission is based on the High Court judgment in VEAL at [14]-[18] which refers to the judgment of Brennan J in Kioa v West at 628-629. Brennan J there referred to adverse information that is credible, relevant and significant which the decision-maker possesses and proposes to take into account. VEAL concerned an unsolicited letter from a third party which had been forwarded by the Department of Immigration and Multicultural and Indigenous Affairs to the Refugee Review Tribunal. 484 In my respectful opinion neither Kioa v West nor VEAL is of direct relevance to the present case, which is not one of "information" of the kind referred to in them. The relevant information that ACCC "possessed" was that Telstra had implemented a churn process that required the participation of both the losing and gaining access seekers, and that neither Telstra (Bigpond) nor Request were participants in that process. This information came from Telstra or was at least known to Telstra. Furthermore, Telstra knew that ACCC's objective was to avoid disconnection charges in the case of an end-user switching service providers, and the information referred to was of obvious relevance to that objective. The procedural fairness issue raised in the present case concerns the solution arrived at and the reasoning process that led to it. This is a different area of discourse from that of information received by a decision-maker from a third party. 485 A party liable to be directly affected by a decision (such as Telstra) is, however, entitled to have its mind directed to the critical issue or factor on which the administrative decision is likely to turn ( Kioa v West at 587; Sinnathamby v Minister for Immigration and Ethnic Affairs (1986) 66 ALR 502 at 517; Broussard v Minister for Immigration and Ethnic Affairs (1989) 21 FCR 472 at 481-482; Somaghi v Minister for Immigration, Local Government and Ethnic Affairs [1991] FCA 389 ; (1991) 31 FCR 100 ( Somaghi ) at 108). This does not mean that the party is entitled to have its mind directed to the provisional views of the decision-maker so that it may have a further opportunity of criticising the decision-maker's mental processes before a final decision is reached ( Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd [1994] FCA 1074 ; (1994) 49 FCR 576 at 590-592). Similarly, a decision-maker is not required to alert parties to "evaluative conclusions" on the material before the decision-maker ( Somaghi at 108). What the rules of procedural fairness require depends on the statutory framework and the facts and circumstances of the particular case: SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 228 CLR 152 at [26] . He states that if Option 2 had been disclosed, he would have proposed that Telstra make submissions addressing it. In fact, he says, Telstra did make submissions in subsequent LSS access dispute arbitrations urging ACCC not to adopt Option 2. Mr Cole also states that he was aware that ACCC had expressed a view that "charges for avoidable disconnection costs associated with end-user 'churn'" should not be allowed. 487 Although I accept that Mr Cole would have done as he says, I do not find his evidence persuasive in the absence of any evidence whatever of the general nature of the submissions that he would have urged be made on Telstra's behalf. 488 In a notice disputing facts ACCC disputes that between 30 March 2007 and 1 August 2007 it did not disclose Option 2 to Telstra. It is clear that ACCC did not do so expressly. Request contends, however, that ACCC disclosed the "issue of Option 2". I dealt with a similar submission made by Telstra at [179]ff above in Section A (Telstra's Cost Model). 489 In my opinion ACCC was not obliged to disclose anything further in relation to, or to give Telstra an opportunity to be heard on, Option 2 specifically. Telstra knew that ACCC wished to eliminate disconnection charges in the case of all transfers or churns. Telstra could not have complained if ACCC had adopted Telstra's LSS Transfer Process without qualification. ACCC embraced that process with additional features that imposed commercial pressure on Telstra and Request to ensure that they participated in order to achieve its "no disconnection charges on churns" objective. 490 Telstra's complaint is that ACCC went too far by denying Telstra a disconnection charge on certain churns to which Telstra (Bigpond) was not a party and on certain cancellations of a LSS service (non-transfers), in each case until Telstra (Bigpond) signed up to the Telstra LSS churn process. However, ultimately that is all that Telstra's complaint is: a complaint over a matter of degree rather than over a solution that was alien to the considerations that had arisen in the course of the arbitration. 491 I think that ACCC was entitled to adopt Option 2 without first acquainting Telstra with its intention to do so and allowing Telstra a further opportunity to be heard on Option 2. 493 The reference to the potential disallowance of "additional disconnection charges" in the first sentence in the emphasised final paragraph in the passage set out at [451] above is a reference to the situations referred to at [430] and [490] above. ACCC was aware that those two situations were ones in which Option 2 would disallow disconnection charges over and above the circumstances in which they would be disallowed under Telstra's existing LSS Transfer Process even if Telstra (Bigpond) had signed up. ACCC was also aware that in consequence, Option 2 "provide[d] slightly stronger incentives on Telstra (Bigpond) to participate". 494 There remains a question what ACCC meant by the words "However, there would be practical difficulties in the use of a more precise test". What was the more precise test than Option 2 that ACCC had in mind? What were the practical difficulties associated with that test? 495 The more precise test that suggests itself most obviously is the one identified by Telstra in its submissions to this Court set out at [461] above. The practical difficulty with that option may have been that it did not impose the maximum pressure available on Telstra (Bigpond) to sign up. Or perhaps the more precise test ACCC had in mind was ACCC's original 30-day waiting period approach which ACCC considered would avoid disconnection charges in the case of all end-user churns. In that case, the practical difficulties were those identified by Telstra in its submissions to ACCC referred to above. 496 The merits of Option 2 were a matter for ACCC. It chose a simple solution knowing precisely what it was doing. The objective was to apply commercial pressure to Telstra (Bigpond) and Request to sign up to the Telstra LSS churn process with a view to the elimination of all disconnection charges on churns throughout the industry. Telstra knew that this was an objective that ACCC wished to achieve in the arbitration. Option 2 was a means directed to that end which ACCC was entitled to adopt without according to Telstra an opportunity to be heard any further on the practical difficulties to which ACCC referred. 497 In my opinion ACCC was not required to inform Telstra of the "practical difficulties" that ACCC had in mind and give Telstra an opportunity to address them before ACCC adopted Option 2 in the Final Determination. 499 It is therefore not necessary for me to address Request's motion for leave to reopen but as full submissions were made on it, I will do so. I will not repeat here what I said there and will confine my attention to issues relating specifically to Option 2. In its application for judicial review of the Adam Final Determination, Telstra does not raise a ground attacking cl 5A(b) in the Adam Final Determination (which is equivalent to cl 5A(ii) in the Final Determination). 501 In the Adam/Telstra arbitration, ACCC advised the parties that it was considering adopting Option 2 in relation to single disconnection charges. Telstra, represented by Mallesons, had the opportunity of making submissions on the issue and did so. Nonetheless, ACCC adopted Option 2. 502 Request submits that this evidence is relevant to the questions whether ACCC failed to accord procedural fairness to Telstra in the Request/Telstra arbitration and whether, as a matter of discretion, relief should be refused to Telstra if ACCC did fail to accord Telstra procedural fairness. 503 In the Adam FD Statement of Reasons, ACCC again addressed Option 1 and Option 2 which it had addressed in the FD Statement of Reasons. ... ... In the short term, neither of these options will emulate the outcome of a condition that disallowed disconnection charges in all cases of end-user churn. For instance, Option (2) has the potential for additional disconnection charges to be disallowed (those relating to 'non-churns') until Bigpond participates in the Telstra LSS churn process. Whether this is the case will depend upon whether the access seeker has signed up to the process. Conversely, each option has the potential to allow additional disconnection charges (where the disconnection is a churn processed outside the Telstra LSS churn process) until all significant service providers are participating. However, in the longer term, option (2) has the greater potential to ensure that disconnection charges are not imposed in cases of end-user churn. Option 2 will be far simpler to implement as compared to possible alternatives of the type that the Commission proposed in previous arbitrations, which would require Telstra to assess each LSS disconnection to identify whether a new service has been installed on the relevant line within a certain period of time. In contrast, option 2 only requires Telstra to check at the time of the disconnection whether the access seeker and Bigpond have signed up to the Telstra LSS churn process. Listings of participants in the Telstra LSS churn process are readily available. 504 In relation to Option 2, Telstra submits that the Adam Final Determination and the Adam FD Statement of Reasons should not be admitted for the reasons to which I referred at [224]ff and for certain additional reasons peculiar to Option 2. In relation to the latter, Telstra again observes that whereas the LSS Pricing Principles of 2002 applied in relation to the Request/Telstra arbitration, it was the 2007 LSS Pricing Principles that applied in respect of the Adam/Request arbitration. Importantly, Part 2 of Sch 1 to the 2007 LSS Pricing Principles adopted Option 2 for disconnection charges, whereas the LSS Pricing Principles of 2002 did not do so. 505 Telstra submits that ACCC relied on the 2007 LSS Pricing Principles in support of its Adam Final Determination. In particular, Telstra draws attention to para 840 of the Adam FD Statement of Reasons, which occurs under the heading "Summary" (and after the paras set out at [503] above). 506 This passage can be read as implying that one consideration that influenced ACCC to adopt Option 2 in the Adam Final Determination was the presence of the indicative prices in the 2007 LSS Pricing Principles --- a feature that was absent from the LSS Pricing Principles of 2002. Request, on the other hand, submits that this paragraph was no more than a statement that the adoption of Option 2 was consistent with and not prohibited by the 2007 LSS Pricing Principles. This submission raises a difficult question of construction of para 840 quoted at [505] above. Clauses 5, 5A and 6 are not to apply to disconnections that were made before 1 February 2006 or after 31 December 2007. The date 15 November 2006 was the date by which ACCC considered it reasonable for Telstra to have implemented a churn process in respect of LSS connections and disconnections, and 22 August 2007 was the date the Final Determination came into effect. 510 I dealt with Telstra's attack on cl 5A(ii) in Section E (Disconnection Charges, the Churn Process and "Option 2"). Clause 5A(ii) operates entirely prospectively, that is to say, in respect of the period after the Final Determination came into effect on 22 August 2007 down to its expiry on 31 December 2007. Clause 5A(i), on the other hand, operates entirety retrospectively, that is to say, in respect of a period prior to the Final Determination's coming into effect on 22 August 2007. 511 Telstra contends that the mandatory relevant considerations listed in s 152CR(1) and the LSS Pricing Principles (see s 152AQA) applied to ACCC's making of cl 5A(i). Request and ACCC contend that they did not. (As mentioned at [102] above, ACCC made submissions on the general issue of construction involved. ) They submit that cl 5A(i) was an exercise of the power to "backdate" given by s 152DNA of the Act. That section contains in subs (7) an exhaustive list of the matters to which ACCC must have regard when exercising the backdating power conferred by s 152DNA(1). 512 It was not contended for Request and ACCC that ACCC had in fact applied the s 152CR(1) criteria and the LSS Pricing Principles when deciding to adopt cl 5A(i). 513 Telstra relies on three grounds in relation to the No Charge Period. 514 First (Telstra's Ground 10(a)), Telstra claims that ACCC failed to take into account a mandatory relevant consideration, namely, Telstra's efficient costs of effecting disconnections during the No Charge Period. Although not specified in Ground 10(a), in its written submissions, Telstra also claims that ACCC failed to have regard to another mandatory consideration, namely, the LSS Pricing Principles. 515 I have already discussed the applicable legal principles in relation to a failure to take into account a mandatory relevant consideration. 516 Second (Telstra's Ground 10(b)), Telstra claims that ACCC failed to observe procedures that it was required by law to observe by reason of its failure to take into account the matters referred to in s 152CR(1) of the Act and the LSS Pricing Principles. Telstra refers, in particular, to para (a) (the LTIE), para (b) (Telstra's legitimate business interests and its investment in facilities to supply the LSS) and para (d) (the direct costs of providing access to the LSS). 517 Third (Telstra's Ground 10(c)), Telstra claims that ACCC fell into jurisdictional error by asking itself whether the ID supported Telstra's applying charges for LSS disconnections during the No Charge Period, rather than asking the correct question, namely, whether Telstra had incurred costs in effecting disconnections of the LSS during the No Charge Period and if so, whether allowing Telstra to levy a charge for such disconnections would balance the statutory criteria in s 152CR(1) and the LSS Pricing Principles. 518 Jurisdictional error occurs where a decision-maker fails to exercise the jurisdiction it has by making or refusing to make an order or decision by reason of "a mistaken assumption or denial of jurisdiction or a misconception or disregard of the nature or limits of jurisdiction" ( Craig v South Australia [1995] HCA 58 ; (1995) 184 CLR 163 at 177). In Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416 at 420, Jordan CJ said that there was a failure to exercise jurisdiction where the decision-maker "misunderstand[s] the nature of the jurisdiction which [he or she] is to exercise, and ... appl[ies] a 'wrong and inadmissible test' ... or ... 'misconceive[s his or her] duty,' ... or '[fails] to apply [himself or herself] to the question which the law prescribes' ... or '... misunderstand[s] the nature of the opinion which [he or she] is to form'". This description of constructive jurisdictional error was approved by Guadron J in Re Minister for Immigration and Multicultural Affairs; ex parte Miah [2001] HCA 22 ; (2001) 206 CLR 57 at [80] . It is convenient now to set out, with certain observations, all of the subsections of s 152DNA. Beginning on 20 January 2006, negotiations took place over the arrangement that was to apply following expiration of that agreement. However, by mid February 2006 the negotiations had became deadlocked. 524 As noted previously, on 18 April 2006 ACCC received Request's notification to ACCC of an access dispute under s 152CM(1) of the Act. The dispute as notified extended to all the terms and conditions of access to Telstra's LSS including the rate of monthly charge and amount of connection and disconnection charges. Any backdating for which the Final Determination provided was not to a date earlier than the date of those negotiations. 525 Schedule 1 to the Final Determination provides a clear example of a backdating of a provision. Except where the parties subsequently agree otherwise, the LSS Annual Charge payable by Request to Telstra for the LSS for the period from 1 February 2006 until 31 December 2007 is $30.00 per LSS per annum ($2.50 per LSS per month). Like cl 1 of Schedule 1, it does not operate in relation to the period before 1 February 2006 or the period after 31 December 2007 (cl 7 of Schedule 2 states so expressly), but unlike cl 1 of Schedule 1 it is not the very same provision that operates before, as operates after, the Final Determination came into effect on 22 August 2007. Clause 5A in Schedule 2 establishes different substantive regimes as between the period 15 November 2006 to 22 August 2007 (cl 5A(i)) and the period 22 August 2007 to 31 December 2007 (cl 5A(ii)). 527 Clause 5, set out at [508] above, is in part like cl 5A(i) and in part like Schedule 1. For the period from 22 August 2007 to 31 December 2007 the disconnection charge is $36.70. That same disconnection charge is backdated to 1 July 2007. In this respect it is like Schedule 1. However, it fixes different disconnection charges of $35.10 for the year 1 July 2006 to 30 June 2007 and $34.70 for a period prior to 30 June 2006. In those respects, it is like cl 5A(i). In the present case, the Final Determination took effect on 22 August 2007. Clause 18 of the Second ID provided that that ID remained in force until, in the events that occurred, the Final Determination came into effect. Accordingly, there was no occasion for the revocation provided for in s 152CPA(9) to operate. (5) This section has effect despite anything in section 152DN. (6) If: (a) a provision of a determination is covered by subsection (1); and (b) the provision requires a party to the determination (the "first party") to pay money to another party; the determination may require the first party to pay interest to the other party, at the rate specified in the determination, on the whole or a part of the money, for the whole or a part of the period: (c) beginning on the date on which the parties began negotiations with a view to agreeing on the terms and conditions as mentioned in paragraph 152AY(2)(a); and (d) ending on the date on which the determination would have taken effect if no provision of the determination had been covered by subsection (1) of this section. These provisions (cll 10 and 11) suggest that ACCC contemplated that the Final Determination may entitle Telstra in respect of a past period to less money than had been paid to it. 532 If Request paid Telstra any disconnection charges for disconnections occurring between 15 November 2006 and 22 August 2007, they would be refundable with interest. Telstra informed ACCC that by reason of the 30-day waiting period for which the First ID and Second ID provided (see [538] and [542] below), Telstra had in fact not been able to make any disconnection charges. The First ID applied in respect of disconnections requested after 15 November 2006 and the Second ID applied in respect of disconnections requested on and from 21 December 2006. If Telstra's statement to ACCC is to be accepted at face value, there would not, as a matter of fact, be any refund payable by Telstra to Request in respect of disconnection charges. (8) The Commission must, by writing, formulate guidelines for the purposes of subsection (7). (9) The Commission must take all reasonable steps to ensure that the first set of guidelines under subsection (8) is made within 6 months after the commencement of this subsection. 534 ACCC did formulate guidelines for the purposes of subs (7) as required by subs (8). They are set out in ACCC's Resolution of telecommunications access disputes --- a guide of March 2004 in section 7.4 headed "Backdating". 536 In dealing with the access dispute, ACCC made the First ID, the Second ID and the Final Determination, all of which addressed the question of disconnection charges. The parties made submissions in response. ACCC made the First ID and provided the First ID Statement of Reason) on 2 November 2006. 538 The question of disconnection charges was dealt with in identical terms in cl 12 of the First Draft ID and cl 12 of the First ID. Subject to clause 14, and except where the parties subsequently agree otherwise, other terms and conditions upon which Telstra supplied the LSS to Request at the time of notification are to continue to apply. In the event of any inconsistency between the terms and conditions upon which Telstra supplied the LSS to Request at the time of notification and the intended operation of this interim determination, this interim determination is taken to apply to override any such pre-existing agreement to the extent of any inconsistency. 15. Clause 12(i) addressed disconnections requested between 2 and 15 November 2006; and cl 12(ii) addressed disconnections requested after 15 November 2006. In summary, and putting to one side migrations from an LSS to an ULLS (in which a disconnection charge was never applicable), under cl 12(ii) there was to be no charge for disconnections effected after 15 November 2006 if an order was placed for a new LSS over the same line within 30 calendar days of the disconnection request being made. 540 In both the First Draft ID Issues Paper and in the First ID Statement of Reasons, ACCC stated that the charges had been derived by applying the LSS Pricing Principles and, in particular, their requirement that LSS prices should comprise the forward looking efficient costs of supplying the LSS. The Commission considers that to charge an additional amount (which the Commission understands is currently $90) to the 'losing' disconnection service provider, on top of the connection charge levied to the 'gaining' service provider, would be an over-recovery of costs. This is because when the disconnection is performed as part of the connection of a new service, the incremental or discrete cost of performing the disconnection is so small and incidental to the connection process that it can be deemed to be recovered in the charge for the new connection. In its final decision on Telstra's LSS connection/disconnection charges access undertaking (section 6.4.6), the Commission identified a LSS disconnection occasioned by a customer churning the ADSL service to a new provider (including Telstra retail) as being an instance in which the LSS disconnection could be performed in conjunction with a new connection on the line. The Commission proposes for the purposes of the interim determination that new orders which are received sufficiently proximate to the disconnection request are to be taken to be occasioned by a customer churning the ADSL service, and hence the relevant disconnection is not to be charged for. In this regard, the Commission considers that it is appropriate for a period of 30 calendar days from the date of the request for the disconnection of the LSS to be allowed. While a period such as this is necessary to facilitate the matching of new orders with an LSS disconnection, were a new order to be received more than 30 calendar days from the date of the disconnection request then it is unlikely that the LSS had been disconnected as part of a customer churn process. A longer period would also appear to have the potential to unduly complicate the order matching process. The Commission considers that this particular aspect of the proposed LSS disconnection charge terms should only apply to LSS disconnections that are made after 15 November 2006. This is to permit any necessary systems changes to be effected by Telstra so as to coordinate disconnections and connection orders from other service providers. This date has been proposed as it has been previously nominated by the Commission to Telstra as the date by when it would be reasonable for Telstra to have this functionality available. Another instance in which the disconnection could be performed in conjunction with a new connection on the line is where the LSS disconnection is performed as part of a migration from the LSS to the ULLS (either as part of or outside an MNM). 541 This material was reproduced in the First ID Statement of Reasons. 542 The relevant terms of the Second ID (which it will be recalled revoked the First ID and applied as and from 21 December 2006) were found in cl 15. Except where the parties subsequently agree otherwise, the following charges are payable by Request to Telstra for the disconnection of a LSS: (i) for a disconnection that is requested in circumstances where the LSS is not being migrated to an ULLS to be supplied to Request or an order is not placed by an end user or service provider for a new service(s) to be provided on that same copper pair/line within 30 calendar days of the disconnection request being made, $58 per service; or (ii) for all other disconnections, no charge is applicable. 16. Subject to clause 17, and except where the parties subsequently agree otherwise, other terms and conditions upon which Telstra supplied the LSS to Request at the time of notification are to continue to apply. 17. In the event of any inconsistency between the terms and conditions upon which Telstra supplied the LSS to Request at the time of notification and the intended operation of this interim determination, this interim determination is taken to apply to override any such pre-existing agreement to the extent of any inconsistency. 18. This interim determination shall take effect as and from 21 December 2006, and will remain in force until 2 November 2007, unless: (i) a final determination comes into effect; or (ii) the LSS ceases to be a declared service; or (iii) this interim determination is revoked or taken to be revoked under the Act: in which case this interim determination will cease to have effect on the day that the relevant event occurs. It was necessary for the Second ID only to repeat para (ii) of cl 12 and only in respect of the period on and from 21 December 2006. 543 In substance the Second ID Statement of Reasons addressed only the newly introduced annual charges. So far as "connection, cancellation and disconnection charges" were concerned, the Second ID Statement of Reasons merely directed attention to the First ID Statement of Reasons (in fn 1). For the period between 15 November 2006 until the time the final determination takes effect, no disconnection charges will be payable. This maintains the position taken at the interim determination stage in the absence of a Telstra LSS churn process, and Telstra's advice that in practice those arrangements did not support Telstra applying charges for any LSS disconnections. 546 The reference to "Telstra's advice" was a reference to advice provided by Telstra that while the terms of the First ID and the Second ID theoretically permitted it to levy a disconnection charge (after waiting 30 days to ensure no request for a new LSS connection on the same line was received), in practice Telstra had been unable to levy any LSS disconnection charges under either the First ID or the Second ID. 548 In contrast, s 152CR(3) sets out the matters which ACCC may take into account when making an ID. These are the s 152CR(1) matters, and any other matter ACCC considers relevant. There are no mandatory considerations relevant to the making of an ID (other than the LSS Pricing Principles - see below). Section 152CR(4) provides that in making an ID, ACCC does not have a duty even to consider whether to take into account a matter mentioned in s 152CR(1). 549 Section 152AQA(6), however, requires ACCC to have regard to the LSS Pricing Principles when arbitrating an access dispute. That includes when making an ID, as well as when making a final determination. 550 The extract from the FD Statement of Reasons set out at [545] shows that ACCC's reason for adopting cl 5A(i) was simply to continue the regime that it thought had operated in respect of the period after 15 November 2006 under the First ID and the Second ID, with one modification. Taking "Telstra's advice" that in practice the 30-day waiting period had meant that Telstra had not been able to impose disconnection charges, ACCC simply eliminated all charges for disconnections occurring between 15 November 2006 and the date the Final Determination came into effect. 551 As noted earlier, ACCC had not been required to take any particular matters into account when making the First ID or the Second ID, and it is plain that it did not take the s 152CR(1) criteria or the LSS Pricing Principles into account when deciding upon cl 5A(i) of the Final Determination. The question for decision, therefore, is simply whether ACCC was required to do so. (As mentioned previously, neither Request nor ACCC advanced arguments that ACCC had taken those matters into account, but rather advanced the argument that ACCC was not required to do so. In deciding whether and how to backdate provisions of a final determination, ACCC was required to have regard only to the factors referred to in s 152DNA(7) (set out at [533] above), and was not required to have regard to those referred to in s 152CR(1). 553 ACCC characterises the provision with respect to the No Charge Period as a decision not to backdate part of the Final Determination because cl 5A(i) represented a continuation of the status quo ante as it existed in practice. According to ACCC's submission, s 152DNA(1) allows ACCC to make "consequential orders' that apply "to" a final determination that are not part of that final determination itself. Therefore, so the argument goes, in exercising the s 152DNA(1) power, ACCC is not required to have regard to the s 152CR(1) criteria which are the matters that ACCC is required to take into account "in making a final determination". 554 It follows, according to the submissions of Request and ACCC, that ACCC was not required to test cl 5A(i)'s provision for the No Charge Period against the s 152CR(1) criteria. 555 Telstra's submissions, on the other hand, proceed along the following lines. 556 Clause 5A(i) is a substantive term or condition of the Final Determination. But for it, the disconnection charges applicable during the No Charge Period would have been those specified by the First ID and the Second ID (see [538] and [542] above) or those agreed upon between Telstra and Request. (Telstra notes that there may be some uncertainty as to which of those charges would have applied in the absence of cl 5A(i) but asserts, and I agree, that it is not necessary to decide between the two for present purposes). Clause 5A(i) varies that position by reducing to zero the disconnection charge payable during the No Charge Period. 557 Had a decision been made not to "backdate" the Final Determination with respect to disconnection charges, it would have been those charges in the First ID and Second ID or as agreed between Telstra and Request that would have applied. Had a decision been made, on the other hand, to "backdate" a provision of the Final Determination, the disconnection charges applicable in respect of the period from 15 November 2006 to 22 August 2007 would have been the charge specified in the last line of the table in cl 5 of the Final Determination. Clause 5A(i) is therefore simply one of the provisions of the Final Determination with respect to the terms and conditions of access (specifically, disconnection fees) for the No Charge Period. It is substantively different from both the disconnection fees that previously applied during that period and from the disconnection fees fixed by cl 5. 558 The correct characterisation of the Final Determination with respect to the No Charge Period is therefore, according to Telstra, that the Final Determination retrospectively varied the terms and conditions of access existing between the parties in relation to the matter of disconnections, and it is not merely an exercise of the power to backdate a provision of the Final Determination given by s 152DNA(1). In determining on cl 5A(i), ACCC was exercising both the power in s 152CP to make a determination on access, to which the s 152CR criteria applied, and the power given by s 152DNA(1) to apply that provision retrospectively. 559 In relation to the matters to which ACCC must have regard in exercising the backdating power in s 152DNA(1), Telstra acknowledges that s 152DNA(7) specifies criteria to which ACCC must have regard. However, Telstra submits that in the context of Pt XIC, other mandatory relevant considerations also apply. 560 First, ACCC must have regard to the LSS Pricing Principles if "it is required to arbitrate an access dispute under Division 8 in relation to the declared service" (s 152AQA(6)). The LSS Pricing Principles apply to any aspect of an arbitration under Div 8, including the exercise of the power to backdate. 561 Second, in exercising the discretion under s 152DNA(7)(b), ACCC must take into account relevant considerations that ACCC is required to take into account in the light of the subject matter, scope and purpose of the Act (citing Peko-Wallsend at 39-40 in support of this proposition). True backdating under s 152DNA(1) is merely adjectival to the making of a final determination under s 152CP and ACCC is required to take into account the matters specified in s 152CR(1) both when making the final determination and when exercising its discretion in respect of backdating that determination. According to Telstra, if this were not so, backdating could undermine ACCC's findings and its balancing of the matters identified in s 152CR(1). 563 There is a distinction between the backdating power contained in s 152DNA(1) and the power to decide upon the substantive provisions of a final determination that is recognised in s 152CR(1) and (2) on the one hand, and s 152DNA(7) on the other. The latter is addressed to substantive provisions which it assumes have been decided upon following the application of the s 152CR(1) and (2) criteria. 564 Section 152DNA(1) is addressed to provisions of a final determination that take effect prospectively, that is to say, from the time when the final determination has effect (21 days after it is made --- see s 152DN) and it allows ACCC to express those provisions to have taken effect on a specified earlier date. 566 The backdating provision reflects an assumption that in a perfect world, the final determination would have been made when the parties to the access dispute commenced their negotiation, or that at that time they would have reached agreement on the terms and conditions which came to be those of the final determination. Neither party should benefit from the passing of time between the commencement of negotiations and the date on which the final determination takes effect. 567 This limited adjectival nature of the power to backdate explains why s 152DNA(7) imposes less stringent requirements than does s 152CR(1). 568 Paragraph (i) of cl 5A, however, does not fit the notion of a mere backdating of a substantive provision in relation to which the ss 152CR(1) and the LSS Pricing Principles have already been taken into account. Rather, para (i) of cl 5A is a substantive provision in respect of a period preceding the coming into effect of the Final Determination different from any substantive provision governing disconnections occurring after the Final Determination came into effect. 569 Nor does cl 5A(i) reflect a decision of ACCC not to backdate the Final Determination, since it provides for a disconnection charge regime different from that otherwise applicable during the No Charge Period. 570 Telstra's Grounds 10(a), 10(b) and 10(c) are made out by reason of ACCC's failure to take into account the s 152CR(1) criteria and the LSS Pricing Principles as required by s 152AQA(6) of the Act, when deciding upon the retrospectively operating cl 5A(i). 571 Since I have found that cl 5A(i) was not solely an exercise of ACCC's power under s 152DNA(1), I need not deal with Telstra's submissions in relation to the other mandatory considerations that apply to ACCC's exercise of that power (see [559]ff above). I certify that the preceding five-hundred and seventy-one (571) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. ACCC Australian Competition and Consumer Commission, the first respondent (also referred to as the Commission). ACCC SC model Cost model in respect of specific costs developed by ACCC, sent to the parties on 30 March 2007. Access Pricing Principles guide ACCC's Access Pricing Principles --- Telecommunications: a guide published in July 1997. Access provider Carrier or carriage service provider that supplies declared services to itself or other persons --- see s 152AR of the Act. Access seeker Service provider that makes, or proposes to make, a request for access to a declared service under s 152AR of the Act. Act Trade Practices Act 1974 (Cth) Adam Adam Internet Pty Ltd Adam FD Statement of Reasons Statement of ACCC's reasons for making the Adam Final Determination which accompanied the Adam Final Determination. Adam Final Determination The written determination on access to the LSS made by ACCC on 20 December 2007 in relation to the arbitration between Adam and Telstra. ADC Access Deficit Contribution ADJR Act Administrative Decisions (Judicial Review) Act 1977 (Cth) ADSL Asymmetric Digital Subscriber Line. A compression technology that supports high speed digital services over conventional copper telephone lines. Broadband Imprecise, but often used to refer to telecommunications capable of providing multiple channels of data over a single communications medium, typically using some form of frequency or wave division multiplexing. CAN Customer Access Network. The portion of the PSTN which comprises the transmission system connecting customers to an aggregation point within the network (usually a local exchange building). In Australia, that connection is normally achieved by copper wire pairs. CCA Current Cost Accounts maintained under the RKR. CD Compact Disc Chime Chime Communications Pty Ltd, the second respondent in proceeding NSD 1560 of 2007. Churn The transfer of a telecommunications customer from one provider to another, such as from Telstra to Request or from Request to Chime or from Primus to Telstra. The "Telstra LSS churn process" was defined in para 8 of Schedule 2 to the Final Determination to be "a Telstra process by which services can be transferred between LSS, and between LSS and DSL services". DFD Draft Final Determination provided by ACCC to Telstra and Request on 30 March 2007. DFD Consultation Paper Consultation paper provided by ACCC to Telstra and Request on 30 March 2007 which set out issues on which ACCC sought submissions. DSL Digital Subscriber Line. DSL services are provided over the high frequency spectrum of a ULL. End-user Retail customer FD Statement of Reasons Statement of ACCC's reasons for making the Final Determination which accompanied the Final Determination. Final Determination The written determination on access to the LSS made by ACCC on 1 August 2007 (with effect from 22 August 2007 and expiring on 31 December 2007) in relation to the arbitration between Request and Telstra. First Draft ID ACCC's draft ID in respect of LSS connection and disconnection charges provided to the parties with the First Draft ID Issues Paper and associated papers on 15 September 2006. First Draft ID Issues Paper Issues paper accompanying the First Draft ID. First ID ACCC's ID in respect of LSS connection and disconnection charges of 2 November 2006. First ID Statement of Reasons ACCC's reasons in support of the First ID. GST Goods and Services Tax ID Interim determination made under s 152CPA of the Act. LCS Local Carriage Service Local loop Line between end-user's premises and a local exchange. LSS Line Sharing Service (also known as the High Frequency Unconditioned Local Loop Service). The LSS was defined in the LSS Declaration Final Report (set out at [52] in these reasons). LSS Declaration Declaration of LSS as a declared service with effect on 16 October 2002. With effect from 3 December 2003, the LSS Declaration was extended to 31 October 2007. With effect from 29 October 2007, the LSS Declaration was further extended to 31 July 2009. LSS Declaration Final Report ACCC's Line Sharing Service: Final Decision on whether or not a Line Sharing Service should be declared under Pt XIC of the Trade Practices Act 1974 published in August 2002 following ACCC's inquiry into whether or not an LSS should be declared under Pt XIC of the Act. LSS Pricing Principles Pricing principles determined by ACCC in relation to the LSS pursuant to s 152AQA of the Act (set out in Ch 7 of the LSS Declaration Final Report). LSS Undertaking Final Report ACCC's A final report on the assessment of Telstra's undertaking for the Line Sharing Service published in August 2004 LSS Undertakings Discussion Paper ACCC's Telstra's Undertakings for the Line Sharing Service --- Discussion Paper published in March 2005. LTIE Long-term interests of end-users. The object of Pt XIC of the Act is to promote the LTIE (s 152AB(1)) and the LTIE is a matter that ACCC must take into account in making a final determination in resolution of a dispute over access to a declared service (s 152CR(1)(a)). Mallesons Mallesons Stephen Jaques, solicitors for Telstra MNM Managed Network Migration. In Schedule 2 to the Final Determination, a Managed Network Migration was defined to be "the transfer or migration of services that is achieved by the project management by Telstra of a coordinated cancellation and connection of services". Narrowband A reference to the low frequency spectrum or voiceband frequency spectrum. Primus Primus Telecommunications Pty Ltd, the second respondent in proceeding NSD 1743 of 2007 PSTN Public Switched Telephone Network. The switched telephone telecommunications network to which public customers can be connected. The infrastructure for basic telecommunications services (including telephones, switches, local and trunk lines, and exchanges). It enables any customer to call and communicate with any other customer. Request Request Broadband Pty Ltd, the second respondent in proceeding NSD 1744 of 2007 Review of LSS Final Decision ACCC's Review of the Line Sharing Service Declaration --- Final Decision published in October 2007 following an inquiry pursuant to s 152ALA(7) of the Act as to whether the LSS Declaration should be extended, revoked or varied. RKR Record Keeping Rules made by ACCC under Div 6 of Pt XIB of the Act. RMAC Retail-minus avoidable cost. A pricing methodology that uses a "top-down" approach, in contrast with a "bottom-up" approach used by a TSLRIC methodology (and its variants). SAOs Standard Access Obligations provided for in s 152AR of the Act. Second Draft ID ACCC's draft ID in relation to LSS periodic charges provided to the parties with the Second Draft ID Issues Paper and associated papers on 6 October 2006. Second Draft ID Issues Paper Issues paper accompanying the Second Draft ID. Second ID ACCC's ID, which revoked the First ID and reproduced it and as well dealt with LSS periodic charges, of 21 December 2006. Second ID Statement of Reasons ACCC's reasons in support of the Second ID. SIO Service in operation Telephony A generic term describing voice telecommunications. Telstra Telstra Corporation Ltd, the applicant. TFP Total Factor Productivity Tribunal Australian Competition Tribunal Tribunal's 2006 Decision Telstra Corporation Limited [2006] ACompT 4. Decision of the Tribunal affirming ACCC's decision to reject Telstra's proffered LSS access undertaking. TSLRIC Total Service Long-Run Incremental Cost. TSLRIC was explained in the Access Pricing Principles guide and the LSS Pricing Principles. TSLRIC+ TSLRIC plus a contribution to indirect and overhead costs. TSLRIC++ TSLRIC+ plus an additional amount as an ADC. ULL Unconditioned Local Loop. The bare or unqualified wire between the end-user's premises and the local exchange. The LSS and the ULLS are both provided over the ULL. ULLS Unconditioned Local Loop Service ULLS and LLS Undertakings Draft Decision ACCC's Assessment of Telstra's ULLS and LSS Monthly Charge Undertakings --- Draft Decision published in August 2005. ULLS and LSS Undertakings Final Report ACCC's Assessment of Telstra's ULLS and LSS monthly charge undertakings published in December 2005. ULLS Undertakings Discussion Paper ACCC's Telstra's Undertaking for the Unconditioned Local Loop Service --- Discussion Paper published in March 2005. WACC Weighted Average Cost of Capital. A reference to the cost to Telstra of attracting equity and loan capital investment in its business. WLR Wholesale Line Rental service xDSL The "family" of DSL services, including ADSL services. Aug 2002 COMMON ACCC Final Decision on whether or not a Line Sharing Service should be declared under Part XIC of the Trade Practices Act 1974 (incorporating Pricing Principles for a declared LSS). 16 Oct 2002 COMMON Notification of LSS Declaration dated 7 October 2002 in Government Gazette. 19 Nov 2003 COMMON Determination that LSS Declaration expires on 31 October 2007 (incorporating ACCC's Expiry Dates for Declared Services dated June 2003). August 2004 COMMON ACCC Final report on the assessment of Telstra's undertaking for the Line Sharing Service. October 2004 COMMON ACCC Assessment of Telstra's undertakings for PSTN, ULLS and LCS, Draft Decision. 21 Dec 04 PRIMUS Notification of Access Dispute. March 2005 COMMON ACCC Discussion Paper on Telstra's undertaking for LSS. March 2005 COMMON ACCC Discussion Paper on Telstra's undertaking for ULLS. 18 April 2005 PRIMUS Letter from Telstra enclosing Telstra's submissions on terms and conditions of a Final Determination. August 2005 COMMON ACCC Assessment of Telstra's ULLS and LSS Monthly Charge Undertaking - Draft Decision. 28 Nov 05 CHIME Notification of Access Dispute. December 2005 COMMON ACCC Final Decision on assessment of Telstra's ULLS and LSS monthly charge undertakings. 3 Feb 06 CHIME Amended notification of Access Dispute. 13 April 06 REQUEST Notification of Access Dispute. 2 June 2006 COMMON Australian Competition Tribunal decision on Telstra's LSS monthly charge undertaking Telstra Corporation Limited [2006] A CompT 4. 12 Jul 06 PRIMUS Letter from ACCC enclosing Interim Determination (" ID ") and statement of reasons. 2 Nov 06 REQUEST Letter from ACCC enclosing ID and statement of reasons. 21 Dec 06 CHIME Letter from ACCC enclosing ID and statement of reasons. 21 Dec 06 REQUEST Letter from ACCC enclosing revocation of ID dated 2 November 2006 and a new ID and statement of reasons. 2 March 2007 COMMON ACCC Determination to hold joint arbitration hearing on common issues in dispute in respect of Chime, Request and Primus access disputes. 6 Mar 07 REQUEST, CHIME Letter from ACCC to parties regarding procedure prior to final determination. 7 Mar 07 PRIMUS Letter from ACCC to parties regarding procedure prior to final determination. 28 Mar 07 REQUEST Letter from ACCC to Request providing documents relevant to the arbitration on disc. 30 Mar 07 COMMON Letter from ACCC to parties enclosing: Draft Final Determination (DFD); DFD Consultation Paper; orders; and ACCC cost models. 27 Apr 07 COMMON Letter from Telstra to ACCC requesting permission to provide submissions and primary attachments by email, followed by delivery of a supplementary CD. 30 Apr 07 COMMON Letter from ACCC to Telstra accepting this proposal. 4 May 07 CHIME Chime's submissions regarding Draft FD. 4 May 07 REQUEST Request's submissions regarding Draft FD. 4 May 07 PRIMUS Primus' submissions regarding Draft FD. 5 May 07 CHIME 5 emails from Mallesons attaching Telstra's submissions on Draft FD, namely letter dated 4 May 2007, attaching Telstra's submissions on Draft FD and primary attachments. 5 May 07 REQUEST 6 emails from Mallesons attaching Telstra's submissions on Draft FD, namely letter dated 4 May 2007, attaching Telstra's submissions on Draft FD, and primary attachments. 5 May 07 PRIMUS 2 emails from Mallesons attaching Telstra's submissions on Draft FD, namely, letter dated 4 May 2007, attaching: Telstra's submissions on Draft FD, and primary attachments. 7 May 07 (on or around) CHIME ACCC receives by courier letter from Telstra, dated 4 May 2007, enclosing supplementary disc of supporting materials. 7 May 07 (on or around) REQUEST ACCC receives by courier letter from Telstra dated 4 May 2007, enclosing supplementary disc of supporting materials. 7 May 07 (on or around) PRIMUS ACCC receives by courier letter from Telstra dated 4 May 2007, enclosing supplementary disc of supporting materials. 8 May 07 CHIME, REQUEST Telstra's supplementary submissions on WACC. 14 May 07 PRIMUS Primus' reply submissions on the Draft FD. 14 May 07 PRIMUS Telstra's submissions in reply to Primus submissions on the Draft FD (sent by email on 15 May 2007). 18 May 07 CHIME Telstra's submissions in reply to Chime submissions on the Draft FD (sent by email on 18 May 2007). 18 May 07 CHIME Chime's reply submissions on Draft FD. 18 May 07 REQUEST Telstra's submissions in reply to Request on the Draft FD including index of supporting material relied on by Telstra (sent by email on 18 May 2007). 21 May 07 REQUEST Request's reply submissions on Draft FD. 25 May 07 COMMON ACCC internal minute re Request, Chime, Primus LLS access disputes. 30 May 07 CHIME Letter from Telstra to ACCC regarding Chime's submissions in reply. 30 May 07 CHIME Letter from Chime to ACCC, regarding Telstra's letter of 30 May 2007. 5 Jun 07 COMMON Letter from Telstra to ACCC. 13 Jun 07 COMMON Letter from ACCC to parties in response to Telstra' s letters of 5 June 2007. 19 Jun 07 COMMON Letter from Telstra to ACCC regarding (inter alia) confirmation of documents to which ACCC will have regard. 6 Jul 07 CHIME, REQUEST Telstra's addendum to supplementary submissions on WACC. 12 Jul 07 CHIME Letter from ACCC to parties enclosing Final Determination (" FD "). 1 Aug 07 REQUEST Letter from ACCC to parties enclosing FD and statement of reasons. 1 Aug 07 PRIMUS Letter from ACCC to parties enclosing FD and statement of reasons. Oct 07 COMMON Final Decision: Review of the Line Sharing Service. 26 Oct 07 COMMON Extension of Declaration Expiry Date under s 152ALA (in Government Gazette). | telecommunications access regime under pt xic of trade practices act 1974 (cth) access disputes between three access seekers and carrier (telstra corporation ltd telstra) australian competition and consumer commission (accc) arbitrating disputes under div 8 of pt xic accc makes final determination under s 152cp telstra challenges final determinations on judicial review grounds statutory list of mandatory relevant considerations whether one or more should be given priority exhortatory provisions whether final determinations invalid because period exceeded period of declaration of line sharing service as a declared service telecommunications access regime under pt xic of trade practices act 1974 (cth) access disputes between three access seekers and carrier (telstra corporation ltd telstra) australian competition and consumer commission (accc) arbitrating disputes under div 8 of pt xic accc makes final determination under s 152cp telstra challenges final determinations on judicial review grounds statutory list of mandatory relevant considerations whether one or more should be given priority exhortatory provisions whether final determinations invalid because period exceeded period of declaration of line sharing service as a declared service administrative law trade practices |
Due to illness, the first appellant (who is the mother of the second and third appellants) was unable to appear when judgment was delivered. Since she had not been heard on the question of costs and it appeared that she might wish to be so heard, I directed my associate to send a letter to the appellants informing them that, if they wished to make any submissions on costs, they should file written submissions. I am a single mother with two young daughters and currently depending financially on my sisters and mother. I have no working rights and enclose a copy of my E class bridging visa. 4 The Court has an unfettered discretion regarding costs orders, although it "must be exercised judicially and not against the successful party except for some reason connected with the case": see Ruddock v Vadarlis (No 2) [2001] FCA 1865 ; (2001) 115 FCR 229 (" Ruddock v Vadarlis (No 2) ") at 234 per Black CJ and French JJ. Ordinarily, if a successful party is denied an order for costs in whole or part, it is because the party's conduct of the proceeding in some respect or respects makes it just or reasonable to do so: see, e.g., Ruddock v Vadarlis (No 2) at 236 and Latoudis v Casey [1990] HCA 59 ; (1990) 170 CLR 534 at 544 per Mason CJ. 5 A successful litigant is, therefore ordinarily entitled to an award of costs: see, e.g., Oshlack v Richmond River Council [1998] HCA 11 ; (1998) 193 CLR 72 at 86 per Gaudron and Gummow JJ; at 97 per McHugh J (dissenting in result) and 120-1 per Kirby J. The inability of the unsuccessful party to meet costs is generally not a sufficient reason to deprive the successful party of a costs award. No evidentiary foundation exists for a finding of futility. Even if the proper inference to be drawn from the applicant's detention is that such an order would be futile, I do not consider that would amount to special circumstances warranting the making of a different order. Here the applicant chose to comprehensively argue his case and expose himself to the risk of costs. Having failed, any futility of collection is not a reason for an order to the contrary. The appellants have not shown a proper basis to justify the Court in making other than the usual costs order. 6 For the foregoing reasons, since the appellants have failed on the appeal, I would order that the appellants pay the first respondent's costs of the appeal. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | inability to pay costs claim costs payable by unsuccessful party migration |
The first respondent, to which I will refer as "GECS", and the second respondent, to whom I will refer as Mr Johnson, have the same legal representation which is different from that of the third respondent, to which I will refer as "GECA". GECS and Mr Johnson have played a subsidiary role in the proceeding, both generally and on the application for security in particular. For example, counsel for GECA alone cross-examined Instyle's witnesses, read the only evidence that was led on behalf of any respondent, and made oral submissions (GECS and Mr Johnson joined in the written submissions that she made). By their notice of motion filed on 10 August 2009, GECS and Mr Johnson sought security in the sum of $80,000 (elsewhere $80,457 is mentioned), and by its notice of motion filed on 7 August 2009 GECA sought security in the sum of $100,000, in each case up to and including discovery. By amended notices of motion filed on 12 October 2009 and 8 October 2009 respectively, the amounts were increased to $120,000 and $200,000. Instyle submits that even if all of its other submissions were to be rejected, there is a proper basis for the Court to reduce the level of security to be ordered in view of what Instyle describes as an apparent doubling up, and, in particular, a question mark over the likely amount of the costs of GECS and Mr Johnson (Instyle points out that their defence is identical to that of GECA, even to the extent of common anomalies). In addition, s 56 is not confined by reference to a corporate applicant or to the costs of the respondent. More importantly, there can be circumstances in which it may be appropriate to order the provision of security even though there is no question of the applicant's capacity to satisfy an adverse costs order, such as where the applicant has no assets within the jurisdiction: see, for example, Austin, Nichols & Co Inc v Lodestar Anstalt [2009] FCA 1228. As Perram J observed, however, in Soul Pattinson Telecommunications Pty Ltd v Subex Americas Inc [2009] FCA 651 at [6] , where the only basis asserted for the making of an order under s 56 of the FCA Act is an alleged inability of the applicant to satisfy a potential costs order, it may be difficult in practice to discern a difference in the operation of the two provisions. In the present case the respondents do not seek to establish that there is a difference in the application to the circumstances of the case of s 1335(1) of the Corporations Act and s 56(1) of the FCA Act. It is useful, however, to outline the nature of the case that Instyle advances in its further amended statement of claim (FASC). The following account is of the allegations made in that document. The Green Building Council of Australia Ltd (GBCA) was incorporated in October 2002. It publishes and promotes an environmental performance rating system for the property industry known as the "Green Star" rating system. This is based on an award of credit points for environmental performance in various categories of assessment. One of these is the "Materials" category, a subcategory of which includes office furniture and fittings such as chairs, workstations and partitions. Credit points can be awarded for these items if they are certified by a third party recognised by the GBCA. One such third party is GECA. GECA issues and publishes environmental product standards (GECA Standards). GECA receives royalties from the sales by suppliers of products that GECA has certified as complying with an applicable GECA Standard. GECA is the legal owner of approximately 16.7% of the issued shares in GECS. GECS trades under the name "Environmental Assurance". GECS is contracted "on an exclusive basis" by GECA to assess and, where applicable, to verify compliance of products with applicable GECA Standards. It issues "environmental product declarations" containing a "certification of compliance" of suppliers' products with the applicable GECA Standard, and issues licences which allow those suppliers to use the "Good Environmental Choice" label. Mr Johnson indirectly holds a substantial proportion of the issued shares in GECS, of which he is the managing director and sole director. He was the founder of GECA, of which he is a director and was formerly the chairman. Instyle supplies fabrics for use in the upholstery of office furniture. Its fabrics have not been assessed for compliance with the GECA Textiles Standard, nor for the "Good Environmental Choice" label. Corporate Express Australia Limited (Corporate Express) was engaged in the business of selling upholstered task and visitor chairs, which were capable of being assessed and verified as compliant with the GECA Furniture Standard. Corporate Express engaged GECS to assess whether its EXP branded task and visitor chairs (EXP Chairs) complied with that Standard. Corporate Express had advised GECS and Mr Johnson that it wished to incorporate Instyle's fabric as a component in its EXP Chairs. That fabric component contributed less than 10% to the weight of the finished EXP Chairs. According to the GECA Furniture Standard, such a fabric component did not need to comply with the Textiles Standard or be certified for any of a specified set of environmental labels in order for the EXP Chairs to be certified as compliant. Nonetheless, GECA, GECS and Mr Johnson advised Corporate Express that even though the fabric component contributed less than 2% in weight of the EXP Chairs, the EXP Chairs could not be certified as complying with the GECA Furniture Standard unless the fabric used in upholstering the chairs had either been certified as complying with the GECA Textiles Standard or had been assessed and verified as complying with that Standard. That advice was, among other things, misleading or deceptive conduct in trade or commerce, and constituted a contravention of s 52 and other provisions of the Trade Practices Act 1974 (Cth) (the TP Act), as well as certain provisions of the Fair Trading Act 1987 (NSW) (the FT Act). The conduct of GECA, GECS and Mr Johnson was in all the circumstances unconscionable and in contravention of s 43 of the Fair Trading Act 1987 (NSW). In reliance on the advice it was given, Corporate Express declined to advertise Instyle's product as a component of its EXP Chairs in its catalogue, approximately 80,000 copies of which were to be distributed Australia wide in or about August 2009. Corporate Express also advised Instyle that its fabrics could not be included as a component of the EXP chairs until those fabrics had been given a GECA certification. Separately, GECA and GECS have issued environmental product declarations (EPDs) to suppliers whose upholstered furniture has been certified as compliant with the GECA Furniture Standard, including the suppliers listed in Annexure 1 to the FASC. The EPDs contain certain statements, the effect of which is that in order for items of upholstered office furniture to be fully certified under the GECA Furniture Standard, the fabric component must be certified by the GECA or other appropriate label, and that in order for certified furniture to accrue the maximum available credit points under the Green Star rating system, the fabric component must be a "GECA or related certified fabric". In this respect GECA and GECS have contravened ss 52 and 53 of the TP Act and ss 42 and 44 of the FT Act. Because of the EPDs, the suppliers named in Annexure 1 to the FASC have not used and will not use Instyle's fabrics in GECA certified products. By reason of the conduct pleaded, Instyle has suffered and will continue to suffer loss and damage and unless restrained the respondents will continue to engage in that conduct. For such motions, the hearing was lengthy and involved extensive evidence, including the testimony of three accounting experts, touching Instyle's capacity to pay. I was not left with a clear impression at the conclusion of the hearing as to whether Instyle would or would not, at the relevant future time, be able to satisfy an adverse costs order. In order to resolve that question one way or the other I would need to examine the evidence with painstaking care. Because of an offer made by Michael Peter Fitzsimons and the view that I take of it as discussed below, I have not embarked on consideration of the voluminous and detailed evidence on Instyle's capacity to pay. Before discussing Mr Fitzsimons's offer I will refer to a threshold issue that was raised. It emerged that the respondents have indemnity insurance in respect of the claims that Instyle makes against them. The detail of the insurance was not in evidence but the parties proceeded on the basis that an insurer has retained the two firms of solicitors who represent the respondents and will be indemnifying the respondents in respect of their legal costs, so that they will not in fact be out of pocket. Instyle submits that in these circumstances there will be no "costs of the defendant" for the purposes of s 1335(1) of the Corporations Act . Uninstructed by authority, I would have thought that the expression "the costs of the defendant" in s 1335(1) refers to the costs of the defendant as between defendant and plaintiff, and that insurance is irrelevant. That is to say, I would have thought that if the defendant has a solicitor on the record who is charging someone fees and disbursements there are "costs of the defendant" even if that solicitor is in fact retained by an insurer to which the solicitor addresses his or her invoices. Instyle relies on Remm Construction (SA) Pty Ltd v Wallbridge and Gilbert Pty Ltd (1991) 162 LSJS 99; [1991] SASC 3090 ( Remm) . In that case the relevant defendants were engineers. They had professional indemnity insurance, or at least the application for security before the Master proceeded on the assumption that they did with respect to the causes of action pleaded against them. The Master nonetheless ordered the plaintiff to provide a security. The plaintiff appealed. Mullighan J reviewed the authorities. There was an inconsistency of approach between that taken by Ormiston J in Irwin Alsop Services v Mercantile Mutual Insurance Co Ltd [1986] VR 61 ( Irwin ) and that taken by Brooking J in Prime Forme Cutting Pty Ltd v Baltica General Insurance Co (1990) 8 ACLC 29 ( Prime Forme ). In Irwin, the defendants were two pools of insurers. Ormiston J had described them (at p 65) as "pre-eminently loss-bearing and loss-sharing entities, whose raison d'être is their ability to shoulder the losses of others albeit on a commercial basis". His Honour expressed the opinion (at p 66) that "it is not ordinarily appropriate to grant security for costs in favour of an insurer defendant, certainly where the existence of a relevant policy is not in dispute". In Prime Forme, Brooking J disagreed, saying that the fact that the party seeking security had substantial means or was liable to be sued because of its business or profession was irrelevant. His Honour considered (at p 32) that s 533(1) of the Companies (Victoria) Code (a predecessor of s 1335(1) of the Corporations Act ) should not be viewed as a provision designed to protect those unable to protect and cover themselves against the costs of litigation. Rather, his Honour thought that the provision was designed to protect defendants sued by insolvent companies against the risk that an order for costs in favour of the defendants would prove fruitless. In Remm, Mullighan J (at p 111) accepted the views of Brooking J as "stating the current position", although he distinguished Irwin as a case in which the insurer was the defendant and in any event said that a close reading of Ormiston J's reasons in that case showed that his Honour had not regarded the presence of insurance as determinative against the ordering of security. Mullighan J concluded that the Master had not erred in exercising his discretion to order security for costs. The decision of Mullighan J in Remm does not support Instyle's argument and is in fact against it. A solicitor who had the benefit of professional indemnity insurance sought security in Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377 ( Livingspring ). The plaintiff urged the court to take the insurance into account. Let it be assumed that the insurer has agreed to indemnify the defendant against the plaintiff's claims. The insurer should be regarded as having exactly the same entitlement as the insured defendant to protection against the risk that the plaintiff will be unable to meet an adverse costs order (cf [ Prime Forme at p 32]). If, as [the plaintiff] argued, the judge had in fact been expressing that view, there would have been no error in doing so. It may be noted, incidentally, that if Instyle's submission had been sustained, the respondents could have relied on s 56 of the FCA Act which is not subject to the same limitation. It is first necessary to note his role in relation to Instyle. The issued share capital of Instyle comprises 10,000 Class A shares, 100 Class C shares and 110,000 Ordinary shares (according to a company extract in evidence, there were previously Class B shares but they no longer form part of the share structure). Mr Fitzsimons holds all 100 Class C shares and 62,000 (56.36%) of the Ordinary shares. A company called Cylinder Investments Pty Limited (Cylinder) holds all 10,000 Class A shares and 48,000 (43.64%) of the Ordinary shares. Mr Fitzsimons is the sole director of Instyle and has been described in the evidence as its founder and Managing Director. According to an affidavit of Mark Fraser, the solicitor for Instyle, Cylinder is the trustee of a discretionary trust and Mr Fitzsimons is the principal beneficiary under that trust. The company extract shows Cylinder as beneficial owner, but there is evidence that this is a mistake and that steps will be taken to correct the record. The constitution of Instyle is not in evidence but I infer from the evidence referred to above that Mr Fitzsimons is the person who stands to benefit from success by Instyle in the proceeding, by reason of his own shareholding and through the discretionary trust. First, the respondents do not contend that Instyle is insolvent. Their case is that Instyle will be unable to satisfy an adverse order for costs when the hypothetical time for payment arrives. That case conforms to the terms of s 1335(1) of the Corporations Act but its limited nature is nonetheless significant. Third, Instyle has pressed for an early final hearing and expeditious progression of the matter. The respondents contended that they should not be required to file their defences until the question of security was resolved. In order that progression of the proceeding would not be delayed, Instyle in fact provided security. On 20 August 2009 I ordered that if Instyle paid into Court, without admissions, $188,717.03 by 21 August 2009 as security for the respondents' costs, but subject to the outcome of the motions for security, the respondents were to file and serve their defences by 1 September 2009; and the sum of $188,717.03 was to be invested in a separate interest-bearing investment. It is difficult to avoid the impression that if the parties had taken a little time for cool and calm consideration of their respective positions, the contest over security may have evaporated. The solicitors' letter asked the respondents' solicitors to advise whether the offer was acceptable, in which case they would prepare a deed for approval. On the same day Kennedys, the solicitors for GECS and Mr Johnson, replied to the effect that their clients were entitled to an assurance that their clients' costs would be recoverable in the event they were successful. Later the same day (5 August 2009), Instyle sought further particulars of the grounds on which the respondents relied for their entitlement to security for costs and the quantum of the anticipated costs, noting that after receipt of that information they would seek instructions as to whether Instyle was prepared to offer security "in addition to that which has already been offered by Mr Fitzsimons or to offer security in an alternative form". On 7 August 2009, Kennedys advised Instyle's solicitors that they adopted the emailed response that had been made on 5 August 2009 by GECA's solicitors (see [43] above). That seems to have been the position when the two notices of motion were filed on 7 August and 10 August 2009. On 11 August 2009 Instyle's solicitors wrote to GECA's solicitors advising that Mr Fitzsimons remained "willing to provide his personal guarantee or to be joined as a party to the proceedings if that is more convenient". However, Instyle's submissions at the conclusion of the hearing cast some doubt on this. At no time was the information sought by the respondents in relation to Mr Fitzsimons's financial standing and capacity provided, or any charge or mortgage offered. The Master ordered the companies to provide security. On appeal, Connolly J, with whom Campbell CJ and Demack J agreed, noted that: there was reason to believe that none of the three corporate plaintiffs would be able to pay the defendants' costs if they were successful; and if any of the plaintiff companies failed, the individual plaintiff must also fail. An individual who conducts his business affairs by medium of a corporation without assets would otherwise be in a position to expose his opponent to a massive bill of costs without hazarding his own assets. The purpose of an order for security is to require him, if not to come out from behind the skirts of the company, at least to bring his own assets into play. If however he is already available for whatever he is worth, the object of the legislation is seen to be satisfied. It seems to follow from the dictum of Connolly J that if the present respondents can be placed in a position in which they will enjoy the same remedies against Mr Fitzsimons in respect of costs as they would if he were the applicant instead of Instyle, the object of s 1335(1) of the Corporations Act would be achieved and Mr Fitzsimons's own worth would be "not really relevant". The basis of this approach is the proposition that the impecuniosity of an individual is not a ground on which to order him or her to give security for costs: see Cowell v Taylor (1885) 31 ChD 34 at 38; Pearson v Naydler [1977] 1 WLR 899 at 902; Barton v Minister for Foreign Affairs [1984] FCA 89 ; (1984) 2 FCR 463 at 469. In Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates (Australia) Pty Ltd (1986) 13 FCR 46 , Burchett J was faced with circumstances similar to those in Harpur in that the individual who was the only shareholder in the applicant company with a substantial interest in any proceeds of the litigation, was also an applicant. It was common ground that both he and the company were insolvent. Nonetheless, his Honour declined to order the company to provide security. His Honour referred to the dictum of Connolly J to the effect that in such circumstances the individual's worth was "not really relevant". What was relevant, his Honour said, was that the company was "not a stalking horse to enable someone else to evade personal responsibility" (at 53). Burchett J said that if the individual accepted responsibility, he or she, even though impecunious, was entitled to rely on the general rule that poverty is no bar to a litigant. In other cases too the view has been taken that provided the individual behind the corporate litigant or the trust of which the corporate litigant is trustee assumes liability for the costs, the purpose of the statutory provision is served: see Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 at 306 (Byrne J); Gentry Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1992) 8 ACSR 405 at 415 (Cooper J) ( Gentry Bros ) and Clyde Industries Ltd v Ryad Engineering Pty Ltd (1993) 11 ACLC 325 at 328 (WASCFC) ( Clyde Industries ). In Gentry Bros Cooper J said that the making of an order which secures the personal liability of the shareholders "is in itself the provision of security" (at 415). In Erolen v Baulkham Hills Shire Council (1993) 10 ACSR 441 Powell J disagreed with the views expressed by Byrne J in Mantaray and by Cooper J in Gentry Bros to the effect that once the shareholders had agreed to accept personal liability for any judgment for costs, the statutory purpose of s 1335 was fulfilled. His Honour considered (at 456) that that approach would be "a fetter" on the Court's discretion. In my opinion the cases to which Powell J referred show only that ordinarily it is to be expected that the discretion will be exercised in favour of the company. I can conceive of circumstances in which it may be appropriate to insist on more than the personal liability of those who stand to benefit from the company's proceeding. An example would be where they had misappropriated to themselves and dissipated the company's property, and therefore destroyed its capacity to pay. I accept that the fact that the shareholder or other person who stands to benefit from the action takes on a personal liability does not necessarily conclude the question against an order for the provision of any further security: cf Intercraft Cabinets Pty Ltd v Sampas Pty Ltd (1997) 18 WAR 306. In Clyde Industries the Acting Master had ordered that the plaintiff company pay into Court $5,000 or provide a bank guarantee in that sum and provide a written guarantee by the company's directors (which they had offered) to indemnify the appellant for its taxed costs. The Full Court of the Supreme Court of Western Australia dismissed the company's cross appeal. However, the Full Court appears to have treated the relevant ground of cross-appeal only as being that the order for provision of security in the sum of $5,000 would stultify the action. The respondents rely on KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 ( KP Cable ) and Avspares Pty Ltd v Skywest Aviation Pty Ltd (1997) 24 ACSR 272 ( Avspare s). In KP Cable , Beazley J, when a judge of this Court, reviewed the authorities, expressed disagreement with Powell J, and noted her concurrence with what was said by Byrne J in Mantaray and by Cooper J in Gentry Bros . Her Honour did so on the basis that all that was being said in those two cases was that "the offer of security by way of a guarantee from the directors or shareholders or other persons interested in the outcome of the litigation was a factor, which could be decisive in a given case, to be considered in determining whether any other form of order for security for costs should be made" (at 204). Beazley J concluded that the question for her to decide was whether the respondents should be deprived of the provision of security such as cash or a charge over assets merely because such an offer had been made. She thought that they should not be, noting that one of the individuals concerned had rugs and antiques which that individual valued at $30,000 and which were not necessary for the individual's daily living needs or for the purposes of her earning a living. Her Honour observed that there was no reason why they should not be charged to the extent of the security that her Honour proposed to order. With respect to Beazley J, as will be seen I take a different approach to the exercise of the discretion in the present case. In Avspares , the company was the only applicant and the husband and wife who stood behind it indicated a preparedness to assume personal responsibility by way of guarantee or otherwise for the costs and offered to secure the amount by charging their motor vehicles and furniture and house contents. Tamberlin J thought that the value of those assets would be sufficient to meet the amounts sought by way of security. His Honour considered that the proceeding should be permitted to continue provided the two individuals accepted responsibility for the costs and secured the amount sought by a charge over their personal assets. In view of the fact that the offer made included an offer of a charge, Tamberlin J's decision in Avspares is distinguishable. An objection to the insistence on a requirement of anything over and above the personal liability of the individual concerned is that the respondent obtains an advantage, and the individual is subjected to a disadvantage, that would not be the case if the individual had been the applicant. I note that in the following two cases there was no requirement that the individuals give a charge or other security beyond their deed of guarantee or their undertaking to the Court. In Memutu Pty Ltd v Lissenden (1983) 8 ACLR 364 at 366 Rogers J fixed on an undertaking to the Court that the individual would make himself personally liable to indemnify the plaintiff in respect of any order for costs in favour of the defendant up to a stipulated sum. In Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd (1988) 79 ALR 634 (Appleglen ) at 635-6, Pincus J determined upon a deed of guarantee executed by the directors of the applicant company, which was the trustee of a family trust, subject to a monetary limit. As an alternative, he has offered to submit to being joined as a party and, by implication, to the making against him of any order that is made against Instyle for payment of the respondents' costs. Mr Fitzsimons has resisted, on grounds of confidentiality, disclosure of his financial affairs, although some details emerged incidentally from the evidence. He has a 1/100 share of lot 21 DP718774 at Mascot. Apparently there is a lease to Instyle. Apparently Instyle carries on its business there. The other 99/100 share is owned by Carolyn May Patterson. Mr Fitzsimons and Ms Patterson own their respective shares as tenants in common. The property is subject to a registered mortgage to St George Bank Limited. Mr Fitzsimons and Ms Patterson own as joint tenants Lot 1 DP 822332 and Lot 1 DP 29787, both in the Local Government area of Randwick, Parish of Botany, and both subject to two mortgages to St George Bank Limited. The evidence does not reveal the values of these properties or the amounts now secured by the mortgages. There could be difficulty in realising Mr Fitzsimons's interest in them. But according to the view that I take, this does not matter. It would be possible to order Instyle to provide security in the form of a deed of guarantee (executed by Mr Fitzsimons) as has happened in certain other cases, such as Appleglen and Gentry Bros . The respondents would have to sue Mr Fitzsimons on the guarantee. In this respect they would not be in as a favourable a position as they would be if Mr Fitzsimons, rather than Instyle, had been the applicant. There is a question whether, in accordance with his alternative offer, Mr Fitzsimons can be joined as a party for no purpose other than that of rendering himself liable to an order for costs. I raised this question with the parties, but they have not addressed it in submissions. Paragraph (b) is wider than para (a), but it is questionable whether it extends to the joinder of a party who had no claim for relief against any of the respondents either at the commencement of the proceedings or at the time of hypothetical joinder. The Court has power to order a non-party to pay costs under a general provision of the kind found in s 43 of the FCA Act: see Knight v F.P. Special Assets Limited [1992] HCA 28 ; (1992) 174 CLR 178. Such an order was made in Oz B and S Pty Ltd v Elders IXL Ltd [1993] FCA 371 ; (1993) 117 ALR 128 , but there were special circumstances in that case. As far as I am aware, there would be no proper basis on which to make such an order against Mr Fitzsimons in the present case, in the absence of a submission to such an order by him. In my view Mr Fitzsimons evinced a willingness, at least at the outset, to place himself in the same position as Instyle. To that end, he should be given an opportunity of proffering an undertaking to the Court consistently with the position that he then took: to pay any costs that Instyle is ordered to pay; and to submit to the making of an order that he do so. If he does so, the usual constraints against alienation of assets will apply to him and there is no occasion to make any further order in that respect. The following remarks assume that the undertaking will be given. The respondents will have obtained security --- indeed, security unlimited in amount. It does not follow, however, either generally or on the particular facts of the present case, that they should have their costs of the motions. Instyle may consider that it should have its costs in view of the offer that it made. However, this is not necessarily so either. First, Instyle appears, at least initially, to have acquiesced in or not to have contested, the proposition that the respondents were entitled to be supplied with some information as to Mr Fitzsimons's capacity to pay, as distinct from advancing the line of reasoning that I have outlined above. Instyle's chief concern seems to have been with the confidentiality of the information. Second, the offer to be joined as a co-applicant was apparently made after the notices of motion were filed and served. Third, nearly the whole of the hearing was devoted to the issue of Instyle's capacity to pay, a question I have not had to resolve, and only a small part related to the present issue. Fourth, an undertaking to the Court was not what was proffered. Fifth, it is unclear but arguable that the offer of the deed of guarantee or of joinder as a party, although initially unqualified, became by the time of final submissions contingent on a finding of Instyle's incapacity to pay --- a matter that remains unresolved. Sixth, Instyle lost on the insurance issue. My present and tentative view is that there should be no order as to costs but, as indicated, I will hear the parties on the question if necessary. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | security for costs motions by respondents for order for security corporate applicant s 1335(1) of corporations act 2001 (cth) s 56(1) of federal court of australia act 1976 (cth) offer by person standing to benefit from the proceeding of a deed of guarantee or to be added as a party against whom order for costs could be made whether, in addition, he must supply particulars of his financial position and a charge or mortgage over assets held: on the facts it would suffice that he provide an undertaking to the court to pay and to submit to an order of the court to pay costs |
The Agreement involved a sale to First United of Forestview's interest in a joint venture and in two shopping centres on land in Forrestfield. Complications have arisen which have delayed settlement of the sale and the Agreement was not concluded within three months from its inception. The Agreement, in its terms, was capable of subsisting for more than three months. For that reason the prior approval of the Court, a resolution of creditors or the approval of a committee of inspectors was required under s 477(2B) of the Corporations Act 2001 (Cth) (the Act) before the Agreement was entered into. 2 The liquidators now apply to the Court for an extension of the period within which to seek approval of the Agreement from the Court and also ask for an order that the Court approve the Agreement. The extension application is sought under s 1322(4)(d) of the Act. 3 In my opinion s 1322(4)(d) does not authorise the Court to extend time under s 477(2B). That is because s 1322(4)(d) provides for extension of periods within which certain things have to be done under the Act. Section 477(2B) defines no such period. It merely requires prior approval of the class of agreement to which it applies. 4 Despite the difficulty associated with the application of s 1322(4)(d) to approvals under s 477(2B) , retrospective approval can be effected in other ways and a declaration made that the Agreement was not invalid notwithstanding the absence of prior approval. The liquidator may be directed, under s 479(3) of the Act, to act as though the Agreement had been approved. The Court may in the exercise of its implied incidental power and its power under s 23 of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act), approve the Agreement. It may also, in the exercise of its power under s 1322(4)(a) of the Act, declare the entry into the Agreement and the Agreement not to have been invalid for want of prior approval. For the reasons that follow I am prepared to make orders approving the Agreement, directing that the liquidators may act on the Agreement as though it had been approved prior to execution and declaring that their entry into the Agreement and the Agreement itself are not invalid. Its directors are Norman Philip Carey and Karen Sandra Carey. Mr Carey and a related company, HECA Nominees Pty Ltd, each holds one share in the company. 6 Up until 27 October 1997, Forestview was the registered proprietor of two parcels of land at Forrestfield, about 15 kilometres south-east of the Perth central business district. A shopping centre stands on the land. The buildings comprising the shopping centre are known as Forrestfield Market Place and Forrestfield Forum. There is a Woolworths Supermarket at Forrestfield Market Place and a Coles Supermarket at Forrestfield Forum. (b) Lot 109 on Plan 17919 being the land comprised and described in Certificate of Title Register Book Volume 1940 Folio 499 and referred to as the "Stage Two Land". The parties each held a 50% interest in the joint venture. 8 Under cl 2.8 of the Joint Venture Agreement it was provided that upon the satisfaction of certain conditions set out in cl 2.1(b) relating to Foreign Investment Review Board approval of the agreement, Forestview would transfer one half of its interest in the Stage One Land to First United so that First United would hold a three quarter interest in that land. First United was to pay $1,875,000 in consideration of that transfer (cl 12). Under cl 10 of the Joint Venture Agreement, First United was entitled to an option to acquire an undivided three quarter interest in the Stage Two Land for a purchase price of $1,500,000. On 27 October 1997, Forestview transferred a three quarter interest in the Stage One Land and the Stage Two Land to First United and the Joint Venture Agreement terminated. 9 On 17 November 1997, Forestview and First United entered into another joint venture agreement, here referred to as the Joint Venture Deed, under which they agreed that their respective interests in the joint venture would be 75% as to First United and 25% as to Forestview. 10 Clause 13 of the Joint Venture Deed dealt with "events of default". One such class of events was an "Insolvency Event" (cl 13.1(a)). An insolvency event was defined in cl 1.1 of the Joint Venture Deed and included appointment of an administrator. The option may be exercised at any time after the occurrence of the event of default under clause 13.1. Failing agreement the purchase price of the defaulting participant's interest in the joint venture would be determined by an expert pursuant to cl 15 of the Joint Venture Deed (cl 13.6). Clause 15 made detailed provision for the appointment of an expert and a valuation process. 11 On 18 December 1998, Sandhurst Trustees Ltd registered a mortgage over the whole of the Stage One and Stage Two Land. It was also the holder of a fixed and floating charge over the assets of Forestview. The mortgage and the charge were assigned in 2000 to Perpetual Nominees Ltd as custodian of the ING Mortgage Pool for ING Funds Management Ltd as the responsible entity of the ING Mortgage Pool (ING). On 13 March 2006, Messrs Korda, Winterbottom and Zohar of KordaMentha were appointed as joint and several receivers and managers of Forestview pursuant to the charge. 12 On 6 June 2006, First United sent a notice to Forestview and to the receivers and managers that it was exercising the option under cl 13.2 of the Joint Venture Deed on the basis that Forestview was a defaulting participant. It stated that it agreed to comply with all the conditions of the option as set out in the Joint Venture Deed. 13 On 7 December 2006 by order of this Court in the principal proceedings in which this interlocutory application is made, Forestview was wound up in insolvency on the application of the Australian Securities and Investments Commission. Simon Andrew Read, Clifford Stewart Rocke and Ian Menzies Carson were appointed as joint and several liquidators. 14 Prior to the appointment of the liquidators, Mr Paul Fletcher of Solomon Brothers Solicitors attempted to negotiate, on behalf of First United, a purchase of Forestview's interest in the joint venture. That negotiation was not successful. Given that any surplus from a sale of Forestview's interest in the joint venture would flow to Forestview he sought to negotiate with the liquidators upon their appointment. 15 On the same day that the liquidators were appointed, First United issued proceedings in the Supreme Court of Western Australia seeking, inter alia, specific performance of its entitlement to purchase Forestview's interest in the joint venture pursuant to the option. 16 On 31 October 2007, Andrew John Birch was appointed, by order of this Court, as a liquidator of Forestview in place of Messrs Rocke and Carson. Mr Read continued. This followed upon a dissolution of the original liquidator's firm: Rocke (as liquidator of ACN 080 794 636 Pty Ltd), In the matter of ss 502 and 506 (4) of the Corporations Act [2007] FCA 1687. 17 According to an affidavit sworn on 10 December 2007 by Mr Read, it became apparent upon the appointment of the liquidators in December 2006 that there were three principal issues requiring resolution before First United could exercise the option and take a transfer of the Stage One and Stage Two Land. 18 Mr Read obtained legal advice about First United's entitlement to enforce the option. By a valuation dated 24 July 2007, Messrs Christie and Manson of Christie Whyte Moore, provided a valuation of the assets of the joint venture including the Stage One and Stage Two Land. In their opinion the market value of the Forrestfield Market Place and Forrestfield Forum Shopping Centre was $34,350,000 exclusive of GST. Mr Read obtained advice from his solicitors in relation to the validity of the Adjustment Claims and made his own assessment of their quantum based upon the books and records of Forestview and information provided to him by First United. After considering the valuation and the Adjustment Claims he formed the view that after deducting Forestview's portion of the indebtedness of the joint venture parties to ING and the Adjustment Claims, there would be nothing remaining to be paid to him as liquidator for the benefit of Forestview's creditors. 19 Following discussions with First United, the liquidators, on behalf of Forestview, entered into an agreement with that company dated 31 August 2007. It has prepared a lengthy Deed of Acknowledgement and Release which would require, inter alia, that First United and Forestview release any claim they may have to a contingency amount of $500,000 retained by the receivers and managers against the possibility of litigation threatened against them by Mr Carey. Discussions in relation to that aspect of the matter and other matters have been ongoing for some weeks as a consequence of which the financier for First United's purchase of Forestview's interest in the joint venture has said it is unwilling to proceed to settlement unless approval of the Agreement is obtained pursuant to subs 477(2B) of the Act. In his affidavit Mr Read expressed his hope that subject to a resolution of the matters involving ING, the settlement and transfer of Forestview's interest would occur shortly. 22 On 1 November 2007, Mr Carey, who is a director of Forestview, wrote to Mr Read expressing his view that the Adjustment Claims were fabricated and had no substance and that the valuation did not accurately reflect the value of the land. Mr Read exhibited a copy of the letter. On 26 November 2007, he informed Mr Carey that in his view a substantial amount of the Adjustment Claims were able to be substantiated and that the valuation was prepared in accordance with normal valuation methodologies. He received no further correspondence from Mr Carey or any other person in relation to that issue. 23 On 10 December 2007 Messrs Read and Birch filed an interlocutory process in this Court applying for retrospective approval of the Agreement with First United. The matter came on for hearing yesterday and judgment was reserved until today. Pursuant to subsection 477(2B) of the Act, the applicants may enter into the Agreement on behalf of Forestview. Section 477 sets out the powers of liquidators. It established a process for determination of the purchase price which was to be by agreement or by the opinion of an appointed expert (cls 2, 3, 6 and 7). 29 Clause 12 of the Agreement provided that First United would pay a once only amount to Forestview of $25,000 upon execution of the Agreement as a non-refundable deposit against the purchase price of the Stage Two Land. The stated purpose of the deposit was to put Forestview in funds "... to enable it to investigate the First United Adjustment Claims and to put submissions to the Expert with respect to determination of the purchase price ...". Clause 14 of the Agreement required each party to make any submissions to the expert within 14 days from the date of the expert's appointment. On its face the Agreement was capable of subsisting for more than three months and thus required approval pursuant to s 477(2B) of the Act. By operation of s 477(2B) therefore, entry into the Agreement would have required prior approval by the Court, a resolution of creditors or a committee of inspection. No such approval was obtained. 32 The liquidators rely upon s 1322(4)(d) of the Act and seek an extension of "the period for making an application under s 477(2B)" seeking approval that the plaintiffs may "enter into" the Agreement dated 31 August 2007. Is the order intelligible? 2. If yes, is it within the power conferred on the Court by s 1322(4)(d)? 33 The relevant ordinary meaning of the word "period" is "the time during which anything runs its course; time of duration": Shorter Oxford English Dictionary (5 th ed, Oxford University Press, 2002). The thing required to be done under s 477(2B) by the liquidators before entering into the Agreement was to obtain the requisite approval. There was no "period" specified for doing that thing. It was not a case of having 14 days after execution of the Agreement to apply for approval. What s 477(2B) required was prior approval. The order proposed by the liquidators, in my respectful opinion, lacks any sensible meaning. That answer to the first question is, of course, directly related to the kind of order that may be sought under s 1322(4)(d). If there is no period to extend, then s 1322(4)(d) has no application. This does not mean, however, that the Court cannot give what amounts to a retrospective approval to the Agreement. 34 Before considering that alternative, reference should be made to authorities which have relied upon s 1322(4)(d) to extend the time for approval for entry into an agreement and to confer such approval after the event. In so doing, I note that those cases do not indicate that any question was raised about the difficulty to which I have referred. I should add that in none of the cases was there a contradictor. 35 In Empire (Aust) Nominees Pty Ltd v Vince (2000) 18 ACLC 738, the liquidators of the company had entered into an agreement with a litigation funder which should have had prior approval under s 477(2B). The failure to obtain approval was innocent and based upon ignorance and oversight. (2) That pursuant to s 1322(4)(d) of the Law the period for the making of an application under s 477(2B) of the Law for approval of the agreement is extended. (3) That pursuant to s 477(2B) of the Law approval is granted to the liquidator to enter into the agreement. In retrospectively approving the appointment, Templeman J relied upon s 246(3) of that Act to give directions to the liquidator. In the alternative he relied upon the "inherent powers" of the court. In Re HIH Insurance Group Ltd [2000] NSWCA 374 ; (2001) 19 ACLC 1,102, Hamilton J relied upon Re Associated Travel 1 WLR 547 and Empire (Aust) Nominees Pty Ltd 18 ACLC 738 for the proposition that an approval under s 477(2B) could be "given by the court retrospectively" (at [6]). 38 Recently in Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375 , an order was made pursuant to s 1322(4)(d) that "... the period for making an application under s 477(2B) of the Act for approval of the entry by the plaintiffs into each of the following agreements is extended ...". Orders were also made giving approval to the plaintiff liquidators to enter into each of a number of agreements. A declaration was made under s 1322(4)(a) that none of the agreements in issue in that case was invalid by reason of having been entered into prior to obtaining the approval of the Court. 39 With respect to the different conclusions reached in Empire (Aust) Nominees Pty Ltd 18 ACLC 738 and Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375 , I do not consider that s 1322(4)(d) can be relied upon to extend time under s 477(2B). 40 The general power of the Court to give directions to a liquidator under s 479(3) of the Act will, in my opinion, also allow the Court to approve the liquidator proceeding under an agreement made without the requisite prior approval under s 477(2B). Further, and equivalent to the inherent jurisdiction of the State Supreme Courts, relied upon in Empire (Aust) Nominees Pty Ltd 18 ACLC 738, is the implied incidental power of this Court to make orders which are necessarily incidental to its express powers. Nevertheless, a statutory court which is expressly given certain jurisdiction and powers must exercise that jurisdiction and those powers. In doing so it must be taken to be given by implication whatever jurisdiction or powers may be necessary for the exercise of those expressly conferred. Such a declaration is not a declaration of an existing state of affairs, but rather a declaration which has the legal effect that any relevant invalidity covered by the declaration is cured. In my opinion the Court also has power under s 479(3) of the Act, or by virtue of its implied incidental power (and if need be s 23 of the Federal Court Act), to approve the Agreement by reference to the criteria in s 477(2B) prior to declaring it, under s 1322(4)(a), to be not invalid. 42 The question then arises whether, on the criteria relevant to the application of s 477(2B), the Agreement should be approved by the Court. 43 Section 477(2B) was enacted by the Corporate Law Reform Act 1992 (Cth) as a result of a recommendation of the Law Reform Commission in its General Insolvency Inquiry, Report No 45, 1988, known as the Harmer Report. That report proposed the removal of restrictions requiring approvals to be obtained from the Court on various matters by liquidators and trustees in bankruptcy. It also proposed, that restrictions requiring prior approvals should be placed on, inter alia, "the power to enter into long term commitments such as the mortgaging or leasing of property of the insolvent" (Report Vol 1, [608]). That suggests that the role of the court, the committee of inspection or the creditors (as the case may be) is to review the liquidator's proposal by reference to those criteria. The role of the approving body, at any rate where that body is a court, is to grant or deny approval to the liquidator's proposal rather than to develop some alternative proposal which might seem to be preferable. In view of the general attitude in the Harmer Report that, subject to the particular fetters spelt out in the legislation, liquidators should be given fairly free rein to conduct the winding up. The court's duty is to see that despite the prolongation of the leading the horse home process, the transaction is in the interests of the company, the creditors and the community. That case concerned an agreement of more than three months duration involving compromise of a claim against the company. Mandie J followed principles applicable to the approval of compromises enunciated by Giles J in Re Spedley Securities Ltd (in liq) (1992) 10 ACLC 1,742. On those principles the Court does not rubber stamp the liquidator's proposal. Nevertheless it will not generally interfere unless there is some want of good faith, error of law or principle, or real and substantial grounds for doubting the prudence of the liquidator's proposal. While the principles so adopted by Mandie J and approved by Austin J related to approval of compromises, they seem to me to have wider application to the exercise of the discretion generally under s 477(2B). 46 In my opinion the liquidator's judgment that the Agreement entered into on 31 August 2007 was in the best interests of the creditors was well-founded for the reasons which he gave in his affidavit evidence in this Court. The letter from Mr Carey challenging the Adjustment Claims and the valuation does not raise any substantial basis for doubting the prudence of the liquidator's course of action. In my opinion, pursuant to the power conferred on the Court by s 479(3), I should direct the liquidator to proceed as though the Agreement had been approved prior to its execution on 31 August 2007. 47 In order to remove any doubt as to the efficacy of the Agreement so far as third parties are concerned, I am also prepared to make a declaration pursuant to s 1322(4)(a) that the entry into the Agreement and the Agreement itself are not invalid by reason of the failure to secure the prior approval required by s 477(2B). As an incident of that declaration, I will make an order approving the Agreement. I should add that I am satisfied, for the purposes of s 1322(6), that the approval required was entirely of a procedural nature and that the liquidator acted honestly in entering into the Agreement. I am also satisfied that having regard to his well-founded judgment that the Agreement is in the best interests of the creditors, it is just and equitable that a declaration be made under s 1322(4)(a). I am also satisfied, having regard to the evidence, that no substantial injustice has been, or is likely to be, caused to any person if the order is made. The Agreement dated 31 August 2007 between the plaintiffs on behalf of Forestview Nominees Pty Ltd (Receivers and Managers Appointed) (In Liquidation) and First United Developments Pte Ltd (the Agreement) is approved. 2. The plaintiffs are directed that they may act on the Agreement as though it had been approved by the Court pursuant to s 477(2B). 3. It is hereby declared, pursuant to s 1322(4)(a) of the Corporations Act 2001 (Cth) that the entry by the plaintiffs into the Agreement and the Agreement itself are not invalid by reason of the failure of the plaintiffs to obtain any prior approval required by s 477(2B) of the Act. | winding up court-appointed liquidators entry into agreement able to subsist more than three months no prior approval under s 477(2b) of corporations act 2001 (cth) application to extend "period" for approval under s 1322(4)(d) no relevant period s 1322(4)(d) not applicable power of court under s 479(3) to direct liquidator liquidator directed to act on agreement as though approved implied incidental powers of court prior to approve agreement power under s 1322(4)(a) to declare entry into agreement and agreement not invalid federal court implied incidental power inherent jurisdiction corporations courts and judges |
... The (appellant) claims to be a citizen of the Philippines and arrived in Australia on 9 November 2004. On the same date, she lodged an application for a protection (Class XA) visa with the Department of Immigration. On 13 December 2004, a delegate of the Minister refused to grant a protection visa and on 11 January 2005 the (appellant) applied to the Tribunal for review of the delegate's decision. According to the (appellant's) protection visa application, she was born in Tobod, the Philippines, and lived at an address near Lala (Lanao del Norte Province, Northern Mindanao) for at least ten years prior to her departure for Australia. She is a Christian of Basia ethnicity. She married in 1993, and her husband and four children remain in the Philippines. The (appellant) obtained a Bachelor of Science degree and a teaching qualification in 1995, and was employed as a high school teacher. The (appellant's) claims for protection are contained in her answer to question 40 of the visa application. She claims her father owns some 25 acres of farming land in the Tobod area. She has ten siblings, some who work in agriculture and others in business. The Moro Islamic Liberation Front ("MILF") is active in the (appellant's) province demanding money from the (appellant's) family. The family guarded their property and initially made some payments to the MILF. However, the MILF then demanded larger sums, threatened to kill family members and take over their property if the (appellant) did not pay. They also demanded a portion of the (appellant's) salary as a teacher. The (appellant) left the Philippines because she was scared. She could initially afford to pay only for her own travel. She hopes to bring her entire family to Australia. The Tribunal rejected her application for a protection visa. The (appellant) claimed in her protection visa to have escaped without the rebels noticing. Having found that the (appellant) has not been subject to past persecution the Tribunal had no evidence before it to indicate that the (appellant) held a well-founded fear of persecution from the rebels or other sources for any reason ... . (Clearly, the word "not" has been omitted between the words 'had' and 'been' in the first sentence. The Tribunal concluded that relocation was a reasonable possibility for the applicant. . It is appropriate that I set out her claims in a little more detail. Their activities are very strong in my province. We are scared about that group, and the government does nothing for this problem so we use to take care of our village in shift basis. Day and night we use to (guard) our village, and me and my other family members are very soft, as and when they demands they use to pay some money and manage for some time slowly they MILF. Started demanding big amounts of money, which is not affordable for our family then they started troubling our family saying they will kill all of our family members and take over all of our properties. I scared and left the country for these (reasons) . And my family members are also scared, because I am working as teacher this terrorist group with Jamie Is lamia and they support each other they use to demand some part of my salary every month which is impossible for me since then I stop working life become very difficult to live and survive. They are very furious I know a lot of cases, where they have killed many people. MILF group is very strong and notorious group. If they plan for killing anyone nobody can escape from them. I think they have very good support from some political and police department officials. If always my family members and me fear with these reasons, it not possible any better future and better education for our children. At least cannot live peaceful life in future. Main reason I am the person mainly refused to pay money for them. • Her husband has a modest fish-mongering business. • They have four children. • The appellant's parents operate a small farm near to her home. • Of her eleven siblings her brothers work on the farm and as paid labourers; her sisters work in Manilla in the garment and leatherwear sectors. One sister had returned, or was returning, from Manilla because of the expense of living there. • The appellant said that in the past her family had paid "revolutionary tax" to the rebels on a monthly basis and continues to do so. • The appellant and her family have been singled out by the MILF rebels because of their financial means, derived from her husband's business and her salary as a teacher. • This was also partly because she had herself ceased to pay the tax and had encouraged other members of his family to do so. • The appellant's husband manages to maintain the family using their modest means. • When asked if it would be possible for her to relocate to Manilla, she said that this was not a realistic option as it was almost impossible to find work, given the corruption and nepotism in the country. Others from her region had moved to Manilla but had returned rather than endure the economic hardships of the city. . It may be that she also fears further extortion because of the relatively favourable financial position of her and her husband. It is arguable that a social group may be defined by its members' possession of wealth and/or by their having spoken out against extortion. See Dranichnikov v Minister for Immigration [2003] HCA 26 ; (2002) 77 ALJR 1088. It is not clear that it recognizes that she claimed to fear both violence and financial hardship. The statement also says nothing about persecution based on her membership of a class comprising persons who are relatively wealthy and/or who have spoken out against extortion. Independent evidence discussed with the (appellant) indicates that their activities in the mainly Christian province have met stiff resistance from government authorities, meaning that their capacity to pursue individual persons is necessarily limited by their own limited manpower, and the pressing priorities of securing resources and achieving immediate political/military objectives. The Tribunal was not satisfied that the appellant had come to the 'adverse attention of the MILF rebels as a result of her disapproval of the revolutionary tax ... . The Tribunal made his decision in bad faith. The Tribunal deprived me of the natural justice. The Tribunal denied the evidentiary proof of my claim. The Tribunal's decision did not reflect the material facts of my claim. The Tribunal has given a decision which was preset in the back of its mind. The Tribunal mixed up many facts with this decision which affected the decision. The Tribunal concentrated in particular fact while ignored many other facts in this condition. The Tribunal make up his mind without any inquiry regarding my claim and he did not believe my genuine Convention-based refugee claim. He was clearly correct in so doing. Ground 2 was unsupported by reference to any relevant facts. Grounds 3, 4, 6 and 7 all relate to the facts of the case. They offer no basis for judicial review. Again, the magistrate correctly dismissed them. The magistrate identified the fact that ground 8 also raised an allegation of failure to investigate. His Honour dismissed this ground upon the basis that there was no positive duty on the Tribunal to do so. 23 The magistrate also dealt with a further "ground" raised by counsel for the respondent, namely a possible failure to comply with the requirements of s 424A of the Act. Counsel submitted that this was not a case within s 424A because the relevant evidence appeared to have been derived from information provided to the Tribunal in the course of the hearing rather than from some other earlier document which had not been provided by the appellant for the purposes of proceedings in the Tribunal. In my view the only way in which the magistrate could have determined how particular information had been provided to the Tribunal would be by reference to the transcript or by direct evidence as to the matter. The appellant had made no such complaint, and so there was no evidence to support or contradict it. Whilst recognizing that counsel was trying to be fair and helpful, the issue was not raised in a way which allowed of its resolution. 24 In the course of the hearing of this appeal I became concerned that the Tribunal may not have fully understood the ambit of the appellant's claim, in particular that she claimed to fear economic persecution as well as physical violence, and that such fear was of persecution for political belief (her opposition to extortion) and, arguably, for membership of a social group (those who could pay and/or had spoken out against extortion). Of course, in any case based on economic persecution it would be necessary to show that the relevant extortion was likely to threaten the capacity of the appellant and her family to subsist. However the present question is whether or not the Tribunal identified these questions as part of the appellant's claim and dealt with them. This point was raised in the written submissions made before the magistrate. They were apparently drafted by somebody other than the appellant. Economic hardship is a major theme of that document. The issue was also raised in the appellant's visa application. The magistrate recognized it as an issue at [10] et seq of his reasons. However, because of the way in which he dealt with the various grounds of appeal, he seems not to have considered whether or not the Tribunal had addressed the question. 25 It is of some importance that the Tribunal accepted that the appellant's family had paid the "revolutionary tax", and that she had subsequently counselled her family against doing so. It seems that at some stage, she had also paid the "tax". The Tribunal's reasons for concluding that it was not satisfied that she had ever come to the adverse attention of the MILF rebels were not all relevant to the question of economic persecution. It was hardly relevant to that question that she had not told anybody about her claims concerning extortion, given that the Tribunal accepted that it had occurred. Similarly, her conduct in returning from the United Arab Emirates was not necessarily inconsistent with a fear of economic persecution, given that her family would be exposed to such persecution whether she was in the Philippines or elsewhere. 26 The appellant's fear of economic persecution was a rather more subtle point than was her fear of violence. In the visa application, she claimed that extortion made life financially difficult. One might reasonably have expected the Tribunal to question her about that subject in more detail than it did, had it understood the nature of the claim. That the Tribunal may not have addressed the question is also suggested by the way in which it dealt with the question of relocation. It appears to have decided that it was reasonable for the appellant to relocate, saying that the appellant's siblings were living in Manilla. However the evidence was that one of her siblings had returned from Manilla because she was finding life financially difficult in that city. Secondly, the Tribunal found that the appellant had sufficient resources to enable her to live in Manilla, namely her family's resources and her husband's income. One assumes, however, that if she were to relocate to Manilla it would be with her family. It could hardly be reasonable to expect her to do otherwise. In that case her husband would be deprived of the income from his business and would be forced to look for work in Manilla with the difficulties attendant thereon. Further, the suggestion that as the appellant was a person with professional qualifications and demonstrated resourcefulness, she could make her way in Manilla notwithstanding the corrupt and nepotistic environment, seems to overlook the capacity of such factors to cause difficulties even to the qualified and resourceful. In my view the financial considerations incidental to relocation were addressed in a particularly superficial way. Had the Tribunal appreciated the appellant's concerns about economic persecution, it would have given more attention to the financial implications of relocation. 27 This is a marginal case. I am aware of the need to adopt a fair reading of the Tribunal's reasons, having particular regard to the fact that it is an administrative tribunal and not a court. However, in the end, I have concluded that the Tribunal failed to appreciate the full range of the appellant's claims to refugee status, particularly those aspects which related to financial persecution. I do not suggest that this aspect of the appellant's case was strong, but it nonetheless ought to have been addressed. In my view it was not. The appeal should be allowed. Orders 2 and 3 made on 2 June 2006 should be set aside. In lieu thereof there should be orders that the decision of the Tribunal dated 22 April 2005 be quashed and that the matter be remitted to the Tribunal for further consideration in accordance with law. Should the parties wish to make submissions as to orders, I will hear those submissions. I am inclined to the view that there should be no order as to costs, but I will hear any submissions in that regard. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. | persecution economic hardship whether the tribunal failed to address the appellant's claim of economic persecution migration |
This seeks the exercise by the Court of the power to transfer provided for in s 48 of the Federal Court of Australia Act 1976 (Cth) and O 10 r 1(2)(f) of the Federal Court Rules . It cannot and should not, in our opinion, be defined more closely or precisely. ... The court must, however, be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. The applicant relies on the affidavit of Mr Forgie, director of the applicant, sworn on 26 May 2006 and of Mr Carmady, solicitor, sworn on 6 June 2006. It conducts its business from its head office and factory in Myaree, Western Australia, having factories there, south of Perth and at Mackay, Queensland. Its website indicates it has offices or representatives in the United Kingdom, India, South Africa, North America and the Philippines. At times material to this proceeding the first respondent Mr MacDonald was the branch manager at Mackay. The basis of the claim against the second to fourth respondents is as knowing participants in the acts of Mr MacDonald. The second respondent is Mr MacDonald's wife and the third and fourth respondents are companies in which she is or was a director and shareholder. 5 JLV claims against the respondents compensation orders pursuant to s 1317H of the Corporations Act 2001 (Cth); an account of profits; alternatively, equitable compensation. 6 There are three claims which JLV makes, each of which is based on a allegation that Mr MacDonald acted in contravention of s 182 of the Corporations Act . 7 The first claim is that from 8 April 2004 until 31 October 2005, Mr MacDonald caused JLV (without the knowledge or consent of it or its directors) to place orders for the manufacture/fabrication of frames and shafts by the third respondent, C-Mak Services Pty Ltd. The particulars enumerated in Sch 1 to the claim show that the orders placed and invoices paid are said to total a value of $1.2 million. 8 The second claim is that during the same period Mr MacDonald caused JLV to supply the services of JLV's employees to C-Mak (without any payment) which services were used in the manufacture/fabrication of frames. Schedule 2 of the claim enumerates the value of such services as in the order of $32 000. In submissions at the hearing, counsel for JLV stated that in the event the respondents are prepared to go on oath and explain the time sheets placed in evidence in the affidavit of Mr Forgie, said to support this claim, and if the explanation is satisfactory, it will not be pursued by JLV. That is of significance because JLV states that the relevant JLV employees who were involved include Phillip Vella, Douglas Dillon, Damian Drotherton, Bill Bovey, Johil Jones, Gary Hamelink and Mr MacDonald, all of whom are said by the respondents at material times to have lived in and still to live in Mackay, Queensland. 9 The third claim is that from 8 April 2004 until 31 December 2004 Mr MacDonald caused JLV to place orders for the supply of labour to JLV by C-Mak and to pay invoices from C-Mak for the supply of that labour. The schedule in particularisation shows a sum in the order of $32 250 as in issue under this claim. 10 I accept that for the claims to be made out in terms of s 182 of the Corporations Act , it will be necessary for the applicant to establish not only the factual elements of each claim but also the elements in s 182 , such as the improper character of the factual occurrences. 11 There is no defence presently filed in respect of the amended statement of claim. Consequently the submissions saw that issue as being central to the litigation. In terms of value, it is a small part of JLV's claims. 13 Initially JLV understood that cross-claims would be made by some of the respondents. However, as Mr Arthur's latest affidavit makes apparent, in Queensland, District Court and Magistrates Court actions have been instituted by those respondents (Mr MacDonald, C-Mak and EDM) in lieu of cross-claims. JLV submits that the respondents' change of direction in this respect is precipitate and unexplained and casts doubt on the reliability of Mr Arthur's evidence as to how the respondents will progress their case. It has the consequence in any event that evidence relating to the factual circumstances involved in the proposed cross-claims now represented by the actions has no relevance to the determination of the present motion. It is these whom the respondents say will be necessary witnesses. 15 Additionally, the respondents contend that nothing in Mr Forgie's affidavit suggests any substantial controversial evidence from any witness located in Western Australia. At the most, it is said, certain paragraphs identify three controversial conversations 'of very limited scope'. The first of those conversations is referred to in [13] of Mr Forgie's affidavit. There he deposes to having been informed by a Mr Johnson, one of JLV's directors, that Mr MacDonald had proposed to him that he was prepared to and wished to manufacture the shafts for assembly at JLV's Mackay facility on a subcontract basis while retaining his position in charge of JLV's Mackay facility. Mr Johnson had, in effect, said no to this and that, if the proposal was carried into effect, it would place Mr MacDonald in a position of conflict of interest. In [14] a telephone conversation with Mr Forgie on 14 December 2004 is referred to during which Mr MacDonald proposed he would act as a contractor to JLV. He was informed in or about late December 2004 by Mr Forgie that JLV was not interested in his proposal. It is apparent that such evidence is important evidence and would go to the allegations of contravention of s 182 of the Corporations Act and breach of fiduciary duties. 16 The other paragraph of relevance is [21] of Mr Forgie's affidavit. It addresses a visit by Mr Forgie on 23 February 2006 to the workshop premises of the fourth respondent, EDM. Mr Forgie's evidence is that he asked one of EDM's employees whether they would be able to manufacture shafts in accordance with JLV drawings. The alleged response was that EDM was already manufacturing such shafts. Again, this is seemingly significant evidence in connection with the central allegation of JLV that Mr MacDonald breached s 182 of the Corporations Act and his fiduciary duties. 17 Consequently, it cannot be accepted the evidence of the conversations will not result in the calling of the relevant witnesses. The evidence of Mr Forgie was that the solicitor for JLV anticipates that it will call evidence from himself, Mr Johnson, a Mr Thomas and a Mr Sealey at the hearing of the application; that is, four witnesses in total. Therefore JLV contends that there is no warrant for the proposition that the Western Australian witnesses will be out numbered, or greatly out numbered, by Queensland witnesses. 18 In these circumstances, even without the abandonment by JLV of its claim which would necessitate evidence from the labourers, the position is that each party will need to call a number of witnesses. However, unless the claim relating to the labourers does not go to trial, it is likely more witnesses will be from Mackay than Perth. 20 JLV submits that the location of documents is not critical because it is usual in the course of prior preparation for either party to work from copies. In the case of JLV its documents are located at Myaree in Western Australia, JLV having its head office and registered office in Western Australia. 21 It is apparent that the nature of Mr MacDonald's obligations will require evidence to be brought from records in Western Australia. Evidence of Mr MacDonald's conduct will require documents to be put into evidence from sources most likely in Queensland. I accept the preponderance of documentation at issue in the trial will be found to be located in Queensland rather than Western Australia. He was offered the position of mechanical engineer, although the contract reserved the right to assign him to other duties. The offer contained a confidentiality provision to the effect that he would not breach the confidence of JLV. Additionally, it stated that in the event of his acceptance of the offer of employment he would be required to sign a deed of confidentiality and restrictive covenant. He did so on 8 February 2000. By cl 3 of that deed, he covenanted not to 'cause, procure, suffer or permit the unauthorised use by any third party of any of the Information and will take all steps as may be necessary from time to time to prevent any such use'. Further, it was provided in cl 12.7 that the deed was governed by the law in force in Western Australia and that each party irrevocably and unconditionally submitted to the non-exclusive jurisdiction of the courts of Western Australia. JLV therefore relies on the fact that there was agreement between it and Mr MacDonald to submit disputes arising from the deed of confidentiality to the courts sitting within Western Australia and that such courts include this Court. In support they rely on Aquila Resources Limited v Pasminco Limited [2004] FCA 39 at [37] - [41] ; Australia Country Cinemas Pty Ltd v BYA Pty Ltd [1998] FCA 714 at 2; see also KC Park Safe (SA) Pty Ltd v Adelaide Terrace Investments Pty Ltd [1998] FCA 601. In the light of those authorities I do not consider it can be contended here as the respondents submit that because the proceeding has been instituted within the Federal Court of Australia, it has not been instituted within the jurisdiction of 'the courts of Western Australia', as provided for in the submission to jurisdiction clause. 23 JLV relies on the fact that the contract of employment was formed within Western Australia at a time when Mr MacDonald was resident there and that the initial years of the employment contract were performed in Western Australia. The respondents assert that this is of no weight because it is not alleged that any breach occurred in Western Australia. 24 The respondents contend that there is limited scope of the claims that parties have agreed to submit to the non-exclusive jurisdiction of the courts of Western Australia and that therefore the Court should not attach much weight to the non-exclusive jurisdiction clause: cf Plantagenet Wines Pty Limited v Lion Nathan Wine Group Australia Limited [2006] FCA 247. They contend that the three express particular breaches pleaded in [10] and [11] of the amended statement of claim relate to the actions of Mr MacDonald. However, they say all other respondents are parties to each breach so that the scope of the claim is well outside the scope of the non-exclusive jurisdiction claim. Here, however, it cannot be said that the breach of the confidentiality requirement constitutes a limited part of the claims that the parties have agreed to submit to the non-exclusive jurisdiction. As has been explained in delineating the nature of the proceeding, it goes to the heart of the allegations under s 182 of the Corporations Act and the alleged breach of fiduciary duties: RP Meagher, JD Heydon, MJ Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, 4 th edn, Butterworths Australia 2002, 206, at [5-255]. The liability of Mr MacDonald is at the foundation of the liability of the other respondents. Therefore I consider that weight is to be accorded here to the non-exclusive jurisdiction clause. However, JLV distinguishes the present circumstances on the basis that the respondents and their solicitors are located in Mackay, which is itself remote from the nearest office of the Queensland Registry in Townsville: see Mr Arthur's earlier affidavit at [11]. Therefore, JLV submits that the respondents can use video conferencing facilities available in Mackay to appear in the court in Perth as readily as they can in Townsville so that the transfer of the application to Townsville is of no tangible advantage to the respondents in this respect. Given that the status quo is that JLV can and will appear before the Court in person in Perth, it is submitted this factor is accordingly marginally against transfer. I agree. Further, they have not deposed that their existing solicitors and counsel cannot continue to fulfil their roles unless the application for transfer succeeds. The respondents do not seek to assert they cannot attend at Court in Perth, only that they have more limited resources to engage in the litigation than does JVL. 27 JVL has not put into evidence particulars of its financial position. I infer from the information on it in evidence that it is a significant company sustaining its business in Australia and overseas. 28 I accept therefore that there is a disparity in resources favouring the respondents. Such an approach was foreshadowed in Burdekin Pacific Limited v Communitee Pty Limited [2003] FCA 777. At the hearing of it became apparent that the first claim, being the greatest in monetary value, was the principal allegation. Further, as the amended statement of claim alleges, each of the claims is based on a breach of Mr MacDonald's obligations arising from the nature of his employment in Western Australia. It is against that perspective that the application to change venue must be viewed. 31 The factors arguably supporting transfer are the present likelihood of more witnesses and documents being located in Mackay than Perth; and the disparity in resources of the parties. The factors arguably against transfer are that nevertheless a significant number of witnesses and documents will be located in Perth; Mr MacDonald has submitted to jurisdiction in Western Australia; and video links from Mackay to Perth may be as convenient to the respondents as video links from Townsville to Perth. The factors are fairly evenly balanced. 32 The test which I must apply was stated at the outset, that is, where can the case be conducted or continued most suitably. I must look for a sound reason to direct that the proceeding be conducted or continued elsewhere. 33 Save for one issue, I consider the proceeding can be most suitably conducted or continued as at present. That one issue is if the evidence of the labourers is required for trial, it would be necessary for them to travel to Perth. That issue, however, can be addressed by directions made concerning the locations at which witnesses are to be heard and the trial conducted. 34 Accordingly I have reached the view that the respondents' motion should be dismissed but without prejudice to the right of the respondents to bring an application in the future concerning the location or locations of the trial. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson. | change of venue allegations of breach of duties by employee claims for compensation and account of profits engagement in western australia performance in queensland witnesses in both places preponderance of documents in queensland submission to non-exclusive jurisdiction in western australia relevance of video-link disparity of resources possibility of trial being located in queensland and/or perth when witnesses finally identified procedure |
It is whether the tender by counsel of six documents, forming part of a 73 page exhibit, constituted a waiver of privilege in the six documents. 2 Ironically, the issue arose at first instance in the course of an application to claim privilege over a separate part of the 73 page exhibit. The learned Federal Magistrate found that legal professional privilege had been waived in the six documents. His Honour said, at [11] of his judgment of 22 November 2006, that counsel for the party who tendered the documents "specifically eschewed" any suggestion of inadvertence in the tender. He proceeded on the basis that the tender was deliberate. 3 The appellant, Mr Boensch, contends that his Honour was in error in concluding that the tender was deliberate and that any claim of inadvertence had been eschewed. Mr Boensch submits that, upon the proper application of the principle stated by the High Court in Mann v Carnell [1999] HCA 66 ; (1999) 201 CLR 1 at 13, there was no implied or accidental waiver of privilege in the six documents. 4 The essential reason why this issue arises is the failure of the solicitor who produced the documents to the first respondent, Mr Pascoe, and to the Court, to make proper enquiry as to the extent of the materials comprised within the documents that were produced and tendered. 5 In the hope of maintaining clarity in my analysis of the question, I will endeavour to distinguish between the documents produced or referred to at various stages of the proceeding. 6 The critical documents, for the purpose of this judgment, fall into three categories. The first category is the six documents that were tendered as part of Exhibit JL1. I will call them the Extra Documents. The second category is certain documents produced to Mr Pascoe and described in my reasons as the First Documents. The third category is certain documents described as Exhibit SDP6 in the application heard before his Honour on 22 November 2006. Mr Pascoe is his trustee in bankruptcy. The second respondent, Mrs Boensch, is Mr Boensch's wife. 8 On or about 30 August 2005 Mr Pascoe gave a notice under s 77A of the Bankruptcy Act 1966 (Cth) to the former solicitor for Mr and Mrs Boensch, Mr James Leong. That section of the Act provides for compulsory production of the documents and records of a bankrupt whose examinable affairs are under investigation. 9 On or about 30 September 2005 Mr Leong answered the s 77A notice by providing a number of documents to Mr Pascoe. I will call the documents that were produced to Mr Pascoe in answer to the notice "the First Documents". 10 Mr Leong's evidence before the Federal Magistrate was that he did not obtain any instructions from Mr Boensch before answering the s 77A notice. Accordingly, Mr Leong had no instructions to claim privilege, nor does he appear to have made such a claim when he produced the First Documents to Mr Pascoe. Moreover, he did not have instructions to waive privilege. 11 Nearly ten months later, on 19 July 2006, Mr Pascoe commenced proceedings in the Federal Magistrates Court against Mr and Mrs Boensch seeking orders under ss 120 and 121 of the Bankruptcy Act setting aside certain transactions entered into between Mr and Mrs Boensch prior to the date of the sequestration order. 12 The application filed in the Federal Magistrates Court was supported by an affidavit sworn by Mr Pascoe. Exhibited to the affidavit was a bundle of documents produced to Mr Pascoe by Mr Leong in answer to the s 77A notice. The documents were described as Exhibit SDP6. I will refer to those documents as Exhibit SDP6 in these reasons. 13 Counsel for Mr Boensch submits that the documents in Exhibit SDP6 are a subset of the First Documents. I have not inspected Exhibit SDP6 but the description of them in Mr Pascoe's affidavit filed on 19 July 2006 in the Federal Magistrates Court, as a bundle of file notes of meetings or conversations, indicates that the submission is correct. 14 The matter came before Federal Magistrate Raphael for directions on 15 August 2006. The legal representatives for Mr and Mrs Boensch stated that a claim for privilege was to be made over the documents contained in Exhibit SDP6. His Honour directed that any application in relation to the admissibility of Exhibit SDP6 be filed by 5 September 2006. 15 On 8 September 2006, Mr and Mrs Boensch filed a document entitled "Amended Interim Application" seeking inter alia a declaration that the documents comprising Exhibit SDP6 were documents to which legal professional privilege attaches. His Honour then made an order for the determination of that issue, and an associated question, as a separate question under Part 17 of the Federal Magistrates Court Rules 2001 . His Honour also referred to the hearing of a preliminary question under s 189 of the Evidence Act 1995 , although it is difficult to see how the occasion for such a hearing had arisen. 16 On 20 November 2006 the solicitor for Mr and Mrs Boensch served on Mr Pascoe's solicitor a draft statement of evidence of Mr Leong. An exhibit, referred to as Exhibit JL1 to the statement, was not served at that time but was adopted by Mr Leong when he was called to give evidence before Federal Magistrate Raphael on 21 November 2006. The exhibit appears to have been provided to Mr Pascoe's legal representatives shortly before the hearing. Reference was made in the statement to all of the pages of Exhibit JL1. That exhibit included the Extra Documents. Exhibit JL1 is not identical with Exhibit SDP6 or with the First Documents. I will continue to refer to it as Exhibit JL1. As I have said, they included the Extra Documents. It is apparent that the Extra Documents did not form part of the First Documents, namely those produced to Mr Pascoe in answer to the s 77A notice. I do not intend to waive any legal professional privilege otherwise properly available. Mr Johnson showed Mr Leong a copy of the documents sent to Mr Pascoe on 30 September 2005, that is to say, the First Documents. Mr Johnson then put to the witness that the content of [51] of his statement was not correct. 23 That is to say, Mr Johnson drew Mr Leong's attention to the inaccuracy of the statement in [51] which assumed, incorrectly, that Exhibit JL1 was identical to the First Documents. However, Mr Leong failed to understand this and said that [51] was correct. He stated that privilege had been waived "on all of these documents for this application". That is to say, Mr Pascoe's claim of waiver of privilege over the Extra Documents was first raised in the course of argument, after the tender of those documents. 25 When counsel for Mr Boensch, Mr Heath, realised the apparent error, he informed his Honour. You are not being criticised. These things happen. They got into your hands, Mr Johnson. Just so there can't be a misunderstanding. And the way in which I am to deal with any document in here is to say either they are privileged or they are not and there is no different category of any of the documents in here; is that right? Mr Johnson has asked him two questions; did you give these documents to Mr Pascoe? Answer: no. In relation to both of these documents. But there is an issue about this now obviously. That was my recollection. There were some "don't recalls", in there in relation to this. But if it is the case that paragraph 51 is wrong, then the issue of privilege in documents that are included in this but were not, in fact, produced to Mr Pascoe are now disclosed, then such disclosure is inadvertent . " (Emphasis added. Your Honour, in my respectful submission, no issue of embarrassment or inadvertent disclosure of privilege arises and that is for these reasons. First of all, one has to consider the context of the current proceedings before your Honour. When I say "current proceedings" I mean, separate question, preliminary issue, voir dire, however it is to be characterised. That is, the context of the present proceedings before your Honour today are the determination of whether privilege exists in certain documents. They were the subject matter of the hearing, not the Extra Documents to which the argument moved only after they were tendered. 30 His Honour then observed at [7] that, as Mr Heath had correctly pointed out, this was a hearing solely to determine whether the contents of Exhibit SDP6 were the subject of privilege. 31 His Honour went on to say at [9] that unfortunately the documents contained in Exhibit 1 were not confined to those in Exhibit SDP6. He said that some of the documents in Exhibit 1 were new documents that had not previously been seen by Mr Pascoe (that is, the Extra Documents). Mr Heath says that these documents are no different from SDP6 documents and that Mr Leong's statement in paragraphs 50 and 51 is sufficient to provide privilege to them. But I have difficulty with that. The documents which are contained in the Exhibit are not the documents which are annexed to the statement. I made it clear yesterday that I appreciated that the documents found in the Exhibit may have been placed there as a matter of inadvertence or for some other reason which might mitigate a loss of privilege. But those appearing for the respondents specifically eschewed such an approach. All I am left with then is a deliberate tender of documents which could have been tendered under cover with no more than a description and added to the list of SDP6 documents if that was thought appropriate. But it was not. It is an argument that I accept but only for those documents for which these proceedings applied, namely the documents in SDP6. Their Honours pointed to an intentional act of disclosure which was inconsistent with the maintenance of confidentiality in the communication. 35 Their Honours went on to say that "[w]hat brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of confidentiality". They said the test is "not some overriding principle of fairness operating at large". 36 Reference may also be made to the observations, to the same effect, by Gyles J in Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237 ; (2004) 140 FCR 101 at [68] . See also the review of the authorities by Allsop J in DSE (Holdings) Pty Limited v Intertan Inc [2003] FCA 384 ; and Lombe v Pollak [2004] FCA 264 at [30] --- [33] dealing with the common law test. 37 It is unnecessary for present purposes to determine whether or to what extent the provisions of s 122 of the Evidence Act dealing with the circumstances in which privilege may be lost correspond with the common law principles; see Mann v Carnell at [23]; see also Van Zonneveld v Seaton [2004] NSWSC 960 at [11] (per Campbell J). 38 It seems to me that on either approach, what is required is a voluntary act which is inconsistent with the purpose of maintaining confidentiality. An inadvertent or unintentional act will not be sufficient to amount to waiver. 39 Of course, "a mere plea" of inadvertence may not by itself necessarily enable a party to avoid a waiver of privilege; Hooker Corporation Ltd v Darling Harbour Authority (1987) 9 NSWLR 538 at 542-543. Thus, the Court must be satisfied on the material before it that the act was in truth inadvertent. 41 It was only when Mr Heath realised what had happened that he drew his Honour's attention to the apparent inadvertence. This is clear, in my view from the passages of the transcript that I have reproduced above. 42 It is true that in the last passage of the transcript that I have reproduced at [27], Mr Heath said that no issue of inadvertence arose. However, this was because, as Mr Heath correctly observed, the amended application before his Honour dealt only with the question of whether privilege could be maintained over Exhibit SDP6. 43 With due respect to his Honour, whose judgment was given ex tempore , an examination of the transcript shows that Mr Heath did not eschew inadvertence in relation to the maintenance of the claim over the Extra Documents. 44 Of course, I do not criticise his Honour for delivering ex tempore reasons. It is merely that a full reading of the transcript puts in context the last passage of Counsel's remarks on the issue of inadvertence. 45 In any event, I would add that it is difficult to see how the tender of Exhibit JL1 was inconsistent with the maintenance of confidentiality. It was tendered on an application to claim privilege and it was tendered with the express proviso in [50] of Mr Leong's statement that he did not intend to disclose confidential communications to which privilege may attach. 46 The tender of Exhibit JL1 cannot be said to have been to deploy the substance of legal advice for forensic or commercial purposes so as to reveal an implied inconsistency with the maintenance of confidentiality; Bennett at [68]. 47 I accept Mr Johnson's submission that it is extraordinary that both solicitors and counsel for Mr Boensch failed to make any or any adequate enquiry as to the extent of the materials contained in Exhibit JL1. Some criticism may flow from that. But it does not preclude a finding of inadvertence. 48 I do not accept Mr Johnson's submission that the documents in Exhibit JL1 were delivered without qualification as to their status. The qualification was stated in [50] of the statement to which the Exhibit was attached. Although no evidence was put before his Honour to explain the mistake, the circumstances make it plain that error and inadvertence were revealed. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | privilege legal professional privilege production of documents by solicitor in response to s 77a bankruptcy notice inadvertent tender of documents by counsel whether waiver of privilege practice and procedure |
She received those payments at the rate fixed for a single person. The Department of Family and Community Services (the Department) decided in March 2003 that for the whole of the period that she had been receiving the payments, between 11 July 2000 and 24 March 2003, she had in fact been living in a marriage-like relationship with a man (Mr Kuhl) with whom she shared her apartment. The Department decided that, by reason of Mr Kuhl's income, she was not entitled to receive any carer's payment during that period. 2 Ms Pelka appealed unsuccessfully against the Department's decision to the Social Security Appeals Tribunal (the SSAT) and then to the Administrative Appeals Tribunal (the Tribunal). She then appealed to this Court. In my opinion, the Tribunal erred in law in its approach to the question whether she and Mr Kuhl were living in a marriage-like relationship during the period that she was in receipt of carer payments. In particular, it erred in finding that she and Mr Kuhl 'pooled' their financial resources within the meaning of the Act. The finding reflected an error in the interpretation of the Act. That factor aside, the difficult question whether there was a marriage-like relationship was finely balanced. The Tribunal might have come to a different decision had it correctly construed the Act. For these reasons its decision will be set aside and the matter remitted to it to determine according to law. She married but separated from her husband in 1986 and divorced him in November 2003. In 1985 she met a man called Michael Kuhl at a party. Later she met his parents. Under an arrangement which she said was an expression of Chinese culture, she and Mr Kuhl became god-brother and god-sister. 4 In 1988 Ms Pelka purchased a two bedroom apartment. At the time that she brought the apartment she intended to take an extended holiday overseas. Mr Kuhl moved into the apartment and house-sat it for her while she was away. After she returned she and Mr Kuhl cohabited in the apartment until September 2004 when she moved to the house of Mr Colin Whittaker in Warwick. Ms Pelka had been Mr Whittaker's carer since 2000. She was in receipt of carer payments under the Act between 11 July 2000 and 23 March 2003. She received those payments at the rate appropriate to a single person. 5 On 24 March 2003 an officer of Centrelink decided that she was living in a marriage-like relationship with Mr Kuhl and had been doing so since her payments began on 11 July 2000. The officer found that she had been overpaid $29,411.14 for the period from 11 July 2000 to 24 March 2003. This amount was calculated on the basis that Mr Kuhl's income during that period reduced her carer payment entitlement to nil. The decision was affirmed by an authorised review officer on 14 May 2003. Centrelink is a statutory authority created by the Commonwealth Service Delivery Agency Act 1997 (Cth). Its officers exercise powers delegated by the Secretary of the Department of Family and Community Services under the Act. They also exercise delegated powers under the Student and Youth Assistance Act 1973 (Cth). 6 Ms Pelka appealed from the Centrelink decision to the SSAT on 20 July 2003. Vary the decision regarding the over payment of carer payment to the effect that the debt amount is to be recalculated taking into account Mr Kuhl's earnings as stated under Findings of Fact. She asserted in her application for review that she and Mr Kuhl were not a member of a couple. They had a god-brother and sister relationship. On 8 February 2005 the Tribunal affirmed the decisions under review. 8 On 4 March 2005 Ms Pelka filed a notice of appeal in the original jurisdiction of this Court against the decision of the Tribunal. An amended notice of appeal was filed on 23 November 2005. He informed the Tribunal that the Secretary favoured deferring the Tribunal hearing until the question of any potential criminal proceedings was resolved. In any event Mr O'Toole, on behalf of Ms Pelka, insisted that she wished to proceed with the hearing by the Tribunal. 10 The Tribunal referred to Ms Pelka's evidence. She told the Tribunal that Mr Kuhl had moved into her unit at Maylands upon her departure for an extended holiday overseas. This was some months after she had herself moved into the unit. Before she went overseas she transferred phone, electricity and gas accounts into his name. She returned to Australia sooner than expected. Mr Kuhl, however, had nowhere to go so she told him he could stay in the spare room. Their arrangement was that he would still pay no rent but in exchange would pay the cost of airfares and accommodation for her to go on overseas holidays. During the whole of the period from 1988 to about 2000 or 2002 Ms Pelka worked at the Kimberley Nursing Home as an aide. During this time she paid the mortgage on the Maylands unit. She eventually paid it off entirely with a settlement from her former marriage. She had always paid rates and water and Mr Kuhl had always paid phone, electricity and gas bills. She paid for overseas calls to her mother. 11 Ms Pelka said that she and Mr Kuhl did not have a sexual relationship, nor did they sleep together. They did their own washing and on occasion she provided food for him generally when she had cooked more than she needed. They travelled overseas about once a year over the twelve year period that they were sharing the apartment. When they used hotel accommodation they would book a twin share in order to save money. When in Singapore she would stay with her mother. She paid for her own shopping trips. On occasions she and Mr Kuhl ate together and took it in turns paying for meals when travelling. 12 Ms Pelka told the Tribunal she and Mr Kuhl had never had a joint bank account. They would occasionally go to the movies together at, perhaps, six monthly intervals. She had never told anyone she was in a relationship with Mr Kuhl. She had not had a sexual relationship with anyone since the breakdown of her marriage. She and Mr Kuhl led separate lives over the 16 years or so that they had shared her unit. Days could go by without them seeing each other. She paid no attention to his private life. It was just a matter of convenience that he was there. They were not responsible for each other. Mr Kuhl had never given her any money and she didn't know what his wages were. Since she moved out in September 2004 to care for Mr Whittaker, Mr Kuhl paid her $55 a week rent as they were no longer going on overseas holidays. 13 Ms Pelka told the Tribunal that Mr Kuhl was purchasing her vehicle from her. She no longer had need for a car because she was using a car provided by Mr Whittaker. 14 Ms Pelka had never considered herself to be in a marriage-like relationship and if she had known that Mr Kuhl had referred to her as his de facto she would have stopped him from doing so. They did not pool resources save for when they were on holiday. She did not know that she was the beneficiary of his will, his superannuation or his life insurance. Although they had had 12 overseas trips together, she had at times travelled overseas alone. While they went to films together they did not go to any parties together during the relevant period. 15 Ms Pelka was referred, in the Tribunal hearing, to her claim for carer's payment in which at question 43, she had marked 'no' to the question 'Do you (and your partner) share with anyone else? ' She said she had given that answer because she had rung Centrelink and had been told that she did not need to put anyone down if they were a god-brother or a brother. She was referred to a document completed by Mr Kuhl on 31 January 2001 in which he referred to his marital status as 'de facto'. There was also information from Mr Kuhl's employer, Kalender Consulting, which referred to her as his de facto. Mr Kuhl claimed that he would have described her in that way because it would help him in his employment to be in a relationship. 16 Mr Kuhl gave evidence to the Tribunal. He said his relationship with Ms Pelka was 'separate and apart'. He didn't tell her what he was doing and he would often stay away with lady friends. They used to find a way to arrange holidays around the same time each year. He would do his own cleaning. He had never had sex with Ms Pelka nor have they ever been in each other's bedrooms. The costs of the overseas trips varied from $1,000 to $5,000. He thought it was perhaps 1991 when they first travelled overseas. He agreed that in an application for membership of a superannuation fund he had referred to her as his partner. He said he had no idea why he put partner instead of friend. Similarly, in a 'New Employees Detail Form' under the heading 'Emergency Contact' he had listed her and described her relationship to him as 'partner'. At the top of the same form he described his marital status as 'single'. He told the Tribunal that, as it was a job application form, it was important to indicate he had a partner, even though he had actually described his marital status as single. He accepted on further questioning that the form in question was not a job application form. 17 Mr Colin Whittaker, for whom Ms Pelka cares, said he had known her for eight to nine years. She had been his carer since 2000. She had been away with him on a number of business trips including a three month period when they were travelling around Australia. He had never been aware of any boyfriend. 18 After setting out the contending submissions from Ms Pelka and the Secretary, the Tribunal gave consideration to various aspects of the relationship as it emerged from the evidence in determining whether or not Ms Pelka was in a marriage-like relationship with Mr Kuhl for the period during which she was receiving carer payments. 19 The Tribunal found that Ms Pelka and Mr Kuhl did not jointly own any real estate, nor have any joint bank accounts or joint liabilities. After the purchase of the apartment Ms Pelka's income and property settlement serviced and paid off the mortgage. Mr Kuhl paid gas, electricity and the telephone accounts. Ms Pelka paid the rates. Mr Kuhl had recently begun to pay a modest rent of $55 a week. Through the entire 16 years of their cohabitation Ms Pelka and Mr Kuhl had maintained a 'barter system' under which she did not receive any rent but instead an annual overseas holiday. 20 Turning to their household the Tribunal found that Ms Pelka and Mr Kuhl each had a bedroom but shared a common kitchen, lounge room and bathroom. The bedroom furniture was their own and Mr Kuhl had supplied most of the lounge room furniture. Ms Pelka did more housework. She could not recall if they ate together once a week, fortnight or a month, but they did eat together at times when she cooked extra food. 21 On the social aspects of their relationship, the Tribunal observed that Ms Pelka's description of her relationship with Mr Kuhl was at times contradictory. She had said to the SSAT that they had a very close spiritual bond. They had become close after she met Mr Kuhl's parents. She described their relationship as like a sister and brother --- a close bond in a spiritual way. At other times she said it was just a matter of convenience that he lived in the apartment. She had no right to know where he was. At home their evidence painted a picture of separate lives bordering on complete disregard for the whereabouts or activities of the other apart from the occasional movie, meal or plans for the next overseas trip. Then for up to 4 weeks a year for at least 12 years they travelled overseas together, ate together regularly and slept in the same room. In addition, the applicant said she would allow Mr Kuhl to live cost free, for example, if unemployed. The Tribunal concluded that this was the most significant relationship the applicant appeared to have in her life involving a close bond, trust and very considerable emotional significance. It did not make any express finding in that respect but appears to have accepted the evidence. Even since she recently left the unit she has allowed him to continue to reside there. Mr Kuhl whilst on the one hand giving evidence that there was no emotion involved in their relationship had made her a beneficiary of his superannuation and will. The Tribunal concludes that their commitment to each other has been long standing and close and there is no evidence of any other significant relationships during the period in question. It found that, because Ms Pelka's partner's income was not taken into account an overpayment had resulted and, pursuant to s 1223(1) of the Act, was a debt to the Commonwealth. 26 The Tribunal referred to provisions of the Act allowing for the waiver of a debt particularly where the overpayment is attributable solely to an administrative error made by the Commonwealth (s 1237A(1)). It held that the debt had not arisen due to such an error. Ms Pelka had answered 'no' to the question 'Do you (and your partner) share with anyone else? ' on the claim for carer payment which she filled out. The Tribunal was not convinced of the accuracy of her recollection that she had rung Centrelink and had been told that if someone were a brother or god-brother they did not have to be listed as sharing accommodation. 27 The Tribunal also referred to s 1237AAD of the Act providing for waiver in the case of special circumstances. There was no evidence before the Tribunal that there were special circumstances and it held that it was unnecessary to consider that provision further. Finding that the applicant was in a marriage-like relationship within the meaning of s 4(3) of the Social Security Act 1991 (Cth) when such a finding was not supported by the evidence and was contrary to the weight of the evidence. (Grounds 4(b) and 4(c)). 2. Failure to give reasons for not accepting the evidence of the applicant, Mr Kuhl and Mr Whittaker. (Ground 4(d)). 3. Failing to consider whether there were special circumstances pursuant to s 1237AAD of the Act which might warrant the waiver of any debt owed to the Commonwealth. (Ground 4(e)). 4. Failing to find that the debt was caused solely by administrative error made by the Commonwealth and that the carer payments were received in good faith. (Ground 4(f)). 5. Failing to provide adequate reasons for concluding there was no evidence of special circumstances pursuant to s 1237AAD of the Act. (Ground 4(g)). The qualifications for and payability of carer payments are set out in Div 1 of Pt 2.5. It may be assumed for present purposes that Ms Pelka qualified for a carer payment by reason of her provision of care for Mr Whittaker. 30 Section 210 of the Act appears in Div 4 of Pt 2.5 which relates to the rate of carer payments. Step 5 in the method set out in Module A requires the application of 'the ordinary income test using Module E below to work out the income reduction'. This effectively requires that the income of the carer be taken into account to reduce the level of benefit payable to him or her. As appears below it also brings to account the income of the carer's spouse or partner in a marriage-like relationship. Under step 8 the income reduction is taken away from the maximum payment rate and the result is called the Income Reduced Rate. There is provision for further reduction by reference to assets. 33 Module E sets out the method for working out the effect of a person's ordinary income on their maximum payment rate. Such distinctions were made in the Social Services Act 1947 (Cth) which preceded the Act. 37 An example of an earlier statutory formula giving effect to such a distinction was considered by the Full Federal Court in Lambe v Director-General of Social Services (1981) 57 FLR 262. The question was whether a single mother in receipt of a supporting parent benefit was '... living with ... a man as his wife on a bona fide domestic basis although not legally married to him'. In deciding whether such a relationship existed the Court held that it was necessary to take into account a variety of factors, albeit no factors were spelt out in the statute. The Court held that all facets of the interpersonal relationship of the two persons had to be taken into account. What must be looked at is the composite picture. Any attempt to isolate individual factors and to attribute to them relative degrees of materiality or importance involves a denial of common experience and will almost inevitably be productive of error. The endless scope for differences in human attitudes and activities means that there will be an almost infinite variety of combinations of circumstances which may fall for consideration. In any particular case, it will be a question of fact and degree, a jury question, whether a relationship between two unrelated persons of the opposite sex meets the statutory test. The question in that case was whether a woman claiming a sole parent's pension was 'a married person ... living separately and apart from her spouse'. Having separated from her husband she had returned home as a matter of convenience and because of his assistance in caring for their disabled child. O'Loughlin J referred to Lambe and Lynam . He endorsed the observations of Fitzgerald J quoted earlier. Those reasons will be better indicators in determining the correct nature of their relationship. 41 The Social Security and Veterans Affairs Amendment Legislation Act (No 3) 1989 (Cth) amended the Social Services Act 1947 by introducing the concept of a person 'living with the other person in a marriage-like relationship' (new s 43A(6)). The assessment of such a relationship required consideration of the same factors that apply today (new s 3A). In Cadman v Secretary, Department of Society Security (1993) 31 ALD 486, Neaves J noted that the Tribunal under appeal had applied the new criteria even though it was dealing with a case to which the old test applied. That was the test of 'living with a man as his wife on a bona fide domestic basis although not legally married to him'. However, his Honour held, each of the listed matters considered under the new s 3A of the former Act was as relevant to that task as it was to the test of a marriage-like relationship (at 490). This merely illustrates the similarities of the kind of decision-making which is required under each of the statutory formulae and, to that extent, the continuing utility of the older authorities. 42 The Social Security (No Budget Measures) Legislation Amendment Act 1995 (Cth) deleted the requirement that a marriage-like relationship required the parties to it to be 'living' together and substituted the term 'has a relationship with a person'. The Explanatory Memorandum to the Bill stated that the changes were designed to ensure that sole parent pensions would not be paid to couples only temporarily living apart. The latter section sets out criteria for determining the existence of a marriage-like relationship for determining whether a person is a member of a 'couple' under s 5E(2). The criteria are the same as those in the Social Security Act --- see generally Creyke R and Sutherland P, Veterans' Entitlements Law (Federation Press, 2000) at 168-172. 44 The formula of the words 'living together in a marriage-like relationship' used in s 11A , as included in the Veterans Entitlements Act 1986 by 1989 amendments, was considered by Tamberlin J in Garner v Repatriation Commission (1998) 53 ALD 297. His Honour observed, relevantly to the current provisions of s 4(3) of the Act, that s 11A required regard to be had to all of the circumstances of the relationship, albeit it set out a number of matters which must be taken into account. 45 There have of course been a number of Tribunal decisions on the marriage-like relationship provisions and these are referred to in the text books cited above. It would, however, be multiplying discussions of various factual situations to canvass those decisions. Must have regard to their interpersonal relationship as a whole not limited by the factors listed in s 4(3). In having regard to the preceding five matters, must have regard to all factors relevant to each and, in particular, must have regard to the factors listed under each heading in s 4(3). 4. Must specifically consider the total picture of the relationship created by all of these factors bearing in mind that consideration must be given to those which weigh against a marriage-like relationship and those which weigh in favour of it. 5. Indeed, it may be that different decision-makers on the same facts could quite reasonably come up with different answers. It is important in approaching this ground to bear in mind that the Tribunal's decision can only be challenged for error of law. That does not encompass mere errors of fact arising out of faulty reasoning from the evidence. 49 Under the first ground Ms Pelka canvassed the Tribunal's findings about her financial relationship with Mr Kuhl, the nature of their household, the lack of any sexual relationship and the nature of their commitment to each other. The principal challenge concerned the Tribunal's findings about their financial relationship. 50 On the financial aspect of their relationship, the Tribunal considered the matters set out in s 4(3)(a) of the Act. (ii) There was significant pooling of financial resources. (iii) No finding was made that Ms Pelka or Mr Kuhl owed any legal obligations to each other. (iv) Mr Kuhl paid gas, electricity and the telephone account and had recently begun to pay a moderate rental of $55. Ms Pelka paid the rates. The Tribunal itself appears not to have relied upon any matters relevant to the financial relationship beyond those listed in s 4(3) except perhaps for its reference to the existence of a 'barter system' between Ms Pelka and Mr Kuhl. The barter system was described as one whereby a rent had been foregone by Ms Pelka for an annual overseas holiday. 52 A relevant constructional question which arises under the first ground is the meaning of the term 'pooling of financial resources' in s 4(3)(a)(ii). It plainly involves something more than financial cooperation or separate contributions to different elements of household expense. The so-called 'barter system' did not constitute a pooling of financial resources in that sense. If Mr Kuhl paid for or contributed to overseas travel for Ms Pelka instead of paying rent, that is not a 'pooling of financial resources' any more than his payment of rent would be so described. There was no evidence of pooling, properly so called, identified by the Tribunal in its findings and the Tribunal's finding that there was appears to reflect an error of law. That error is a misconstruction of s 4(3)(a)(ii). There was no pooling 'in relation to major financial commitments' which is a particular focus of the pooling to be considered under s 4(3)(a)(ii). I accept that there was a very small scale pooling reflected in evidence that Ms Pelka and Mr Kuhl contributed to a collection box funds that were used on overseas trips. The money so contributed was referred to in Mr Kuhl's evidence as 'loose change'. His evidence, as summarised by the Tribunal was that it '... might pay for one meal when they went away' [24]. 53 Cooperation is not identified as a specific factor in s 4(3) of the Act. That is not to say cooperative behaviour may not be taken into account for the matters listed in s 4(3) are not exhaustive. But cooperation of itself does not take a relationship very far down the path towards characterisation as 'marriage-like'. Cooperation is an indispensable feature of human society and of a multiplicity of different kinds of relationships within human society including the purely commercial. The same may be said of 'mutual benefit' which attaches to a large range of arrangements between people. 54 The Tribunal's findings on the nature of the household arrangements between Ms Pelka and Mr Kuhl can be measured against the non-exhaustive matters identified in s 4(3)(b). (ii) The living arrangements involved separate bedrooms and a common kitchen, lounge and bathroom. Ms Pelka and Mr Kuhl each owned their own bedroom furniture and Mr Kuhl supplied most of the lounge room furniture. (iii) Ms Pelka did more housework than Mr Kuhl and they occasionally ate together when she cooked more than she needed for herself. It was submitted however, on behalf of Ms Pelka, that they were not consistent with a 'marriage-like relationship' and did not support the Tribunal's overall conclusion. I agree with that proposition. But the Tribunal is not shown to have erred in that regard. It has not, on the face of its reasons, made any finding that the household arrangements were indicative of a marriage-like relationship. 55 The Tribunal referred specifically to the evidence as highlighting 'the marked contrast in the relationship between the applicant and Mr Kuhl at home and overseas'. It pointed out that 'at home their evidence painted a picture of separate lives, bordering on complete disregard for the whereabouts or activities of the other apart from the occasional movie, meal or plans for the next overseas trip'. The Tribunal contrasted this picture with their overseas travel when, 'for up to 4 weeks a year for at least 12 years they travelled overseas together, ate together regularly and slept in the same room'. 56 If by contrasting the preceding the Tribunal was intending to cast doubt upon the evidence of the household arrangements at home it should have said so and made an appropriate finding. As they stand however, the reasons indicate acceptance of the evidence from Ms Pelka and Mr Kuhl in that respect. Given that acceptance it is hard to see the household arrangements as anything less than a major factor against the Tribunal's ultimate conclusion. There is, however, no basis upon which an error of law was disclosed in this aspect of the Tribunal's reasoning. He had described her as his de facto and partner on particular occasions without her knowledge. A unilateral declaration of that kind might be evidence relevant to the answer to the question posed by s 4(3)(c)(i), namely whether the people held themselves out as married to each other, but in this case the answer is plainly no. That followed from the Tribunal's acceptance of Ms Pelka's evidence. (ii) There was no evidence from friends or regular acquaintances about the nature of the relationship. The Tribunal's observations on Mr Whittaker's evidence were a little curious. He said that in the eight or nine years that he had known Ms Pelka he had never been aware that she had a boyfriend. This evidence, along with his evidence that she was always available to care for him at short notice, was said to be largely negated by his evidence that she was secretive and did not discuss her private life. That fact might have been taken as evidence in support of the proposition that Ms Pelka did not regard Mr Kuhl as her marital or quasi marital partner. Even a secretive person might be expected to make some reference to a husband or partner. (iii) The Tribunal did not expressly consider s 4(3)(c)(iii), no doubt because there was little or no evidence of any joint social activities engaged in by Ms Pelka and Mr Kuhl. It referred to her evidence that she would allow Mr Kuhl to live at her place cost free if he were unemployed. The Tribunal came to the conclusion that the relationship Ms Pelka had with Mr Kuhl 'was the most significant relationship [she] appeared to have in her life involving a close bond, trust and very considerable emotional significance'. The Tribunal's conclusion in this respect was challenged on the basis that it was not supported by the evidence. The evidence, it was said, was consistent with a close friendship between two people or a brother and sister-like relationship. But the Tribunal's conclusion about the importance of the relationship, the closeness of Ms Pelka's bond to Mr Kuhl and its emotional significance to her, could as well fit such a relationship. It was open on the evidence and does not of itself disclose any error of law. 59 As to the sexual relationship between Ms Pelka and Mr Kuhl, the Tribunal appears to have accepted in effect that there was none. This was a factor therefore to be weighed in the balance against a conclusion of a marriage-like relationship. No such weighing process appears to have occurred. 60 The final factor to be considered by the Tribunal was the nature of the commitment of Ms Pelka and Mr Kuhl to each other. The term 'commitment' is not readily susceptible of clear definition. Its dimensions in the context of s 4(3)(e) are illustrated by the matters to be considered in relation to it. (ii) Their commitment to each other had been long standing and close. (iv) There was no finding whether they saw their relationship as marriage-like, albeit the Tribunal had referred to Mr Kuhl's description, in certain circumstances, of Ms Pelka as his partner or de facto. It is plain that there were matters pointing in different directions. A decision-maker in applying the matters set out in s 4(3) should acknowledge that they are non-exhaustive and at least indicate that consideration has been given to whether there might be any other factors relevant to the difficult judgment of whether a 'marriage-like' relationship exists. Each of the individual matters listed in s 4(3) is accompanied by a non-exhaustive list of factors. Again, the decision-maker in each case should consider whether there are any other factors relevant to the particular matter listed --- see Garner (supra). The Tribunal quoted a passage from a decision of the Tribunal in Re: Secretary, Department of Family and Community Services and WAP [2000] AATA 7. It is not clear however from the reasons how it applied the non-exhaustive approach set out in the passage which it quoted. 62 The statutory criterion of 'marriage-like relationship' is no doubt intended to ensure that there is no unfair discrimination in the payment of benefits as between those who are married and those who enjoy the benefits of marriage without its formalities. The formula is likely to be productive of difficulty in application and uncertainty in result. In this respect it is little better than its statutory ancestors to which reference was made earlier in these reasons. The real difficulty arises from the fact that, in the payment of various classes of benefit, there is a distinction drawn between married and unmarried people. So long as marriage is a basis for different levels of benefit there will be a policy imperative to apply the distinction to marriage-like relationships. 63 I am constrained, on this application, to interfere with the Tribunal decision only if I am satisfied that an error of law has been disclosed. In my view the Tribunal misapplied the law to the extent that it found that Ms Pelka and Mr Kuhl pooled their resources. This was not supported by the evidence on a proper construction of the Act. The Tribunal's conclusion in this respect indicates that it misconstrued the Act. 64 It is not possible to know what conclusion the Tribunal would have come to on a proper interpretation of the section. It is significant, however, in my opinion that this was a case in which there were weighty factors pointing in different directions on the question whether Ms Pelka and Mr Kuhl were living in a marriage-like relationship. Not to put too fine a point on it, the question was finely balanced. In my opinion therefore, for the reasons which I have indicated, the Tribunal's decision should be set aside and the matter remitted to it for reconsideration according to law. It did not disclose any additional error of law. It may not have accepted his conclusionary statement that his relationship with Ms Pelka was 'separate and apart' but such a statement is not really evidentiary. 67 In relation to Mr Whittaker I do not agree with the Tribunal's approach to his evidence. However, that is not a matter which discloses an error of law and certainly not a failure to give reasons as required by s 43. The second ground, in my opinion, fails. There is no evidence before the Tribunal that there are special circumstances in this case so it is not necessary to consider this provision further. A statement of facts and contentions filed at the hearing on behalf of Ms Pelka did not refer to any such circumstances. There was, in my opinion, no error disclosed on the part of the Tribunal in this regard, nor were its reasons inadequate. She had given some evidence that she had been advised by an officer of Centrelink in relation to the form she had to fill in for the carer's payment. However there was no evidence as to the content of that advice. 72 At one point in her evidence Ms Pelka was questioned by the Tribunal on whether or not there was anything about her circumstances which were 'different or special'. Again, the answers were rather vague. None of them were indicative of any administrative error on the part of the Commonwealth. 73 The Tribunal found, at [48] of its reasons, that there had been no relevant administrative error. Ms Pelka had answered 'no' to the question 'Do you (and your partner) share with anyone else? ' on her claim for Carer Payment and/or Carer Allowance. This does not amount, on any view, to administrative error on the part of the Commonwealth. There is nothing in this ground. The respondent should pay the applicant's costs of this appeal. I certify that the preceding seventy four (74) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | carer's payment single rate marriage-like relationship factors relevant to assessment of marriage-like relationship whether pooling of financial resources finding by tribunal of pooling no evidence of pooling apparent misconstruction by the tribunal of relevant statutory criterion error of law question of marriage-like relationship otherwise finely balanced tribunal decision set aside matter remitted to tribunal to determine according to law 'marriage-like relationship', 'pooling of financial resources' social security words and phrases |
They also seek an order approving the form of the Explanatory Statement for the schemes, and providing for the manner in which the meetings are to be held. 4 The Scheme Companies are insurance companies. Their businesses are in the nature of reinsurance and are in run-off. In broad terms, the purpose of each scheme is to accelerate the payment of reinsurance claims that have been made, or might be in the future, so as to resolve their potential reinsurance now, and to enable their businesses to be terminated. While there have been several in England in recent years, this appears to be only the second in Australia, the first being the subject of Conti J's judgment in Re Mercantile Mutual Insurance (Australia) Ltd (" MMIA ") (2002) 196 ALR 362. It is an indirect subsidiary of ING Groep NV, a Netherlands incorporated and listed company. 9 NRG London was an active reinsurer until 1991, when it ceased underwriting new risks, and was placed into run-off. 10 As at 31 December 2005, NRG London had total assets of GBP 164,821,000 and total liabilities of GBP 108,500,000 (giving an excess of assets over liabilities of GBP 56,321,000). Registration of a foreign corporation under the Corporations Act does not create a new legal entity (s 601BM). However, because APRA regulates only the Australian operations of NRG London, it is necessary to distinguish between its Australian and non-Australian operations. 12 APRA is concerned with the protection of NRG London's Australian policyholders. There is a general requirement under s 28 of the Insurance Act that insurers maintain "in Australia" (as to which see s 116A of that Act) assets at least equal to the value of their liabilities. Prudential Standards made under the Insurance Act require foreign insurers to maintain assets in Australia in excess of their liabilities in Australia, in an amount at least equal to their "Minimum Capital Requirement": Prudential Standard GPS 110 , para 25 and Prudential Standard GPS 120 , para 18. NRG London must, therefore, maintain a balance sheet for its Australian operations. The accounts so prepared depict the financial condition of a notional entity referred to as a "branch": see Prudential Standard GPS 110 , para. 25. 13 The notional division between NRG London's Australian operations and its other operations is reinforced by restrictions that APRA places on NRG London's ability to deal with its Australian assets. NRG London may not reduce its Australian assets (save to the extent of current-year profits) without APRA approval: Prudential Standard GPS 110 , paras. 6 and 25; Guidance Note GGN 110.1 , paras 20-22. 14 In this way, APRA "quarantines" within Australia assets sufficient to meet NRG London's Australian liabilities. APRA is therefore able to ignore NRG London's non-Australian assets and liabilities. NRG London's Australian assets must not be applied, without APRA approval, towards satisfying its other non-Australian liabilities. (It is possible that NRG London's Australian policyholders may benefit from NRG London's non-Australian operations, in the sense that, at least so far as Australian law is concerned, NRG London remains obliged, and, subject to any contrary requirement of foreign law, able to apply its non-Australian assets towards satisfying its Australian liabilities). 15 For the above reasons, it is convenient to refer to the "Australian branch" of NRG London ("NRG London (Australian Branch ) ") as if it were a separate legal entity. For the purposes of these proceedings, for example, because the liabilities of NRG London that are to be subject to the scheme are only those "in Australia", it is convenient to refer to them as liabilities of the NRG London (Australian Branch). 16 NRG London (Australian Branch) was established in September 1973, and was an active reinsurer in the Australian market between 1974 and 1991. In 1991, NRG London (Australian Branch) was placed into run-off. Accordingly, it has now been in run-off for approximately the last 15 years. If the NRG London scheme is eventually implemented, NRG London (Australian Branch) will no longer be carrying on business. 17 As at 31 December 2005 NRG London (Australian Branch) had total assets of AUD 21,321,000 and total liabilities of AUD 7,211,000. (an excess of assets over liabilities of AUD 14,110,000). It is also an indirect subsidiary of ING Groep NV. 19 NRG Victory was an active reinsurer in the Australian market between 1956 and 1993, writing both life insurance and reinsurance, and non-life reinsurance. 20 In 1993, NRG Victory ceased underwriting new risks. Unsuccessful attempts were made to sell the company as a composite insurer, and NRG Victory's life business was transferred to Life Reinsurance of Australia Limited pursuant to a scheme under the Life Insurance Act 1945 (Cth) ("the Life Insurance Act"). NRG Victory's non-life reinsurance business remained and was placed into run-off. 21 Accordingly, NRG Victory's business has been in run-off for the last 12 to 13 years. If the NRG Victory scheme is eventually implemented, NRG Victory will no longer be carrying on business. 22 As at 31 December 2005, NRG Victory had total assets of AUD 47,268,000 and total liabilities of AUD 12,905,000 (an excess of assets over liabilities of 34,363,000). The first exception relates to the way in which the Scheme Creditors are defined. The second relates to the value of Scheme Creditors' claims, above which the respective Scheme Companies have a discretion to terminate the scheme and to "revert to run-off". A person has a Claim against a Scheme Company if the Scheme Company has a liability to that person under a contract of reinsurance, unless the liability falls within the expression "Excluded Liabilities". 25 Each scheme defines Excluded Liabilities differently. In the NRG London scheme, Excluded Liabilities are all liabilities of NRG London under contracts of reinsurance that were not written through NRG London (Australian Branch). 26 In the NRG Victory scheme, Excluded Liabilities are all liabilities under contracts of life reinsurance that were transferred to Life Reinsurance of Australasia Limited by way of the scheme under the Life Insurance Act in late 1993 (mentioned at [18] above). Strictly, it is unnecessary to exclude such liabilities, since NRG Victory is no longer liable on those contracts. They were expressly excluded "for abundant precaution". Under the proposed schemes, all potential entitlements to reinsurance indemnity that a Scheme Creditor has against a Scheme Company will be valued and paid out now. 29 Where it has sufficient information to do so, the Scheme Company will pre-complete a Claim Form stating its estimate of the value of the Scheme Creditor's claim. If the Scheme Creditor agrees with the estimate, it need take no further action. 30 If the Scheme Company has not pre-completed a Claim Form, or if the Scheme Creditor disagrees with the Scheme Company's estimate, the Scheme Creditor will itself complete the Claim Form and submit it to the Scheme Company along with any relevant supporting information. 31 In order to assist the Scheme Companies, the Scheme Adjudicator (see below), and the Scheme Creditors in valuing claims, an "Estimation Methodology" has been prepared by Scott Collings, of Finity Consulting Pty Limited. Mr Collings is a Fellow of the Institute of Actuaries of Australia. He is the actuary appointed by NRG London (Australian Branch) and NRG Victory pursuant to s 39 of the Insurance Act and approved by APRA pursuant to s 40 of that Act. The Estimation Methodology is not a binding statement of the manner in which claims will be valued. It is, however, a statement of what Mr Collings believes is an appropriate actuarial approach to the valuation of most of the claims expected to be made. The Estimation Methodology is set out in Section 5 of the Scheme Booklet to be distributed to Scheme Creditors. 32 If the Scheme Company agrees with the value assigned by the Scheme Creditor, that amount will become the value of the claim. If the Scheme Company does not agree, and discussions do not produce agreement, the question of the value of the claim will be submitted to a "Scheme Adjudicator". 33 The Scheme Adjudicator will consider all relevant information, may consult with advisers, such as actuaries and lawyers, and will determine the value of the claim. 34 Once the value of a claim is agreed or is determined by the Scheme Adjudicator, the Scheme Company will deduct from that amount any amount owing by the Scheme Creditor to the Scheme Company, and pay the balance to the Scheme Creditor (in the unlikely event that there is a balance owing to the Scheme Company, the Scheme Creditor will have to pay that amount to the Scheme Company). The amount is the amount for which provision for insurance liabilities has been made in the Scheme Company's accounts. For NRG London (Australian Branch), that amount is $7,032,000, and for NRG Victory, it is $11,788,000. 36 The provision for reversion to run-off gives reassurance that the Scheme Companies will not be rendered insolvent as a result of an unexpectedly high value of Claims. 37 The most significant potential detriment for a Scheme Creditor is the possibility that the value of a Scheme Creditor's claim will prove to be less than the amount of the indemnity to which the Scheme Creditor would have been entitled if run-off had continued. No doubt Scheme Creditors will take into account this disadvantage, and, on the other hand, the extent of the advantage to them of having money in hand, in determining whether to support the scheme. There remains, however, the possibility that some may not have been identified. It must be remembered that we are considering insurers that entered into contracts of reinsurance with a Scheme Company prior to 1991 in the case of NRG London (Australian Branch), and prior to 1993 in the case of NRG Victory. 39 The records of NRG London (Australian Branch) identify only policyholders who have been in contact with NRG London (Australian Branch) since 1 July 1989, in connection, for example, with the payment or receipt of money, the provision of advice regarding premiums, or the notification of a claim. The records of NRG Victory disclose only the identity of all policyholders who have been in contact with it since 1 January 1994. 40 Both Scheme Companies have, however, also made inquiries of managers or agents of various underwriting pools regarding the identity of any remaining claimants on the pools. 41 In summary, all potential Scheme Creditors of both Scheme Companies have been identified except for any who have not had any contact with NRG London (Australian Branch) since 1 July 1989 or with NRG Victory since 1 January 1994. 42 Most potential claimants on NRG London (Australian Branch) and on NRG Victory are Australian insurance companies. Other potential claimants are Australian entities that are not authorized insurers (such as government insurance offices and self-insurers), and some New Zealand, Papua New Guinean and Pacific Islands entities. 43 In order to ensure that those possible further Scheme Creditors learn of the respective schemes, NRG London and NRG Victory will send copies of the Scheme Booklet to all authorised insurers in Australia, and to all brokers who have, to their knowledge, written business for NRG London (Australian Branch) or NRG Victory, as the case may be. 44 NRG London and NRG Victory will also advertise the respective schemes in newspapers in Australia, New Zealand and Papua New Guinea. Those advertisements will provide contact details for potential Scheme Creditors to make inquiries and to obtain copies of the Scheme Booklet. 45 There is a further category of policyholders who may be Scheme Creditors of NRG Victory. Between 1970 and 1974, NRG Victory accepted general insurance risks in South East Asia. It appears from the records of NRG Victory that this business was transferred to another company in 1974. It is not, however, possible to be certain that it was. 46 No claims emanating from South East Asia have been made on NRG Victory, and no contact with NRG Victory has been made on behalf of any South East Asian policyholder since at least 1994. 47 Given the apparent transfer of the South East Asian business to another company, and the lack of any known claims history, it is perhaps unnecessary that any steps be taken to notify potential South East Asian Scheme Creditors of NRG Victory, but in fact the NRG Victory scheme will be advertised in a newspaper in Asia. This does not trouble me: the differences between the proposed schemes are so minor that a potential Scheme Creditor under one scheme will not be confused or misled by the presence in the Scheme Booklet of a discussion concerning the other scheme. Certain parts of the Scheme Booklet constitute the Explanatory Statement for the schemes: see Corporations Act ss 411(1) , 412 (1). 52 For property damage claims and specific incident claims that are known, the value will be the Scheme Creditor's estimate of the value of the particular claim, that is to say, the amount recorded by the Scheme Creditor as the expected settlement cost of the claim. 53 For IBNR property damage claims and IBNR specific incident claims, no methodology has been prescribed. This is because it is considered unlikely that there will be any IBNR claims, and it will be incumbent upon a Scheme Creditor to prove that it has or may have such a claim, and how it should best be valued. 54 For latent injury claims, the valuation methodology applicable to known and IBNR claims will be applied. That is because both types of latent injury claims share certain features which make their valuation a similar exercise. For example, even once the total damage suffered by an individual as a result of exposure to asbestos is known, there are likely to be questions of "sharing", both as between defendants and as between insurers. That is to say, because a person may have been exposed to asbestos from different sources and over a lengthy period of time, a Scheme Company may have an exposure only in respect of certain years or certain sources. As a result, liability for any one claim will usually be apportioned between different entities. The same considerations apply to IBNR asbestos claims. 55 The approach adopted by the Estimation Methodology to the valuation of latent injury claims is to permit the Scheme Creditor a wide discretion as to the way in which it will substantiate its claim. The Estimation Methodology indicates that information should be supplied to establish such matters as the nature of the exposure, the number of policyholders likely to be affected, and the likely frequency of claims. The value of latent injury claims will be determined on the basis of the supporting information supplied by the Scheme Creditor. 56 In all cases, there will be no discount applied to the value of a claim as a result of the proposed early payment, provided the claim is projected to settle within five years of the "Valuation Date" (30 June 2006). For claims that are projected to settle after 30 June 2011, the value of the claim will be discounted by 5.5% per annum, but only for the period from 30 June 2011 to the date of projected settlement. There will be a separate meeting for each Scheme Company's Scheme Creditors (cf Re Safety Fix Pty Ltd [1962] VR 467 at 470), but it is not proposed to convene separate meetings for classes of Scheme Creditors of the one Scheme Company. 58 Are there classes of Scheme Creditors for which separate meetings should be convened? 59 If the answer to this question is yes, the proposed scheme to be considered at the class meetings would remain unchanged: there would be no change in the definition of the Scheme Creditors and there would not be a different scheme for each class. The scheme would be binding on either class only if agreed to by the necessary majority of the meeting of that class: see Corporations Act s 411(4). 60 Unless the scheme were to be changed to stipulate that it could proceed as binding on only one class of Scheme Creditors, such as the IBNR Scheme Creditors (see below), the scheme would become binding only if agreed to by both classes at their separate meetings: in effect, each class would have a right of veto. This would be so, even if, for example, the total value of the claims of non-IBNR Scheme Creditors was quite small compared to the value of the total value of the claims of IBNR Scheme Creditors. (In passing, it should be noted that s 411(5) , which provides for an aggregation of the votes cast at separate meetings has no application: that subsection applies to multiple meetings of "creditors" or of the same "class of creditors, not to the separate meetings that necessarily arise from the existence of classes of creditors. 62 I turn to the first possible basis of classification. Non-IBNR claims are to be valued at the settlement cost placed on them by the Scheme Creditor. Therefore, if the circumstances giving rise to the Scheme Company's reinsurance liability under a claim have occurred and been reported, the Scheme Creditor will receive the amount that it would have received in the ordinary course by way of indemnity. The Scheme Creditor will be in the same position as it would have been in if the Scheme Company had continued in run-off. IBNR Scheme Creditors, on the other hand, would be in a different position than that in which they would have been under a run-off, because their future (and contingent) claims will be valued and they will be paid out. As Lewison J observed in Re British Aviation Insurance Co Ltd [2005] EWHC 1621 (" BAIC ") (at [83]), "barring a miracle, the valuation will not be the same as the indemnity. This, therefore, must be done: they must be divided into different classes. What is the reason for such a course? It is because the creditors composing the different classes have different interests; and, therefore, if we find a different state of facts existing among different creditors which may differently affect their minds and their judgment, they must be divided into different classes. It is one of community of interest. The court must ask itself whether the rights and entitlements of the different groups, viewed in the totality of the scheme's context, are so dissimilar as to make it impossible for them to consult together with a view to their common interest. The focus is not on the fact of differentiation but on its effects. The extent and nature of the differentiation must be measured in terms of the effect on the ability to consult together in a common interest or, in other words, the ability to come together in a single meeting and to debate the question of what is good or bad for the constituency as a whole and where the common good lies. Only if the differentiation destroys that ability --- the word used by Bowen LJ is 'impossible' --- does class distinction come to prevail. 65 In MMIA , Conti J referred (at [18], [19]) to "the class question" in the circumstances of a scheme generally similar to the present schemes. His Honour referred to Sovereign Life , Hills Motorway , and Re Hawk Insurance Co Ltd [2001] EWCA Civ 241 ; [2001] 2 BCLC 480 at 527, and, applying Bowen LJ's "impossibility of consulting together" test, held that a single meeting of all creditors was appropriate. 66 In BAIC , Lewison J considered (at [83]) that on the facts of that case, policyholders with "known" or "accrued" claims constituted a separate class from policyholders with IBNR claims. In truth, they do not have a common interest at all. In Re NRG Victory Reinsurance Ltd [2006] EWHC 679 (' NRG Victory '), in which the circumstances were very similar to those of the present case, Lindsay J took the view that there was only one class of creditors. Where insurance companies are concerned, much will depend on matters such as the types of business which they covered and in what proportions between those classes of business; whether the business conducted was direct insurance or reinsurance and in what proportions; in what parts of the world, even, that their claimants are to be found; their solvency margins; how recently and when they stopped writing such new business as they used to write; the various times, class by class of business, at which they stopped; how long, accordingly, they have been in run-off and what has been their commutation experience. 69 BAIC is distinguishable on its facts. In particular, the creditors in that case were not, as they are here, all insurance companies. Indeed, "about 92 percent of its asbestos liabilities [were] owed to direct insureds": BAIC at [6]. (d) Both Scheme Companies have assets significantly in excess of their liabilities (so that all policyholders can be confident of receiving payment in full on their claims). (e) It is not expected that there will be many (or any) IBNR claims for property damage or specific incidents. It is expected that there will be IBNR claims for latent injuries, but in that case Mr. Collings has given evidence that the approach to determining both known and IBNR claims is similar. That is to say, in each case the approach is to determine the value of the claim in accordance with generally accepted actuarial principles. (f) There is no suggestion that the value of any of the Scheme Companies' IBNR claims will be unable to be estimated. It is not conclusive that the non-IBNR Scheme Creditors, or some of them, may be expected to think it immaterial to them whether the Scheme proceeds or not. 72 For the above reasons, I do not think it appropriate to order separate meetings of IBNR and non-IBNR Scheme Creditors. 73 It should be emphasised that if the meetings reveal a relevant problem, it will remain open to the Court not to approve the scheme. Indeed, although the observations made by Lewison J in BAIC related to the convening stage, in fact in that case the meeting of creditors had already been held and the question of the appropriateness of the single meeting as against class meetings was being dealt with at the approval hearing, at which some creditors appeared to oppose the granting of the approval. It is a somewhat broad test and there could well be cases where the creditors, given the chance to meet, prove more flexible, cohesive or mutually accommodating than their respective lawyers ahead of the event would have expected and that creditors, even lumped together, find no unfairness and more that is in common between them than might have been thought to be divisive. One (albeit unlikely) consequence of the application of a set-off is that the Scheme Creditor may be indebted to the Scheme Company. 75 The fact of the existence of a set-off does not, however, change the fundamental nature of the compromise between the Scheme Company and the Scheme Creditors. In all cases, the issue to be decided by the Scheme Creditors is whether they wish to have their claims "accelerated" and valued now, or to call on their reinsurance indemnity in the ordinary course of run-off. It is by no means "impossible" for Scheme Creditors to discuss and consider that issue in circumstances where some of them will have countervailing amounts set off against their claims. 76 For these reasons, I think that it is appropriate for only one meeting of the Scheme Creditors of each Scheme Company to be convened. Where a Scheme Company has sufficient information to make its own determination of the value of a Scheme Creditor's claim, it will pre-complete that Scheme Creditor's Claim Form, inserting an estimated value of the claim. The Scheme Creditor may accept that value, or it may reject it and specify a different value. 78 The value of claims for voting purposes will be determined by the Chairperson of the meeting of Scheme Creditors. That advice will be based upon the principles set out in the Estimation Methodology, referred to earlier. 80 Finally, any remaining concern will, of course, be able to be raised by a Scheme Creditor at the confirmation hearing or, if it is applicable, pursuant to s 1321 of the Corporations Act . In particular, the proposed Explanatory Statement complies with s 112(1). In particular, the Scheme Booklet, incorporating the Explanatory Statement and the proposed schemes, has been provided to them. 83 Both APRA and ASIC were notified of the date of the hearing, and indicated that they did not intend to appear to oppose the making of the orders sought. I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. The Scheme Creditors of NRG London are defined in the NRG London scheme of arrangement as creditors of NRG London in respect of liabilities (including potential and future liabilities) under reinsurance contracts written through the Australian branch of NRG London, but excluding liabilities under reinsurance contracts not written through the Australian branch of NRG London. The Scheme Creditors of NRG Victory are defined in the NRG Victory scheme of arrangement as creditors of NRG Victory in respect of liabilities (including potential and future liabilities) under reinsurance contracts written through NRG Victory, but excluding liabilities under reinsurance contracts that were transferred to Life Reinsurance of Australasia (now Hannover Life Re of Australasia Ltd) in 1993. The purpose of the meetings is to consider, and if thought fit, agree to schemes of arrangement (with or without modification) proposed between NRG London and its Scheme Creditors and between NRG Victory and its Scheme Creditors. Scheme Creditors may vote in person at the meetings or may appoint another person as their proxy to attend and vote in their place. Any Scheme Creditor may obtain a copy of the proposed scheme of arrangement, the Explanatory Statement and the proxy and voting form required to be furnished pursuant to the Corporations Act by requesting the same by email to [email protected], by fax to the attention of Ross Littlewood on (61) (02) 9274 3033, or post by issuing a postal service request to Ross Littlewood, NRG London Reinsurance Company Limited, Level 21, Tower Building, Australia Square, 264 George Street, Sydney, New South Wales, 2000. If you are in any doubt as to any aspect of this proposal or as to the action you should take, you should consult your insurance broker or other financial or professional adviser without delay. Time statements are made: this Scheme Booklet is dated 5 July 2006. The statements, opinions and information contained in this Scheme Booklet are made, held or given respectively as at the date of this Scheme Booklet, unless another time is specified and such statements, opinions and information are made, held or given solely by or on behalf of the relevant Scheme Company unless expressly attributed to another party. Service of this Scheme Booklet shall not give rise to any implication that there has been no change in the facts set out in it since such date. Subject to any obligations under the Corporations Act or any other applicable laws and regulations, each Scheme Company has no obligation to, and will not, disseminate after the date of this Scheme Booklet, any updates or revisions to any such statements or any change in events, conditions or circumstances on which any of those statements are based. No admissions: nothing contained in this Scheme Booklet constitutes an admission of any fact or liability on the part of either Scheme Company or any other person in respect of any asset to which they may be entitled or any claim against them. No estimate of the amount of any claim against a Scheme Company specified in the voting form, or otherwise provided for voting purposes, shall be taken into account in calculating payments under the Schemes. Any such estimate shall only be used for voting purposes at the meetings of Scheme Creditors to consider the Schemes. Summary qualified by Schemes: the summary of the principal provisions of the Schemes and related matters contained in this Scheme Booklet is qualified in its entirety by reference to the Schemes themselves, the full text of which is set out in Section 6. Consequently, if such representations are made, they should not be relied upon. ASIC: a copy of this Scheme Booklet has been lodged with ASIC under section 412(6) of the Corporations Act . ASIC has been requested to provide a statement, that ASIC has no objection to the Schemes. If ASIC provides this statement, then it will be produced to the Court at the time of the Court hearing to approve the Schemes. Neither ASIC nor any of its officers take any responsibility for the contents of this Scheme Booklet. APRA: a copy of this Scheme Booklet has been provided to APRA. Neither APRA, nor any of its officers, take any responsibility for the contents of this Scheme Booklet. APRA has no formal role in relation to schemes of arrangement pursuant to section 411 of the Corporations Act , but in its capacity of prudential regulator of general insurers has confirmed that it has no objection to the Schemes proceeding. Court: an order by the Court under Section 411(1) and (1A) of the Corporations Act is not an endorsement of, or any other expression of opinion, on the Schemes. No financial advice: no Scheme Creditor should construe the contents of this Scheme Booklet as legal, tax, financial or other professional advice. This Scheme Booklet does not take into account the specific investment objectives, financial situation and particular needs of Scheme Creditors. Scheme Creditors should read this Scheme Booklet carefully, and in its entirety, before making a decision as to how to vote on the resolutions to be considered at the Scheme Meetings. Each Scheme Creditor should consult its own financial and/or professional advisers as to the legal, tax, financial or other matters relevant to the action it should take in connection with the Scheme. Forward-looking statements: this Scheme Booklet may contain forward-looking statements relating to future matters which are subject to known and unknown risks, uncertainties and other important factors that could cause the actual conduct, results, performance or achievements of either Scheme to be materially different from those expressed or implied by such statements. Neither the Scheme Companies, nor their associates or respective officers and advisers, give any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Scheme Booklet will actually occur. You are cautioned not to place undue reliance on these forward-looking statements. Capitalised terms: when used in this Scheme Booklet, capitalised terms have the meanings set out in section 11. Guidance Notes and instructions for completion of the proxy and voting form are set out on the forms themselves. The primary objective of the Schemes is to conclude the run-off of all business of NRG Victory and all business of NRG London written through its Australian branch at an earlier stage than would otherwise be possible. The NRG London (Australian branch) Scheme will not relate to any business of NRG London that was not written through its Australian branch. This objective will be achieved by establishing an accelerated Claims agreement process whereby all Claims by Scheme Creditors against each Scheme Company, including future and contingent Claims, will be valued, finally determined and paid in full earlier than would be possible through a normal run-off. These summaries are a guide only and should not be relied upon instead of reading the terms of the Schemes set out in Section 6 and the notices of the Scheme Meetings which are due to be held on 15 August 2006 at the offices of Clayton Utz, Level 34, No 1 O'Connell Street, Sydney NSW 2000 commencing at 10:00 am in the case of NRG London, and 10:30 am in the case of NRG Victory set out in Section 7. Proxy and voting forms may also be handed in at the registration desk at the relevant Scheme Meeting prior to the commencement of the Scheme Meetings (see Section 2.9); and • attend the relevant Scheme Meeting(s). The Scheme Meetings will be held on 15 August 2006 at the offices of Clayton Utz, Level 34, No 1 O'Connell Street, Sydney NSW 2000, commencing at 10:00 am. Where the Scheme Company has sufficient information to do so, it will pre-complete each Claim Form sent to any Scheme Creditor known to it at the Effective Date with an estimate of the value of the Claims of the Scheme Creditor. It will not pre-complete an amount with respect to IBNR. In order to qualify for payments under the Scheme, Scheme Creditors must duly submit their Claim Form in accordance with the Scheme by the Claims Submission Date, that is, no later than 11:59 pm Sydney time on the first business day falling 120 days after (but not including) the Effective Date. Each Scheme Company will endeavour to agree the value of the Scheme Creditor's Claim with the Scheme Creditor. If the valuations of such Claims cannot be agreed, they will be determined by the Scheme Adjudicator in accordance with the provisions of the Scheme, with limited rights of review. Claims which are agreed or determined in this way will become Agreed Claims (Pre Set-Off). Once a Claim becomes an Agreed Claim (Pre Set-Off), set-off and other relevant deductions as described in Section 2.9 will be applied. The amount of the Scheme Creditor's Claim after such deductions will become the Scheme Creditor's "Final Determined Claim". Final Determined Claims will be paid in full at the values so agreed between the applicable Scheme Company and Scheme Creditor, or as otherwise determined in accordance with the applicable Scheme. In short, each Scheme, will effect a mass commutation between the Scheme Company and its Scheme Creditors. Section 3 summarises the terms of the Schemes if they become effective. Each Scheme establishes a method by which the present and future Claims of the Scheme Creditors will be valued as at the Valuation Date, 30 June 2006, and paid in full at the values agreed or determined in accordance with the provisions of the Schemes, at the earliest possible opportunity. A scheme of arrangement, such as that proposed here, is a compromise or arrangement between a company or a registered foreign company and its creditors (or any class of them), entered into pursuant to section 411 of the Corporations Act . Each of the Scheme Companies is proposing a Scheme and each such Scheme is, in law, a separate Scheme. A Scheme Company does not have any liability or responsibility for the other Scheme Company's liabilities or obligations. Each such Scheme is capable of becoming effective whether or not the other Scheme becomes effective. Scheme Creditors should note that once a Scheme becomes effective, it will bind the applicable Scheme Company in respect of which it has become effective and all its Scheme Creditors worldwide, irrespective of whether they were notified of the Scheme and/or the Scheme Meetings or not and/or whether they voted at the Scheme Meeting or not, and if they voted, whether they voted for or against the relevant Scheme. As the Scheme Companies are solvent, the Scheme Companies intend to continue to pay these creditors in the normal course. The fact that this Scheme Booklet has been made available to you does not necessarily mean that you are a Scheme Creditor or that you will be affected by either Scheme. You may also wish to ask your broker for further details about your possible involvement with the Scheme Companies. Each Scheme will have the effect of concluding the run-off of the applicable Scheme Business earlier than would be the case if it were to continue until all Claims materialise and are agreed and paid in the normal course. Each Scheme Company considers that all of its Final Determined Claims will be paid in full, based on its present financial condition assuming all Claims were to run to their natural expiry and taking into account the anticipated costs of running-off the Scheme Business. There is, however, no absolute guarantee that each Scheme Company will have sufficient financial resources to settle all of its Final Determined Claims in full. A more detailed summary of the audited balance sheet of NRG London as at 31 December 2005, is included in Section 4.1. Note that the figures for NRG London are presented in Pounds Sterling and the figures for NRG London (Australian branch) in Australian Dollars. A more detailed summary of the audited balance sheet of NRG Victory as at 31 December 2005 is included in Section 4.2. The Scheme should enable its Scheme Creditors to have their Claims agreed or determined as Final Determined Claims and paid in full considerably sooner than if the run-off of the Scheme Company was to continue until all Claims mature and are paid in the ordinary course. If Claims are determined or agreed under the Scheme as Final Determined Claims, they can be paid as soon as practicable after the Effective Date. Administration costs which would have been incurred in running off the Scheme Company's relevant books of business over many years should be reduced materially by the Scheme. In recognition of this, the Scheme Company is committing to pay Claims without discount for the time value of money, provided that the Claim is projected to settle within 5 years. Claims with a projected settlement date greater than 5 years will be discounted, including Claims in respect of latent diseases (further details regarding this are set out in Section 5 dealing with the Estimation Methodology). The Scheme should enable its Scheme Creditors to achieve finality in respect of any Claims regarding the Scheme Business. Any concerns which Scheme Creditors may have over the continuation of a Scheme Company's run-off, or over the long-term future solvency of a Scheme Company, will be removed. Each Scheme is designed to enable Claims to be dealt with quickly and without protracted litigation, as each Scheme prohibits (without the prior written consent of the relevant Scheme Company), the commencement or continuation of any proceedings outside the mechanisms of the Schemes, where the purpose of such proceedings is to obtain payment of a Claim, or to establish the existence or quantum of a Claim. A Scheme Creditor may submit and continually revise its Claims up to the Claims Submissions Date (provided that it has not been notified that its Claim has been agreed by the Scheme Company in the meantime). Each Scheme will provide a practical and cost-effective process for agreeing all present and future Claims (including those which may not easily be evaluated, such as incurred but not reported losses (IBNR)), by way of a transparent Estimation Methodology. The Estimation Methodology is set out in Section 5. The Estimation Methodology has been developed by Scott Collings, the Scheme Actuary, who is also the approved actuary for the Australian branch of NRG London and NRG Victory. Mr Collings is a director of the actuarial firm 'Finity Consulting Pty Limited'. Mr Collings prepared the Actuarial Valuation Report of Insurance Liabilities of both the Australian branch of NRG London and NRG Victory as at 31 December 2005. In the event that agreement cannot be reached between a Scheme Company and a Scheme Creditor in relation to a Claim, the Scheme provides for the final and binding determination of that Claim by the Scheme Adjudicator in what is intended to be a fair and efficient manner. The simplified Claims agreement process has been designed to deal with Claims (including Notified Outstanding Claims and IBNR) as accurately and fairly as possible (see the main advantages discussed at Section 2.6). The effect of each Scheme will be to commute and terminate a Scheme Creditor's policy with a Scheme Company in return for a once-and-for-all payment. To facilitate the acceleration and payment of Claims, each Scheme provides a mechanism for cutting-off Claims. All Claims must be duly submitted on the Claim Form for proportional, non-proportional and IBNR Claims on or prior to the Claims Submission Date. Claims notified after the Claims Submission Date will be valued at an amount limited to the value of the Scheme Creditor's Claim which had already been finally agreed by the relevant Scheme Company on or before the Effective Date and which remains unpaid (if any). Such amounts will be sent to the relevant Scheme Creditor upon a request being made to Ross Littlewood (see page 3 above for contact details). For the avoidance of doubt, only amounts which have been pre-completed by the relevant Scheme Company on the relevant Scheme Creditor's Claim Form are considered by the relevant Scheme Company to be "finally agreed" for this purpose. To the extent that a Scheme Creditor has no such "finally agreed" Claim, its Claim will be valued at zero, and the relevant Scheme Company will have no further liabilities to it in respect of its Scheme Business. If a Scheme Creditor wishes to receive payment in respect of any other amounts, it must submit a Claim Form, providing the necessary information in respect of its Claims, prior to the Claims Submission Date. The Schemes may result in certain large IBNR Claims being submitted, or further information being provided in respect of known Claims, which may significantly increase the Liabilities of the Scheme Companies in respect of the Scheme Business. Theoretically, this could prejudice Scheme Creditors whose Claims are agreed and settled later than others if this material adverse change impacted on the Scheme Companies capacity to pay any remaining Scheme Creditors. However, the Scheme Companies do not believe this is a significant risk given the significant surplus of assets over liabilities of the Scheme Companies, and the capacity of the Scheme Companies to revert to run-off (described in Section 3.17 below). It is impossible, however, to address each Scheme Creditor's individual circumstances, and as such, it is impossible to regard this list of advantages and disadvantages as exhaustive. Each Scheme Creditor is advised to make its own assessment of how the relevant Scheme would affect its interests. Each Scheme Company considers that the main advantages referred to above outweigh the possible disadvantages. The Scheme Meetings have been convened as directed by the Court, for the purpose of considering and, if thought fit, approving the Scheme in relation to each Scheme Company. The Scheme Meetings will be held on 15 August 2006, at the offices of the offices of Clayton Utz, Level 34, No 1 O'Connell Street, Sydney, NSW 2000, commencing at 10:00 am (Sydney time), in respect of the NRG London (Australian branch) Scheme and 10:30 am, (Sydney time), in respect of the NRG Victory Scheme. Each Scheme Company is of the view that all Scheme Creditors should vote at any applicable Scheme Meeting, irrespective of whether they have proportional, non-proportional or IBNR Claims. Each Scheme Company considers that one Scheme Meeting for its Scheme is appropriate given that, under the Scheme, Scheme Creditors do not give up or acquire rights which are so dissimilar as to make it impossible for Scheme Creditors to consult together with a view to their common interest. Notice of the Scheme Meetings is included in Section 7. It may also be obtained by email, fax or post by issuing a postal service request to a Scheme Company using the contact details given on page 3 above. An individual appointed as corporate representative to attend a Scheme Meeting on behalf of a Scheme Creditor who is a corporation, partnership or other unincorporated body, must bring with him or her to the relevant Scheme Meeting, a form or appointment executed by the corporation either under common seal, or by a director and secretary, by a partner on behalf of the partnership, or by the individual (as the case requires). Enclosed with this Scheme Booklet is a proxy and voting form, to be used for voting at the Scheme Meetings. The proxy and voting form can be used for all Claims against all Scheme Companies. A copy of the proxy and voting form can be found in Section 8 of the Scheme Booklet. Each Scheme Creditor should indicate on the proxy and voting form how it intends to vote in respect of each Scheme Company against which it maintains a Claim. To assist Scheme Creditors, where the relevant Scheme Company has sufficient information to do so, it will pre-complete the proxy and voting form of known Scheme Creditors, indicating its estimate of the value of the Scheme Creditor's Claims. No estimate will be included for IBNR, as the Scheme Companies do not provide for IBNR on a Scheme Creditor by Scheme Creditor basis. Any details of Claims provided are intended to assist Scheme Creditors in completing their proxy and voting form and should not be regarded as a complete and accurate list of all Claims of a Scheme Creditor that may be affected by the Scheme. The Scheme Creditor may accept this statement of Claims and value, or may alter the details. The proxy and voting form must be returned to the Scheme Company. Scheme Companies, (re)insurance brokers, agents or intermediaries may be able to assist Scheme Creditors in confirming or identifying Claims. Further copies of the proxy and voting form are available upon request to the relevant Scheme Company (see page 3 above for contact details). Whether or not Scheme Creditors intend to be present in person at the relevant Scheme Meeting, they are requested to complete and sign the proxy and voting form in accordance with the instructions printed on the proxy and voting form to the Scheme Company c/o the person and address specified on page 3, above and the Guidance Notes accompanying the proxy and voting form and return the proxy and voting form as soon as possible, and in any event so that they are received by 5:00 pm (Sydney time) on 11 August 2006. Appointing a proxy will not prevent a Scheme Creditor from attending and voting in person at the relevant Scheme Meeting. However, a proxy will not be able to vote if the relevant Scheme Creditor attends the relevant Scheme Meeting and votes in person. Proxy and voting forms may also be handed in at the registration desk at the relevant Scheme Meeting prior to the commencement of the Scheme Meeting. Please note that faxed and emailed forms of proxy and voting forms will only be accepted if they are legible. Each Scheme Company would like as many votes as possible to be cast at its Scheme Meeting (whether in person or by proxy). Each Scheme Creditor is therefore encouraged to sign and return its proxy and voting form as soon as possible. The chairperson will be Nancy Milne (see Section 10.9 for further details) and Ian Hutchinson in her absence. In the event that either Nancy Milne or Ian Hutchinson has a conflict of interest in relation to the determination of any issue the subject of the Scheme Meetings, the Scheme Adjudicator will be the chairperson for the purpose of making any decision or determination in relation to which Nancy Milne or Ian Hutchinson has such a conflict. Account will also be taken of any known deduction, set-off or cross-claim. If the sum of the deduction, set-off or cross-claim exceeds the value of the Claim, the value of the Claim for voting purposes will be zero. The Chairperson has the power to reject a Claim, in whole or in part, for voting purposes only if the Chairperson considers that it does not represent a reasonable assessment of the sum due from a Scheme Company. The decision of the Chairperson as to the value to be placed on a Claim for voting purposes is final (subject to an overriding decision of the Court at the second court hearing). Where the Chairperson has amended a Scheme Creditor's assessment of the value of its Claims for voting purposes, the Chairperson will, if possible, notify the relevant Scheme Creditor of such amendment, and the reasons for the amendment before the Scheme Meetings and, in any event, after the Scheme Meeting but before the second court hearing. Scheme Creditors should note that information and estimates provided in relation to the proxy and voting form may not be protected by legal professional privilege and may be required to be disclosed in any relevant future legal proceedings. Scheme Creditors should consult their own legal advisers as to the consequences of furnishing such particulars in the event that they are, or may become, involved in any litigation. However, this summary should not be relied upon as a substitute for reading the Schemes (set out in Section 6) in their entirety. Consequently, any entitlement to payment in respect of a Final Determined Claim under a Scheme will be reduced to an amount determined by the relevant Scheme Company after taking into account, amongst other things, the money, Property or other benefit received by the Scheme Creditor, as well as any costs incurred by the Scheme Company as a result of the Proceedings. If any such advance payment to a Scheme Creditor exceeds the amount of its Final Determined Claim, the Scheme Creditor will be required to repay the balance immediately to the relevant Scheme Company to the extent permitted by law. These provisions will operate without prejudice to any rights of action the relevant Scheme Company may have against such a Scheme Creditor. Such interest will be calculated from the date provided for in the relevant contract, statute or law, to the day prior to the date on which payment is made in respect of such Final Determined Claim, in accordance with the relevant Scheme. Scheme Creditors will also be entitled to receive default interest (calculated in accordance with the Scheme) on Final Determined Claims, where such Final Determined Claim has been finally agreed or otherwise determined, but remains unpaid by the relevant Scheme Company for 90 days or longer from the date of such agreement or determination. No other interest will be payable. Where the amount to be applied in set-off against the Scheme Creditor's aggregate Agreed Claim (Pre Set-Off) is payable in a different currency to the currency of the Agreed Claim (Pre Set-Off), the amount to be applied in set-off shall be converted to the relevant currency of the Agreed Claim (Pre Set-Off), at the Relevant Rate of Exchange (as defined in the applicable Scheme). Final Determined Claims shall be denominated and paid in the predominant currency in which the Claims arise, unless otherwise requested by a Scheme Creditor (however, each Scheme Company has sole discretion whether or not to agree to such request). Brokers and agents are urged to notify all possible Scheme Creditors of the action that they should consider taking with regard to the Scheme and to advise Scheme Creditors to complete and submit their Claim Forms by the Claims Submission Date. To assist Scheme Creditors, where the Scheme Company has sufficient information to do so, it will pre-complete each Claim Form sent to any Scheme Creditor known to it (at the Effective Date) with its estimate of the value of the Scheme Creditor's Claims. Scheme Creditors will not be required to submit a Claim Form or provide any supporting information if they agree with the pre-completed amounts. No amount will be pre-completed in respect of IBNR. Scheme Creditors will be required to complete or correct their Claim Form, making such amendments or additions to the details as may be necessary, and to submit the Claim Form to the relevant Scheme Company, together with any appropriate supporting information (as described in the Guidance Notes to the Claim Form and in the Estimation Methodology). Scheme Creditors are requested to submit Claim Forms by email (provided any attachments are submitted in Microsoft Word, Microsoft Excel or pdf format only), fax or post, in accordance with the instructions set out in the Guidance Notes attached to the Claim Form. Any details on Claim Forms that have been pre-completed by the Scheme Company are intended to assist the Scheme Creditor in completing its Claim Form, and should not be regarded as a complete and accurate list of all Claims of a Scheme Creditor that may be affected by the Scheme. If a Scheme Company becomes aware of the existence of a Scheme Creditor after the Effective Date, but before the Claims Submission Date, it shall send the above mentioned notice to that Scheme Creditor as soon as reasonably practicable and, if practicable, before the Claims Submission Date. An Estimation Methodology is set out in Section 5 to provide guidance to Scheme Creditors in estimating their Claims. The purpose of the Estimation Methodology is to illustrate the techniques that will be employed by each Scheme Company, in association with the Scheme Actuary (as and when required), in reviewing Scheme Creditors' Claims. The Estimation Methodology also sets out the supporting evidence that the relevant Scheme Company will expect to see in relation to Scheme Creditors' Claims. Scheme Creditors will also be invited to submit details of any sums which they owe to a Scheme Company, which are to be set-off in reduction of the Claims of that Scheme Creditor against the relevant Scheme Company. Where there are mutual balances due between a Scheme Company and a Scheme Creditor (including, but not limited to, contingent, prospective and unliquidated balances), it is administratively convenient for those balances to be set-off against each other, leaving a net balance due to, or from, a Scheme Creditor. Only the balance remaining after the application of set-off shall be payable by the Scheme Company or the Scheme Creditor (as appropriate). Each Scheme Creditor is requested to complete its Claim Form in accordance with the instructions on the Claim Form, (a copy of which is set out in Section 9), and to submit it by email, fax or post so as to reach the Scheme Companies at any time on or before the Claims Submission Date. Scheme Creditors should note that particulars as to the estimates of the amount of any future Claims, furnished by a Scheme Creditor, may not be protected by legal professional privilege under Australian law, and may be discoverable at the insistence of a third party with a Claim against the Scheme Creditor, in any action or Proceedings to which the Scheme Creditor may be party. Scheme Creditors should consult their legal advisers as to the consequences of furnishing such particulars in the event that they are, or may become, involved in any litigation with third parties. Brokers or agents who submit Claim Forms on behalf of their clients who are Scheme Creditors are requested to provide evidence of their authority (to act on behalf of such Scheme Creditors) to the applicable Scheme Company. In order to make this election, a Scheme Creditor should follow the instructions to make a proxy and voting form election (a copy of which is included at Section 9). Claims which are not adequately substantiated in the proxy and voting form (or indeed in any Claim Form), may ultimately not be agreed by the relevant Scheme Company. This date will be notified to Scheme Creditors in the notices and advertisements referred to in Section 3.6. Each Scheme Creditor will be entitled to submit a new or revised Claim Form and to provide revised or further supporting information to the applicable Scheme Company in respect of its Claims, at any time up to the Claims Submission Date. No Scheme Creditor will have any right after the Claims Submission Date to submit a Claim Form, or a revised Claim Form. A Scheme Creditor may provide revised or further supporting information after the Claims Submission Date in response only to a notice or request from the Scheme Company or the Scheme Adjudicator. A Scheme Company may, in its absolute discretion, treat a Claim Form that is not submitted by the Claims Submission Date as if it had been submitted by the Claims Submission Date. It is intended that this discretion will only be exercised in the event of exceptional and unforeseen circumstances beyond the control of Scheme Creditors, such as in the event of a postal strike, widespread telecommunications failure or other event of similar scale and nature. Where a Scheme Creditor fails to submit a Claim Form to a Scheme Company by the Claims Submission Date, the total Claims of that Scheme Creditor will be valued at an amount limited to the value of the Scheme Creditor's Claims which had already been finally agreed by the relevant Scheme Company on or before the Effective Date, and which remain unpaid, (if any). Only amounts which have been pre-completed by the Scheme Company on the relevant Scheme Creditor's Claim Form as its estimate of the Scheme Creditor's Claims are considered by the Scheme Company to be "finally agreed" for this purpose. If a Scheme Creditor wishes to receive payment in respect of any other amounts (including IBNR), it must submit a Claim Form in respect of such Claim on, or prior to, the Claims Submission Date. If a Scheme Creditor fails to submit its Claim Form by the Claims Submission Date, its Claim will be valued at zero, and the applicable Scheme Company will have no further Liabilities to it in respect of the Scheme Business (save to the extent of any Claim which has already been "finally agreed" on or before the Effective Date, as described above). This review will form the basis of the determination of any Scheme Creditor's Agreed Claim (Pre Set-Off) under the applicable Scheme. A Scheme Company will consider, amongst other things, whether any estimates relating to future or contingent Claims are reasonable. If required, a Scheme Company will request that the Scheme Actuary review estimates of the amount of any Notified Outstanding Claims and/or IBNR Claims, furnished by a Scheme Creditor, for reasonableness. If a Scheme Creditor submits a Claim Form for Notified Outstanding Claims and/or IBNR Claims, but does not submit an estimate of the amount concerned, the relevant Scheme Company may not be able to agree the value of those Claims under the relevant Scheme, and this may result in such Claims being valued at nil, and being fully and finally discharged. Scheme Creditors are therefore urged to ensure that they submit an estimate of the amount of any Claims for Notified Outstanding Claims and/or IBNR Claims (if applicable). If a Scheme Company does not agree with the value attributed by the Scheme Creditor to its Claims against it, or requires further information, it will notify the Scheme Creditor as soon as reasonably practicable. The Scheme Creditor shall provide any further information requested by the Scheme Company within 30 days of deemed receipt (in accordance with clause 9.4(b) of the Scheme) of such request. If that Scheme Company is still unable to agree with the value attributed by a Scheme Creditor against the Scheme Company after the provision of such additional information, it may send the Scheme Creditor an Alternative Claim Form, setting out the values which it is prepared to accept in respect of that Scheme Creditor's Claim. If the Scheme Creditor does not accept the values attributed to its Claims in the Alternative Claim Form, it must give notice to the Scheme Company, within 30 days of the Scheme Creditor's deemed receipt of the Alternative Claim Form, that it wishes its Claim to be referred to the Scheme Adjudicator, who in the first instance will be Mark Moyes of 3 red Pty Ltd. If the Scheme Creditor does not dispute the Alternative Claim Form within this 30 day period, its Claim will be valued at the amount set out in the Alternative Claim Form, and this will become the Scheme Creditor's Agreed Claim (Pre Set-Off). The Scheme Adjudicator will make a final determination in respect of each Disputed Claim referred to him, in accordance with the procedure set out in the applicable Scheme. Except as required by law, the Scheme Adjudicator's decision will be final. The Scheme Company shall notify the Scheme Creditor of the value attributed to its Final Determined Claim or of the amount owing by a Scheme Creditor to the Scheme Company as soon as reasonably practicable following its determination. If the Scheme Company and a Scheme Creditor cannot agree on the appropriate deductions to be made from an Agreed Claim (Pre Set-Off), in order to arrive at the Final Determined Claim, the dispute will be referred to the Scheme Adjudicator for final determination. The Scheme Companies shall make a full and final payment to the relevant Scheme Creditor in respect of any Final Determined Claim, as soon as reasonably practicable following its determination. The Scheme Creditor shall pay any amount owing to the Scheme Company as soon as reasonably practicable following its determination. Disputed Claims will be dealt with in accordance with the Dispute Resolution Procedure (set out in clause 4.6 of the attachment to each Scheme), by the Scheme Adjudicator, who is independent of the Scheme Companies. Any Claim which has not been agreed by 11:59 pm Sydney time, on the day on which the period of 365 days from, but not including, the Claims Submission Date elapses, the Long Stop Date, shall be referred to the Scheme Adjudicator, unless both the Scheme Creditor and Scheme Company, and on such terms as they may, otherwise agree. The Scheme Adjudicator's decision will be final and binding on the relevant Scheme Company and Scheme Creditor to the extent permitted by law (see Section 3.20 and Section 3.21). The Scheme Creditor's Final Determined Claim will be determined by deducting any right of set-off, counterclaim or other deduction as provided for by the Scheme, from the Scheme Creditor's Agreed Claim (Pre Set-Off). The relevant Scheme Company will make payment in full to its Scheme Creditors in respect of their Final Determined Claims as soon as reasonably practicable, after the determination of each such Final Determined Claim. The Scheme Companies may, at their discretion, if requested by a broker or agent who has provided written evidence to the Scheme Company of his/her authority to act on behalf of a Scheme Creditor, and provided no notice is received by that Scheme Company to the contrary from such Scheme Creditor, make payments to the broker or agent in respect of the Scheme Creditor's Final Determined Claim. Payment in full by a Scheme Company to a Scheme Creditor, or any broker or agent duly authorised by the Scheme Creditor to receive such payment, in respect of any Final Determined Claim will be full and final settlement of such Final Determined Claim and the Scheme Company will have no further Liability to that Scheme Creditor in respect of the relevant Final Determined Claim. Payments will be made by way of electronic funds transfer at the expense of the relevant Scheme Company, to a bank account specified by the Scheme Creditor. Alternatively, if requested to do so by the Scheme Creditor, the Scheme Company may, at its expense, make payments by cheque and send payment by post. The dispatch of cheques and payments made by way of electronic funds transfer will constitute a full discharge of a Scheme Company's Liability to Scheme Creditors in respect of Claims. If a payment to a Scheme Creditor is uncashed or otherwise unclaimed by the intended payee the unclaimed monies will be dealt with by the Scheme Company in accordance with the Unclaimed Money Act 1995 (NSW). However, each Scheme Company retains a sole discretion to re-issue relevant payment instructions or unpaid cheques in respect of the unclaimed amount up to and including the date that the Schemes are terminated. Some brokers may have made payments to Scheme Creditors in respect of Claims against, or premiums due from, the Scheme Companies. Where that funding took place otherwise than at the request of, or under a contractual obligation to, the Scheme Creditor, the broker will only be entitled to claim from the Schemes, in respect of the funded amount, if it provides evidence of the assignment to it of the funded Claim, or written confirmation from the policyholder that the broker may claim in its place, in respect of the funded Claim. Brokers should provide such evidence or written confirmation at the time of submitting the Claim Form. The Scheme Adjudicator will deal with Disputed Claims in accordance with the Dispute Resolution Procedure. A copy of Mark Moyes' curriculum vitae, describing his qualifications and experience, is set out in Section 10.7. The Scheme Adjudicator will act as an independent expert, and not as an arbitrator, and his specific function will be to adjudicate any Disputed Claim and/or Disputed Set-Off or Deduction referred to him, in accordance with the terms of the applicable Scheme. To assist him in this regard, the Scheme Adjudicator will be entitled to engage such appropriate professional advisers as he considers necessary. Each Scheme obliges the Scheme Adjudicator to notify any conflicts of interest he may have, to the relevant Scheme Company. It also provides for the appointment of an alternate Scheme Adjudicator to deal with any Claims where conflicts of interest have arisen. Each Scheme provides that any such appointment should be made in consultation with the particular Scheme Creditor. Scheme Creditors will not be entitled to challenge acts done, or omitted to be done, in good faith, and with due care, by the Scheme Adjudicator in performing his duties or functions under the Schemes. Further, the Scheme Adjudicator will not be liable for any loss of a Scheme Creditor unless such loss is attributable to his negligence, wilful default, wilful breach of duty or trust, fraud or dishonesty. Scott Collings is the approved actuary for the Australian branch of NRG London and NRG Victory. The Scheme Actuary will provide advice and assistance to the relevant Scheme Company and to the Scheme Adjudicator, (on behalf of the Scheme Companies), in respect of the valuation of Claims and the application of the Estimation Methodology. Scheme Creditors will not be entitled to challenge acts done, or omitted to be done, by the Scheme Actuary in performing his duties or functions under the Schemes, and the Scheme Actuary will not be liable for any loss of a Scheme Creditor unless such loss is attributable to his fraud or dishonesty. Accordingly, no Scheme Creditor shall bring or institute any proceedings, claims or complaints against the Scheme Actuary, save in the case of his fraud or dishonesty (or the fraud or dishonesty of his employees or delegates). To the extent the provision applies, the Court has power to confirm, revise or modify the act, omission or decision, and make such orders as it thinks fit. As such, and despite anything in this Scheme Booklet to the contrary, the acts, omissions or decisions of persons administering the Schemes may be reviewable pursuant to section 1321(a) of the Corporations Act . Similarly, a Scheme Company must meet the reasonable calls for assistance from the Scheme Adjudicator, in connection with the performance of his duties under a Scheme. These are specified in each Scheme. The Scheme Company may, in its absolute discretion, deduct any amount to be paid by the Scheme Creditor to the Scheme Adjudicator, from the Scheme Creditor's Agreed Claim (Pre Set-Off). For such purposes, the Scheme Creditors and the Scheme Companies irrevocably submit to the non-exclusive jurisdiction of the Court. It is authorised by the Financial Services Authority to carry out, (but not to effect), contracts of general insurance. NRG London has a current variation of permission to allow it to effect contracts of general insurance solely for the purpose of accepting business from NRG Fenchurch Insurance Co. Ltd under a Part VII transfer. NRG London intends shortly to apply to cancel the variation of permission. NRG London is a direct, wholly owned, subsidiary of NRG Victory Holdings Limited, whose ultimate parent is ING Groep N.V., a Netherlands incorporated and listed entity. NRG London was incorporated on 20 May 1960, as London Reinsurance Company Limited (Company Registration No. 660030). Its name was changed to New London Reinsurance Company Ltd on 31 January 1961, and to NRG London Reinsurance Company Limited on 1 July 1975. NRG London was registered as a foreign company in Australia under the precursor to the Corporations Act on 28 September 1973. It remains registered as a foreign company in Australia, under the Corporations Act . NRG London (Australian branch) does not have a separate legal personality to NRG London. Rather, for prudential and regulatory purposes, APRA requires NRG London to hold assets in Australia sufficient to meet its expected Australian Liabilities. APRA accordingly requires NRG London to maintain separate accounts in respect of its Australian operations. Those accounts depict the financial condition of a notional entity referred to as a "branch". As such, while it may be convenient to speak of NRG London (Australian branch) as if it were a separate legal entity, such references should be understood in the above context. NRG London (Australian branch) was an active reinsurer in the Australian market between 1974 and 1991 inclusive. NRG London (Australian branch) ceased writing business in Australia in 1991 and its treaties expired in 1992. NRG London (Australian branch) is only authorised by APRA under the Insurance Act 1973 to conduct insurance business in Australia for the sole purpose of discharging Liabilities under policies entered into prior to 18 June 2002. Its registered address in Australia is Level 21, Tower Building, Australia Square, 264 George Street, Sydney, New South Wales, 2000, Australia. From 1974 to 1983, NRG London (Australian branch) underwrote predominantly property proportional reinsurance contracts which were short tail in nature. From 1983 to 1991, NRG London (Australian branch) wrote, in addition to the property proportional accounts, non-proportional liability contracts. These contracts were higher layer business, protecting general third party portfolios, as well as statutory classes of business, such as compulsory motor vehicle third party and workers compensation. The pool manager, ANIP Pty Ltd, has provided a list of the policyholders with outstanding claims. NRG London's (Australian branch) share of those Claims as at 31 December, 2005, amounted to AUD $22.00. The contractual relationship between the underwriting agent (or pool manager), and the pool members in such a situation, is that of principal and agent: the underwriting agent accepts business on behalf of each of the pool members individually, so that each member is bound only to the extent of the line written on his behalf, pursuant to the terms of the agency or pool agreement. In the period since 1991, the Australian branch of NRG London has been in run-off, and has actively commuted either individual claims, treaties or entire relationships with ceding companies. In relation to the Claims outstanding of NRG London (Australian branch) as at 31 December 2005, this amount is supported by an Actuarial Valuation of Insurance Liabilities as at 31 December 2005, prepared by Scott Collings of Finity Consulting Pty Limited in accordance with the APRA General Insurance Prudential Standard, GPS210. Mr Collings is the Scheme Actuary and the approved actuary of NRG London (Australian branch). During the course of its investigation, Finity Consulting Pty Limited did not identify any issues that it believes could materially adversely impact on NRG London (Australian branch's) policyholders. It was initially called The Victory Reinsurance Company of Australia Ltd but changed its name to NRG Victory Australia Limited on 11 December 1991. NRG Victory is only authorised by APRA under the Insurance Act 1973 to conduct insurance business in Australia for the sole purpose of discharging liabilities under policies entered into prior to October 1993. Its current registered office is located at Level 21, Tower Building, Australia Square, 264 George Street, Sydney, New South Wales, 2000, Australia. NRG Victory was originally located in Melbourne, Victoria, but transferred its head office to Sydney in 1987. The Scheme does not relate to any reinsurance contracts which were transferred by way of a scheme in accordance with Division 9 of the Life Insurance Act 1945 to Life Reinsurance of Australasia Ltd (now Hannover Life Re of Australasia Ltd) in 1993, in accordance with the provisions of the Life Insurance Act 1945. Upon transfer, these reinsurance contracts effectively ceased to be a Liability of NRG Victory. NRG Victory wrote both life insurance and reinsurance and non-life reinsurance. Between 1970 and 1974, NRG Victory accepted non-life risk in South East Asia. This business was discontinued in 1974 with the underwriting being assumed by a related company. In 1986, NRG Victory established a branch in New Zealand. This branch was closed in 1996. In 1993, the underwriting activities of NRG Victory were affected by the cessation of underwriting activities at a NRG group level. Initially, it was expected that NRG Victory could be sold as a composite company, writing both life and non-life business. However, attempts to sell NRG Victory were unsuccessful. As a result, in late 1993, the life business was transferred by way of scheme prepared in accordance with Division 9 of the Life Insurance Act 1945, into a new company, and NRG Victory's non-life portfolio was put in run-off. In 1994, the new life subsidiary was sold to the Hannover Rückversicherung AG (50%) and E&S Rückversicherung (50%) and the administration of NRG Victory, which was now a pure non-life reinsurer, was transferred to Littlewood Services Pty Limited. NRG Victory also participated as a member of ANIP. The pool manager, ANIP Pty Ltd, has provided a list of the policyholders with outstanding claims. NRG Victory's share of those Claims as at 30 June, 2005, amounted to nil. The contractual relationship between the underwriting agent (or pool manager) and the pool members in such a situation is that of principal and agent: the underwriting agent accepts business on behalf of each of the pool members individually, so that each member is bound only to the extent of the line written on his behalf, pursuant to terms of the agency or pool agreement. In the period since 1994, NRG Victory has actively commuted either individual claims, treaties or entire relationships with ceding companies. In particular the total assets of $47,268,000 as at 31 December 2005, greatly exceeded total liabilities of $12,905,000. Of the $40,365,000 financial assets of NRG Victory as at 31 December 2005, these are comprised of Commonwealth Government, State Government and bank debt securities (except for $2,490,000 of other debt securities). In relation to the outstanding Claims of NRG Victory as at 31 December 2005, this amount is supported by an Actuarial Valuation of Insurance Liabilities as at 31 December 2005, prepared by Scott Collings of Finity Consulting Pty Limited in accordance with the APRA General Insurance Prudential Standard, GPS210. Mr Collings is the Scheme Actuary who is also the approved actuary of NRG Victory. Scott Collings is also the approved actuary of the Scheme Companies. This Estimation Methodology applies equally to both Schemes. The purpose of the Section is to explain to the Scheme Creditors of each Scheme, the basis on which Claims under each Scheme should be presented, and how Claims will be assessed and determined by the Scheme Actuary. The Estimation Methodology provides guidance on the method in which Claims should be presented by Scheme Creditors, and in particular, the supporting information that should be provided with the Claim Form. The speedy and equitable resolution of Claims will be assisted if Claims are presented in this way and if the assumptions used are considered by the Scheme Actuary to be on a Best Estimate basis. The three methodologies are applicable whether the Claim is under a proportional treaty, excess of loss treaty or facultative arrangement. If a Scheme Creditor believes it has a Claim under the Scheme that is not covered by one of these categories, the relevant Scheme Company should be approached to seek further advice from the Scheme Actuary. The vast bulk of the Scheme Creditors are located in Australia and to a lesser extent, New Zealand and the Pacific Islands. The Estimation Methodology therefore applies to Claims arising from Reinsurance Contracts in Australia, New Zealand and the Pacific Islands. If a Scheme Creditor believes there is a Claim under the Scheme arising in a different jurisdiction (especially relating to inwards reinsurance from the London Market or the United States), the Scheme Company should be approached to seek further advice from the Scheme Actuary. The Estimation Methodology has been prepared so as to set out the type of information and the approach the Scheme Company and the Scheme Actuary would expect Scheme Creditors to follow in calculating and justifying Claims. It does not, however, preclude Scheme Creditors from using other projection techniques, so long as these techniques are shown to be robust and they use assumptions that can be reasonably justified by the Scheme Creditor. It similarly does not preclude the Scheme Actuary from using an alternative estimation methodology, should individual claim circumstances warrant such an approach. Any Claim against the Scheme will be offset against any reinstatement premiums payable. Most such Claims arise under excess of loss treaty reinsurance arrangements. It applies only to Claims where the incident giving rise to the Claim is a single incident occurring at a specific time. Latent injury claims are dealt with in section 5.6. If so, the basis of indexation should be specified and the original and current values of the index number provided. Future indexation of the treaty should be allowed for until the anticipated date of settlement. The Scheme Company will pay the amount of the Claim so agreed at face value provided the Scheme Creditor expects to settle the underlying claim prior to 30 June 2011. For convenience the Estimation Methodology is described in terms of asbestos related diseases, but if another injury type is applicable, the Estimation Methodology applies with the necessary changes in terminology. The Scheme Company will pay the amount of the Claim so agreed at face value provided the Scheme Creditor expects to settle the underlying claim prior to 30 June 2011. Where the settlement date of the underlying claim is expected to be some time after 30 June 2011, the Claim will be reduced by 5.5% per annum for the period between 30 June 2011 and the expected settlement date. To allow reasonable equity with the Claims described in Section 5.5 and to reduce complexity, the settlement date can be approximated by the Claim reporting date in the calculations. The Scheme Company (a) The Scheme Company was incorporated in England (company number 660030) on 20 May 1960, as London Reinsurance Company Limited. (b) The Scheme Company's name changed to New London Reinsurance Company Limited on 31 January 1961, and on 1 July 1975, to NRG London Reinsurance Company Limited. (c) The Scheme Company established its Australian branch in September 1973, and it was registered as a foreign company under the precursor to the Corporations Act in Australia on 28 September 1973. (d) The Scheme Company ceased writing business through its Australian branch in 1991, and its authorisation under the Insurance Act 1973 , only permits it to carry on insurance business in Australia for the sole purpose of discharging liabilities under policies entered into prior to 18 June 2002. 2. "Excluded Liabilities" means Liabilities under Reinsurance Contracts not written through the Australian branch of the Scheme Company. The Scheme Company (a) The Scheme Company was incorporated in Victoria under the precursor to the Corporations Act on 26 November 1956 and its registration was transferred to New South Wales effective 2 August 1975. It was initially called The Victory Reinsurance Company of Australia Ltd but changed its name to NRG Victory Australia Limited on 11 December 1991. (b) The Scheme Company is only authorised by APRA under the Insurance Act 1973 to conduct insurance business in Australia for the sole purpose of discharging liabilities under policies entered into prior to October 1993. 2. "Excluded Liabilities" means Liabilities written under Reinsurance Contracts which were transferred to Life Reinsurance of Australasia in 1993, (now Hannover Life Re of Australasia Ltd ), under the Life Insurance Act 1945. " Adjudication Costs " has the meaning given to that term in clause 4.6(j)(i). " Admissible Interest " means any interest provided for in a relevant Reinsurance Contract or any relevant statute. " Advance Payment " has the meaning given to that term in clause 3.2(b) . " Agreed Claim (Pre Set-Off) " means the amount determined as being due in respect of a Scheme Creditor's Claim pursuant to clauses 4.5(b) , 4.5(d) , 4.5(e) , 4.6(f) or 4.6(h) prior to set-off and relevant deductions in accordance with the relevant Scheme. " Agreed Paid Losses " means Paid Losses which the Scheme Company determines (in its sole discretion, by reference to its computer records) were due and payable but unpaid by it on the Effective Date. "ASIC" means Australian Securities and Investments Commission. "Authorised Insurer" means a general insurer authorised to conduct business in Australia under the Insurance Act 1973 . If the Scheme Company is unable to obtain three quotes, the Bill Rate will be the rate reasonably determined by the Scheme Company to be the appropriate equivalent rate, having regard to prevailing market conditions. " Broker " means any broker who placed business with, or on behalf of, the Scheme Company or, if applicable, any successor to such a broker. "Business Day" means any day other than a Saturday, Sunday or public holiday on which banks are not generally open for business in Sydney. " Claim " means any claim against the Scheme Company (not being a claim in respect of Pre-Scheme Expenses or Scheme Costs) in respect of a Liability (other than an Excluded Liability), under, or in relation to, Scheme Business and to which the Scheme Company was subject at the Valuation Date, or to which the Scheme Company may become subject after the Valuation Date, by reason of an obligation incurred on, or before that date, including a claim for Admissible Interest. " Claim Form " means the document entitled "Claim Form" made available to Scheme Creditors and Known Brokers in accordance with the notices issued pursuant to clause 4.2(a) , which Scheme Creditors are required to Submit prior to the Final Claims Submission Date, in order to have their Claims agreed or determined. "Court" means the Federal Court of Australia. " Creditors' Meeting " means the meeting of the Scheme Creditors of the Scheme Company convened for the purpose of considering and, if thought fit, approving the Scheme. " Default Interest " means interest payable pursuant to clause 4.14(b) in circumstances where the Scheme Company fails to make payment in full of a Scheme Creditor's Final Determined Claim within 90 days from (but not including) the date of such Final Determined Claim having been determined. " Delegate " means any person to whom the Scheme Actuary delegates any of his powers, rights, duties or functions under the Scheme. " Disputed Final Determined Claim Notice " shall have the meaning given to that term in clause 4.7(b)(ii) . " Disputed Claim " means a Claim referred to the Scheme Adjudicator in accordance with clause 4.5(e) , 4.5(f) , 4.5(h) or 4.7(d) . " Dispute Resolution Procedure " means the procedure for the adjudication of disputes by the Scheme Adjudicator set out in clauses 4.6 , 4.7(d) , 4.7(e) and 4.7(f) . " Disputed Set-Off or Deduction " has the meaning given to that term in clause 4.7(b)(i). "Effective" where used in relation to the Scheme, means the coming into effect, pursuant to section 411(10) of the Act, of the order of the Court made under section 411(4)(b) of the Act. " Effective Date " means the date on which the Scheme becomes effective. " Employee " means, as the context shall admit, any partner in the same firm as the Scheme Actuary or any individual or corporate entity employed, whether under a contract of service or a contract for services, by that firm, by any company owned by that firm or the Scheme Actuary in connection with the performance or exercise of his powers, rights, duties or functions under the Scheme. " Estimation Methodology " means the method of estimation described at Section 5 to the Scheme Booklet. " Final Claims Submission Date " means 11:59 pm (Sydney time) on the 120th day after, but not including, the Effective Date (or, if such day is not a Business Day, the first Business Day thereafter). " Final Determined Claim " means the balance, if any, remaining due from the Scheme Company to a Scheme Creditor, following the deduction of those amounts referred to in clause 4.7(a) . " Final Determined Claim Notice " shall have the meaning given to that term in clause 4.7(b) . " Final Determined Claim Notification Date " shall have the meaning given to that term in clause 4.7(b) . " Guidance Notes " means the guidance notes in respect of the Claim Form explaining how to access, obtain, complete, amend and submit a Claim Form, and the manner in which a Scheme Creditor may provide any supporting documentation to the Scheme Company. " IBNR Claims " means a Claim under a Reinsurance Contract based on Liabilities of the Scheme Company, in respect of losses which have been incurred but have not been reported to the Scheme Company, and which are subject to potential recoveries under a Reinsurance Contract with the Scheme Company. " Known Broker " means a Broker of whose involvement in placing and/or administering a Reinsurance Contract, the Scheme Company is aware. " Liability " means any debt or liability (being a liability to pay money or money's worth) of a person, whether it is present or future, certain or contingent, whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion, including any liability under any enactment (in Australia or in any other jurisdiction), and any liability in contract, tort or bailment, or arising out of an obligation to make restitution or in any other manner whatsoever, provided that such expression does not include any debt or liability which is barred by statute under Australian law, or the law of any other jurisdiction, which applies to that liability or is otherwise unenforceable. For the avoidance of doubt, where any obligation or liability under a contract or policy is void or, being voidable, has been duly avoided, no obligation or liability shall arise in respect of such obligation or liability. " Long Stop Date " has the meaning given to that term in clause 4.5(h) . " Notified Outstanding Claims " means a Claim under a Reinsurance Contract, based on Liabilities of the Scheme Company in respect of losses which have been notified to the Scheme Company, but have not become Paid Losses, and which are subject to potential recoveries under a Reinsurance Contract. " Paid Losses " means Liabilities of the Scheme Company, in respect of losses of a Scheme Creditor arising pursuant to Scheme Business, which have been notified to the Scheme Company and which are certain in amount. " Post " means delivered by hand (including by a generally recognised commercial courier service), pre-paid first class post, or air mail. " Pre-Scheme Expenses " means all costs, charges, expenses and disbursements reasonably incurred by the Scheme Company in connection with the promotion and preparation of the Scheme, including the costs of holding the Creditors' Meeting, and the costs of obtaining the sanction of the Court of the Scheme. " Proceedings " means any form of proceedings in any jurisdiction or forum including, without limitation, any legal proceedings, demand, arbitration, alternative dispute resolution procedure, judicial review, adjudication, mediation, execution, seizure, distraint, forfeiture, re-entry, enforcement of judgment or enforcement of any security or any step taken for the purpose of creating or enforcing a lien. " Property " means all forms of property (including money, goods, things in action, land and every description of property wherever situated), and every description of interest, whether present, future, vested or contingent, arising out of, or incidental to, property and including, for the avoidance of doubt, all contributions to the assets of the Scheme Company. " Resolution Period " has the meaning given to that term in clause 4.7(d). " Reversion to Run-Off Date " has the meaning given to that term in clause 8.2(a). " Scheme " means, in respect of the Scheme Company, the scheme of arrangement pursuant to section 411 of the Act, in the form set out in this document with or subject to any modification, addition or condition approved or imposed by the Court. " Scheme Actuary " means Scott Collings of Finity Consulting Pty Limited, or such other person for the time being appointed as Scheme Actuary in accordance with clause 5.1(f) . " Scheme Adjudicator " means Mark Moyes of 3 red Pty Ltd, or such other person for the time being appointed as Scheme Adjudicator in accordance with clause 6.1 or, where the context may admit, an alternate Scheme Adjudicator in accordance with clause 6.1(b) . " Scheme Booklet " means the document bearing that title and dated the date hereof, explaining the effect of the Scheme to Scheme Creditors in compliance with section 412(1) of the Act and sent to Scheme Creditors in advance of the Creditors' Meeting. " Scheme Business " means all the Scheme Company's Reinsurance Contracts, excluding the Excluded Liabilities. " Scheme Period " means the period beginning on the Effective Date and ending on the Termination Date. " Submit " means duty to complete and submit a Claim Form to the Scheme Company (in accordance with the instructions thereon) whether by email, by facsimile or by Post, and " Submitted " and " Submitting " shall be construed accordingly. " Tax " means any form of taxation, levy, deduction, duty, charge, contribution, withholding, or impost of whatever nature (including any related fine, penalty, surcharge or interest) imposed, collected, assessed or withheld by, or payable to, a Tax Authority. " Tax Authority " means any government, state, municipality, or any local, state, federal or other fiscal, revenue, customs or excise authority, body or official, anywhere in the world in relation to Tax (including, in Australia, without limitation, the Australian Taxation Office or any successor thereto). " Termination Date " has the meaning given to that term in clause 8.1 . " Valuation Date " means 30 June 2006. Purpose of Scheme (a) The purpose of the Scheme is to provide a procedure for the agreement, determination or adjudication, and satisfaction of Claims as early as practicable. (b) The Scheme shall apply to all Claims. The Scheme will not apply to any Excluded Liabilities. 3. The Scheme 3.1 Restraint on proceedings by Scheme Creditors (a) Without prejudice to clause 3.1 (c) , except with the prior express written consent of the Scheme Company, no Scheme Creditor shall be permitted to institute or continue, any Proceedings whatsoever against the Scheme Company or its Property, to establish the existence, or amount, of a Claim. (b) Except to the extent that the Scheme Company has failed to perform any obligation to make a payment to a Scheme Creditor under the provisions of the Scheme, no Scheme Creditor shall be entitled to institute or continue any Proceedings whatsoever against the Scheme Company, or its Property, to enforce payment in whole, or in part, of any Claim. (c) Nothing in the Scheme shall preclude the Scheme Company from commencing or continuing any Proceedings against a Scheme Creditor. For the avoidance of doubt, the relevant Scheme Creditor shall be entitled to assert and prosecute a Claim against the Scheme Company in such Proceedings provided that: (i) the relevant Claim arises out of a Reinsurance Contract that is the subject matter of the Scheme Company's Claim in the relevant Proceedings; and (ii) the relevant Claim does not require the presence of third parties over whom the court or tribunal in question cannot have jurisdiction for its adjudication. 3.2 Effect of breach of clause 3.1(a) restraint (a) If, and to the extent that, a Scheme Creditor obtains an order, judgment, decision or award of a court or tribunal against the Scheme Company in relation to a Claim in contravention of clause 3.1(a) , such order, judgment, decision or award shall not give rise to an Agreed Claim (Pre Set-Off), and shall be disregarded when determining the Liability of the Scheme Company in respect of the relevant Claim. (b) If any Scheme Creditor takes any action after the Effective Date, which is prohibited by clause 3.1(a) or 3.1(b) , it shall, without prejudice to any other rights of the Scheme Company, be treated as having received an advance payment on account of its Claim, equal to the amount or gross value of any money, Property, benefit or advantage obtained by him at the expense of the Scheme Company as the result of such action (an Advance Payment) and the extent to which it is entitled to receive any payment under the Scheme in respect of its Final Determined Claim shall be determined accordingly. (c) For the purpose of clause 3.2(b), the gross value of any Advance Payment shall be conclusively determined by the Scheme Company and, without limitation, may include such amounts as the Scheme Company may consider to be appropriate by way of interest, costs, charges or expenses incurred by the Scheme Company as a consequence of the relevant Scheme Creditor acting in a manner prohibited by clause 3.1(a) or 3.1(b) . (d) If the amount of an Advance Payment which a Scheme Creditor is treated as having received pursuant to clause 3.2(b) (such Advance Payment, if necessary, being converted at the Relevant Rate of Exchange into one or more of the currencies in which the Scheme Creditor has an Final Determined Claim), exceeds the total amount the relevant Scheme Creditor would otherwise be entitled to receive pursuant to the Scheme, then, without prejudice to any other rights of the Scheme Company, the Scheme Creditor shall immediately pay the excess to the Scheme Company, failing which interest shall accrue on such excess for the period from the date upon which the Scheme Creditor's Final Determined Claim is determined under the Scheme, to the date of payment of such excess, at the annual rate which is the Bill Rate applicable at the date of determination. Interest shall accrue from day-to-day for the duration of such period (from and including the first day thereof), and shall be calculated on the basis of the actual number of days elapsed and a 360-day year and shall be payable on the last day of such period. Such excess and interest shall be held on trust for the Scheme Company by the relevant Scheme Creditor until paid. 3.3 Interest (a) For the purpose of making payments under the Scheme, where a Claim includes an element of Admissible Interest, such Admissible Interest shall be payable for the period from the date provided for in the relevant Reinsurance Contract or statute, to the day immediately preceding the date on which payment is made in respect of the relevant Final Determined Claim. (b) No payment shall be made under the Scheme in respect of any part of a Claim which represents interest which is not Admissible Interest or Default Interest. (c) Any payment made under the Scheme in respect of any part of a Claim which represents Admissible Interest or Default Interest shall be made net of any necessary deduction or withholding for, or on account of, Tax. 4. (b) In addition, the Scheme Company shall as soon as reasonably practicable, and in any event within 15 Business Days of the Effective Date, cause to be published in the same newspaper and publications in which the Creditors' Meeting was advertised or, if this should not prove possible, in such other publications as it shall deem appropriate, notice: (i) that the Scheme has become effective, giving the Effective Date; (ii) of the Final Claims Submission Date; and (iii) calling for all Scheme Creditors to Submit their Claim Forms by the Final Claims Submission Date. (c) Where the Scheme Company is notified of a Scheme Creditor or a Scheme Creditor's postal address after the Effective Date, but before the Final Claims Submission Date, the Scheme Company shall send, within 14 days of being so notified and, if practicable, prior to the Final Claims Submission Date, the relevant Scheme Creditor the information referred to in clause 0 . 4.3 Completing Claim Forms (a) Each Scheme Creditor shall Submit with its Claim Form, information relating to its Claims as at the Valuation Date, by reference to each Reinsurance Contract in respect of Scheme Business pursuant to which the relevant Claims arise, together with such details as the Scheme Creditor may have of the Broker or Brokers who placed the relevant business. (b) The information provided by the relevant Scheme Creditor shall be provided separately for Claims which relate to Paid Losses, Notified Outstanding Claims and IBNR. In respect of: (i) (Paid Losses): Scheme Creditors shall provide with the Claim Form an analysis supporting each Claim in respect of Paid Losses, including (where relevant), but not limited to, loss bordereaux certified by the leading underwriter, and/or copies of loss reports from policyholders/cedants or their legal representatives to the Scheme Creditor; (ii) (Notified Outstanding Claims): Scheme Creditors shall provide on or with the Claim in respect of a Notified Outstanding Claim, including (where relevant), but not limited to, loss bordereaux certified by the leading underwriter and/or copies of loss reports from policyholders/cedants or their legal representative to the Scheme Creditor and/or closing statements in respect of agreed Claims not yet settled by the Scheme Creditor, for each Claim; and (iii) (IBNR): Scheme Creditors shall, insofar as is reasonably practicable, provide with the Claim Form, an amount for IBNR and details of the basis for the estimate for each Claim in respect of IBNR, and any relevant documentary evidence to show the reasonableness of such estimate, including (but not limited to): A. cumulative data triangles of paid loss data; and/or B. cumulative data triangles of incurred loss data; and/or C. cumulative data triangles of incurred loss ratios; and/or D. loss bordereaux certified by the leading underwriter; and/or E. copies of loss reports from policyholders/cedants to the Scheme Creditor; and/or F. any relevant actuarial reports; and/or G. any other supporting information. (c) Where it has sufficient information, the Scheme Company shall pre-complete each Claim Form sent to any Scheme Creditor known to it as at the Effective Date with its estimate of the Claims of the Scheme Creditor (other than in respect of IBNR). Scheme Creditors shall not be required to Submit a Claim Form, or provide any additional supporting information, in respect of such amounts. For the avoidance of doubt, only amounts which have been pre-completed by the Scheme Company on the relevant Scheme Creditor's Claim Form are "Agreed Paid Losses" for the purposes of clause 4.4(c) . If a Scheme Creditor wishes to receive payment in respect of any other Claims, it must submit a Claim Form in respect of such Claims, prior to the Final Claims Submission Date. (d) In respect of each Reinsurance Contract, the Scheme Creditor shall also provide details of: (i) all Liabilities owed by it to the Scheme Company in relation to such Reinsurance Contract; and (ii) all reinstatement premiums paid or payable in relation to such Reinsurance Contract. (e) Subject to clause 4.4(b) , a Claim Form must be Submitted to the Scheme Company on, or before, the Final Claims Submission Date. Except as provided for in clause 4.3 (f) , the information contained in the Claim Form shall be binding on the Scheme Creditor as to the matters referred to therein. (h) A Scheme Creditor may, by placing a tick in the relevant box on the Claim Form and then Submitting that Claim Form, elect to incorporate into its Claim Form, the Claims information contained in its proxy and voting form which it submitted to the Scheme Company for the purpose of voting at the Creditors' Meeting. A Claim Form will only validly incorporate the Claims information contained in, or supplied with, the said proxy and voting form pursuant to this clause, if the Claims information sections of the Claim Form are left blank by the Scheme Creditor. The provisions of this clause are without prejudice to the Scheme Creditor's rights under clause 4.3 (f) . (i) Determination of the amount of the Claim should take into account the normal negotiated process of discounting the value of future expenses to be incurred by the claimant (such as future care costs) in recognition of the fact that the underlying claim is to be settled by way of immediate lump sum as opposed to by way of an ongoing stream of expense reimbursement. The Scheme Company will pay the amount of the Claim so agreed at face value provided the Scheme Creditor expects to settle the underlying claim within five years of the Valuation Date. Where the settlement date of the underlying claim is expected to be beyond five years of the Valuation Date, the Claim will be reduced by 5.5% per annum for the period between five years of the Valuation Date and the expected settlement date. 4.4 Failure to return Claim Forms (a) Subject to clauses 4.3(c) , 4.4 (b) and 4.4 (c) , no Scheme Creditor shall be entitled to claim under, or receive any payment under, the Scheme in respect of a Claim, unless that Claim has been notified to the Scheme Company by the Scheme Creditor by means of a Claim Form Submitted to the Scheme Company no later than the Final Claims Submission Date. (b) The Scheme Company may, in its absolute and sole discretion, allow a Claim Form that was not Submitted on or before the Final Claims Submission Date, to be determined in accordance with the provisions of the Scheme as if that Claim Form had been Submitted on or before the Final Claims Submission Date. (c) If a Scheme Creditor has not Submitted a Claim Form on or before the Final Claims Submission Date, that Scheme Creditor's Claim will be valued at the Agreed Paid Losses, if any. To the extent that there are no Agreed Paid Losses, the Scheme Creditor's Claim shall be valued at zero, and such Claim shall be deemed satisfied in full. For the avoidance of doubt, for the purpose of this clause, the Scheme Company's determination of the amount of Agreed Paid Losses shall be final and binding on the Scheme Company and the relevant Scheme Creditor, and there shall be no right of appeal in respect thereof, whether pursuant to the Scheme or otherwise. 4.5 Review of Claim Forms and determination of Agreed Claims (Pre Set-Off) (a) The Scheme Company will consider the information concerning a Scheme Creditor's Claims on its Claim Form including, but not limited to, consideration of whether any submissions are accurate and/or adequately supported with relevant documentation, whether any estimates in relation to future or contingent Claims are reasonable and have been calculated in accordance with the Estimation Methodology, and whether there is any applicable reinstatement premium or set-off. (b) If the Scheme Company agrees with a Scheme Creditor's estimate of the value of any of its Claims as set out in its Claim Form, it shall, as soon as reasonably practicable, notify the relevant Scheme Creditor of such agreement in writing in accordance with clause 9.4 . Such estimated value, together with any unpaid Agreed Paid Losses, shall be the Scheme Creditor's Agreed Claim (Pre Set-Off) in respect of each such Claim. (c) If the Scheme Company does not agree with the information provided on a Claim Form in respect of a Claim, it shall, as soon as reasonably practicable, notify the relevant Scheme Creditor in writing, in accordance with clause 9.4 , that the Claim Form has not been agreed, and advise the Scheme Creditor in writing of those matters which are not agreed, the reasons for failing to agree to such matters, and any additional information that the Scheme Company may require to further consider the Claim. The Scheme Creditor shall provide such additional information no later than 30 days after deemed receipt (in accordance with clause 9.4(b)) of such a request. (d) If the relevant Scheme Creditor provides any additional information required pursuant to clause 4.5 (c) , within the time period set out therein, the Scheme Company will then endeavour to agree the disputed matters and the relevant Claim, as soon as reasonably practicable. In the event that the Claim is so agreed, the Scheme Company shall, as soon as reasonably practicable, notify the Scheme Creditor in writing of its agreement and of the amount of the Agreed Claim (Pre Set-Off). If the Scheme Creditor wishes its Claim to be referred to the Scheme Adjudicator, it must give notice thereof to the Scheme Company, in accordance with clause 9.4 , within 30 days of deemed receipt of the Scheme Company's communication. If such notice is received from the Scheme Creditor, the Scheme Company shall refer the relevant Claim to the Scheme Adjudicator as a Disputed Claim. If the Scheme Creditor does not respond to the communication from the Scheme Company within 30 days of deemed receipt of such communication, the Claim Form so completed by the Scheme Company, will be deemed to be determinative of the disputed matters and will form the basis of the Scheme Creditor's Agreed Claim (Pre Set-Off). (g) The amount of any Agreed Claim (Pre Set-Off) determined or agreed under clause 4.5 (b) , (d) or (e) , shall be final and binding on the Scheme Company and the relevant Scheme Creditor and, subject to clause 4.16, there shall be no right of appeal in respect thereof. (h) In the event that a Claim contained in a Claim Form Submitted in accordance with the requirements of clause 4.3 , has not become a Final Determined Claim by 11:59 pm Sydney time on the day on which a period of 365 days from the Final Claims Submission Date elapses (the Long Stop Date) the Scheme Company shall within a further 7 days, refer such Claim to the Scheme Adjudicator as a Disputed Claim (unless, and on such terms as, both the Scheme Creditor and the Scheme Company shall otherwise agree). The Scheme Company shall send notice in writing in accordance with clause 9.4 to the Scheme Creditor concerned, that the Claim has become a Disputed Claim and has been referred to the Scheme Adjudicator and the provisions of clause 4.6 shall apply to such Disputed Claim. 4.6 Adjudicator dispute resolution procedure (a) In referring a Claim to the Scheme Adjudicator in accordance with clause 4.5(e) , 4.5(f) or 4.5(h) , the Scheme Company shall provide the Scheme Adjudicator with a copy of the Claim Form relating to such Claim (as Submitted by the Scheme Creditor and, where applicable, as amended by the Scheme Company), and a copy of any notice, statement or correspondence sent or received by the Scheme Company in connection with the Claim. The Scheme Adjudicator shall have access to all of the Scheme Company's records and information in the possession of, or under the control of, the Scheme Company, which the Scheme Adjudicator considers he needs to resolve the dispute concerning such Claim subject to any claim for legal professional privilege. (b) The Scheme Adjudicator shall consider the records and information sent to him in accordance with clause 4.6 (a) , and shall have regard to (but not be bound by) the Estimation Methodology, in relation to any Claim referred to him and, as soon as reasonably practicable, shall notify the Scheme Company and/or the Scheme Creditor concerned as to whether he requires: (i) further documents, data or information, in which case the relevant person shall, within 30 days after deemed receipt of such notice, provide the Scheme Adjudicator with the required documents, data or information; and/or (ii) the Scheme Company and/or the relevant Scheme Creditor to appear before him and address him on any matter he shall determine, in which case the Scheme Company and/or the relevant Scheme Creditor (or in either case its duly authorised representative) shall appear on such date, which shall be within 30 days after deemed receipt of such notice, and at such place as the Scheme Adjudicator shall prescribe. The Scheme Adjudicator shall be entitled to prescribe and lay down such procedures or provisions for the purposes of the appearance of the parties before him, as he, in his sole and absolute discretion, deems appropriate (including, without limitation, making provision for meetings via a video conferencing facility), and shall be entitled to call for such evidence, documents, data and information as he may require to assist him in reaching his decision. (c) At the request of a Scheme Creditor, the Scheme Adjudicator may attend a meeting with that Scheme Creditor to discuss its Claim. Any such meeting may take place in person or via a video conferencing facility, and the Scheme Adjudicator shall be entitled to travel to another jurisdiction in order to attend a meeting with a Scheme Creditor. (d) The Scheme Adjudicator may (but is not obliged to) extend any time period laid down by clause 4.6 (b) as he thinks fit for any one, or more, or all, Disputed Claims. (e) The Scheme Adjudicator shall be entitled to consult with such advisers, including legal advisers and experts and actuaries from any relevant jurisdiction, as he may deem appropriate in considering any Claim referred to him. The Scheme Adjudicator will consider all documents, data or information Submitted by a Scheme Creditor in support of its Claim including details of relevant actuarial principles applying in other jurisdictions. (f) If any person concerned fails to provide further documents, data or information in accordance with clause 4.6 (b)(i) above, or fails to appear before the Scheme Adjudicator in accordance with clause 4.6 (b)(ii) above, the Scheme Adjudicator shall make such determination as he sees fit in relation to the relevant Disputed Claim on the basis of the information then available to him. (g) In adjudicating on any Disputed Claim, the Scheme Adjudicator shall act as an expert and not as an arbitrator. (h) The Scheme Adjudicator shall notify the relevant Scheme Creditor and the Scheme Company of his determination in respect of the relevant Disputed Claim, and of the resulting amount of the Scheme Creditor's Agreed Claim (Pre Set-Off), by notice given in accordance with clause 9.4 , within 30 days after the later of: (i) receipt of the documents accompanying the reference of the Disputed Claim to him in accordance with clause 4.6 (a) ; (ii) the provision of further documents, data or information to him pursuant to clause 4.6 (b)(i) ; (iii) the conclusion of any appearance before him pursuant to clause 4.6 (b)(ii) ; or (iv) the failure of the relevant party to provide such documents, data or information in accordance with clause 4.6 (b)(i) , or to appear before him in accordance with clause 4.6 (b)(ii) . (i) Any such determination shall, to the extent permitted by law and subject to section 1321(a) of the Corporations Act , be final and binding on the Scheme Company and the relevant Scheme Creditor, and neither the Scheme Creditor nor the Scheme Company shall have any right of appeal from such determination. Neither the Scheme Creditor, nor the Scheme Company, shall have any right to make any claim against the Scheme Adjudicator in respect of such determination, save in respect of his negligence, wilful default, wilful breach of duty or trust, fraud or dishonesty. (j) Notwithstanding clauses 6.2(b) and 6.3(c)(i) , the Scheme Adjudicator must before adjudicating the Disputed Claim: (i) advise the Scheme Creditor in writing that remuneration, costs, charges and expenses incurred by the Scheme Adjudicator in respect of a Disputed Claim, including the fees and expenses of any adviser or expert consulted by him pursuant to clause 4.6 (e) (the Adjudication Costs) may be apportioned between the Scheme Company and the Scheme Creditor in such proportions as the Scheme Adjudicator may determine in his absolute discretion and shall be paid in accordance with clauses 4.6 (k) and 4.6 (l) , subject to section 1321(a) of the Corporations Act ; and (ii) provide to the Scheme Creditor an estimate of the Adjudication Costs including an estimate of the Scheme Creditor's portion of the Adjudication Costs. (l) The amount of the relevant Scheme Creditor's share of such Adjudication Costs calculated in accordance with clause 4.6 (j) shall, at the Scheme Adjudicator's option, be either: (i) paid out of the Property of the Scheme Company in accordance with clause 6.2(b) as Scheme Costs, in which case: A. the Scheme Creditor shall pay the Scheme Company the amount so paid by the Scheme Company as soon as reasonably practicable; or B. at the option of the Scheme Company, the Scheme Company may deduct such amount from that Scheme Creditor's aggregate Agreed Claim (Pre Set-Off) when calculating its Final Determined Claim pursuant to clause 4.7 ; or (ii) paid by the Scheme Creditor to the Scheme Adjudicator directly. 4.7 Determination of Final Determined Claims (a) Subject to clause 4.13 , following determination of the Agreed Claim (Pre Set-Off), in respect of all of a Scheme Creditor's Claims pursuant to clause 4.5(b) , 4.5(d) , 4.5(e) , 4.6(f) or 4.6(h) , the Scheme Company shall determine the Scheme Creditor's Final Determined Claim (which may be denominated in more than one currency) by: (i) deducting from the aggregate Agreed Claim (Pre Set-Off) any Advance Payments, any sum paid in accordance with clause 4.1 and any sum to be deducted pursuant to clause 4.6(l) ; and then (ii) deducting any reinstatement premium payable in accordance with the terms of the relevant Reinsurance Contract; and then (iii) applying any applicable set-off pursuant to clause 4.10 . Except in the case of manifest error, being an arithmetical or typographical error which is apparent on the face of the document concerned, a Scheme Creditor shall not be entitled to challenge the amount of the Final Determined Claim set out in the Final Determined Claim Notice, except where such challenge is: (i) in respect of the amount of any deduction or set-off determined by the Scheme Company under clause 4.7(a)(i), (ii) or (iii), in respect of the Scheme Creditor's Agreed Claim (Pre Set-Off) (the Disputed Set-Off or Deduction); and (ii) made by notice given in accordance with clause 9.4 , within 30 days of the Final Determined Claim Notification Date (the Disputed Final Determined Claim Notice). The Scheme Company and the Scheme Creditor shall endeavour to agree the disputed matters and the relevant Final Determined Claim set-off or deduction, if any, as soon as reasonably practicable. In the event that a set-off or deduction is agreed between them, the Scheme Company shall provide the relevant Scheme Creditor with written confirmation, in accordance with clause 9.4 , of the agreed valuation of its Final Determined Claim, taking into account the agreed set-off or deduction, and such valuation shall constitute the Scheme Creditor's Final Determined Claim for the purposes of the Scheme. (d) If the disputed matters and the relevant Final Determined Claim are not resolved between the Scheme Creditor and the Scheme Company within 30 days of the date of the Disputed Final Determined Claim Notice, the Resolution Period, the Scheme Creditor may, no later than 30 days after the end of the Resolution Period, notify the Scheme Company in writing that it wishes the valuation of the Disputed Set-Off or Deduction to be referred to the Scheme Adjudicator. If such notification is received from the Scheme Creditor, the Scheme Company shall refer the matter to the Scheme Adjudicator as a Disputed Claim. If the Scheme Creditor does not issue a request for the value of its Disputed Set-Off or Deduction to be adjudicated before the expiry of that 30 day period, the last value attributed to the Final Determined Claim by the Scheme Company shall be deemed to have been accepted by the Scheme Creditor, and shall constitute its Final Determined Claim. (e) The Scheme Adjudicator's adjudication of Final Determined Claims shall be conducted in accordance with the Dispute Resolution Procedure set out in clause 4.6 , which provisions shall apply with the necessary changes being made except that the information initially provided to the Scheme Adjudicator by the Scheme Company in accordance with clause 4.6(a) , shall consist of documentation evidencing the value of, the Disputed Set-Off or Deduction, together with a copy of any statement, notice, correspondence or documentation sent or received by the Scheme Company in relation to the valuation of the Scheme Creditor's Disputed Set-Off or Deduction. (f) In determining the value of a Scheme Creditor's Disputed Set-Off or Deduction in accordance with clause 4.7 (e) above, the Scheme Adjudicator shall take into account the Scheme Creditor's share (if any) of the Adjudication Costs described in clause 4.6(j) . (g) The value of a Scheme Creditor's Disputed Set-Off or Deduction, determined in accordance with clauses 4.7 (a) to 4.7 (f) shall, to the extent permitted by law, including section 1321(a) of the Act, be binding on the relevant Scheme Creditor and the Scheme Company as the amount of that Scheme Creditor's Disputed Set-Off or Deduction, and by virtue of its deduction from the Agreed Claim (Pre Set-Off), its Final Determined Claim, and there shall be no right of appeal in respect thereof. (b) The Scheme Company shall provide the Scheme Actuary and/or the Scheme Adjudicator with all reasonable assistance required by them in connection with the Scheme. 4.10 Set-off (a) Where a Scheme Creditor owes a Liability to the Scheme Company in respect of any Reinsurance Contract (including, for the avoidance of doubt, where such Liability is contingent and/or prospective), an account shall be taken of the sums due from the relevant Scheme Creditor to the Scheme Company and from the Scheme Company to that Scheme Creditor, in relation to such Scheme Business. Sums (including contingent or prospective sums) owing by a Scheme Creditor to the Scheme Company in respect of the Scheme Business, will be set-off against sums owing by the Scheme Company to that Scheme Creditor in respect of Scheme Business. For the avoidance of doubt, pursuant to this clause, sums owing by a Scheme Creditor to the Scheme Company in respect of the latter's Scheme Business shall include, without limitation, sums owing by that Scheme Creditor in its capacity as reinsurer of the Scheme Company's Scheme Business. (b) For the avoidance of doubt, contingent and prospective Claims against the Scheme Company, the amount of which have been determined as Agreed Claims (Pre Set-Off) pursuant to the terms of the Scheme, shall be included in any account taken pursuant to clause 4.10 (a) , including where the relevant Agreed Claims (Pre Set-Off) give rise to a reinsurance or other indemnity claim by the Scheme Company against a reinsurer/indemnitor who is also a Scheme Creditor of the Scheme Company. (c) Only the balance of an account, if any, referred to in clause 4.10 (a) and payable to a Scheme Creditor, as well as other sums deductible in accordance with the Scheme, shall be capable of becoming a Final Determined Claim in respect of which that Scheme Creditor may receive payment. (d) The discount applying for the purposes of set-off is as follow: (i) projected obligations payable within five years of the Valuation Date will be paid at face value; (ii) projected obligations payable beyond five years of the Valuation Date will be discounted at a rate of 5.5% per annum for the period between five years of the Valuation Date and the expected payment date of the obligation. (b) For the avoidance of doubt, any Broker claiming in respect of a funded Claim shall Submit a Claim Form in respect of such Claim in accordance with the provisions of clauses 4.3(a) to 4.3(f) . The supporting information to be provided pursuant to clause 4.3(b) shall, unless the Broker is claiming pursuant to clause 4.12 (a)(ii)B , include a copy of the relevant assignment, written confirmation or contract referred to in clause 4.12 (a) (ii). (b) For the purpose of clause 4.7 , the aggregate Agreed Claim (Pre Set-Off) may be denominated in more than one currency and the deductions and application of set-off, shall be applied: (i) first against that element of the Agreed Claim (Pre Set-Off) which is denominated in the same currency as the items to be deducted or set-off (as the case may be); (ii) thereafter against the predominant currency of the Agreed Claim (Pre Set-Off) until exhausted; and (iii) thereafter against the next most predominant currency and so on. (c) For the purpose of converting amounts into a predominant currency, as required by clause 4.13 (b) and 4.13 (d) , such amounts shall be converted at the Relevant Rate of Exchange. (d) Final Determined Claims shall be denominated and paid in the predominant currency in which Claims arise, unless otherwise requested by the Scheme Creditor (subject to clause 4.13 (e) below), after application of the deductions and set-off required under clause 4.7 . (e) Where a Scheme Creditor requests that its Final Determined Claims be paid in an alternative currency to the predominant currency of its Claims, the Scheme Company may in its absolute and sole discretion, decide to accept or decline such a request. 4.14 Payment of Final Determined Claims (a) The Scheme Company shall not agree any Claims after the Effective Date, nor pay any Claims agreed after the Effective Date, otherwise than pursuant to the Scheme, save where such agreement is in the nature of a commutation or policy buy-back which is negotiated upon a basis which is in all material respects the same as that provided for under the Scheme. (b) The Scheme Company shall effect payment in full of each Scheme Creditor's Final Determined Claim as soon as reasonably practicable after determination, in accordance with the Scheme. Where the Scheme Company fails to make payment in full of a Scheme Creditor's Final Determined Claim within 90 days from (but not including) the date of such Final Determined Claim having been determined, interest shall accrue on that part of the Final Determined Claim which remains unpaid, at the annual rate which is the Bill Rate in force at such time. For the avoidance of doubt, a Scheme Creditor's Final Determined Claim shall be deemed to have been determined on the day: (i) upon which the 30 day period referred to in clause 4.7(b) expires, provided that no Disputed Final Determined Claim Notice has been issued during this period; (ii) of any deemed receipt by the Scheme Creditor of a written confirmation given by the Scheme Company to the relevant Scheme Creditor of the agreed valuation of that Scheme Creditor's Final Determined Claim in accordance with clause 4.7(c) ; (iii) upon which the 30 day period after the Resolution Period referred to in clause 4.7(d) expires (provided that the Scheme Creditor has not notified the Scheme Company in writing that it wishes the valuation of its Final Determined Claim to be referred to the Scheme Adjudicator during such period); (iv) of any deemed receipt by the Scheme Company of notification from the Scheme Adjudicator of his determination of the amount of the Final Determined Claim. The Final Determined Claim to which it relates shall be deemed to have been settled in full. (e) The Scheme Company reserves the right to re-issue relevant payment instructions or unpaid cheques in respect of any unclaimed amount up to and including the Termination Date, if, in its sole and absolute discretion, it shall deem fit. (f) Payments made pursuant to this clause to a Scheme Creditor or any payment made pursuant to the Unclaimed Money Act 1995 (NSW) shall for all purposes, constitute a valid discharge of the Scheme Company in respect of such Final Determined Claim to the extent of such payment. For the purpose of this clause 4.14 , receipt by the receiving bank of the amount of an electronic funds transfer shall be satisfaction of the obligation to pay the amount transferred, and payment of any cheque by the bank on which it is drawn shall be satisfaction of this obligation to pay the amount in which it was drawn. The Scheme Actuary 5.1 The Scheme Actuary (a) There shall be a Scheme Actuary having the duties and functions and the rights conferred upon him by the Scheme. (b) The Scheme Actuary shall provide such advice and assistance to the Scheme Company and the Scheme Adjudicator in respect of the valuation of Claims and the application of the Estimation Methodology, as he may be requested in the discharge of his functions under the Scheme. (c) The Scheme Actuary shall be a Fellow of the Institute of Actuaries of Australia and meet all the requirements to be an approved actuary under General Insurance Prudential Standard GPS220 or GPS520 (from 1 October 2006). (d) The Scheme Actuary shall be Scott Collings of Finity Consulting Pty Limited. (e) The office of Scheme Actuary shall be vacated, if the appointee to that office: (i) dies or becomes bankrupt; (ii) is admitted to hospital because of mental disorder or becomes the subject of an order in matters concerning his mental disorder made by a court having jurisdiction in such matters in Australia or elsewhere; (iii) is convicted of an indictable offence; (iv) resigns his office in accordance with any terms agreed with the Scheme Company; (v) is removed for good cause by the Scheme Company; or (vi) ceases to be a Fellow of the Institute of Actuaries of Australia. (f) In the event of a vacancy in the office of the Scheme Actuary, the Scheme Company shall be entitled to appoint as a replacement Scheme Actuary, a person who is qualified so to act pursuant to clause 5.1 (c) , and who is not disqualified from acting in accordance with clause 5.1 (e) . The Scheme Company will notify the Australian Prudential Regulation Authority, following the appointment of a replacement Scheme Actuary. (g) The Scheme Actuary shall be paid such remuneration for (as well as costs, charges and expenses incurred in), the exercise and performance of his powers, rights, duties and functions under the Scheme as may be agreed between the Scheme Actuary and the Scheme Company, such remuneration, costs, charges and expenses are to be paid as a Scheme Cost. 5.2 Responsibility and indemnity (a) No Scheme Creditor shall be entitled to challenge the validity of any act done or omitted to be done by the Scheme Actuary or his Employees or Delegates pursuant to the provisions of the Scheme or in the exercise or performance of any power, right, duty or function conferred upon him under the Scheme and the Scheme Actuary, his Delegates and/or Employees shall not be liable for any loss, unless such loss is attributable to their own (or in the case of the Scheme Actuary, his Employee's or Delegates') fraud or dishonesty. (b) Subject to the Act, the Scheme Actuary (in his capacity as such) and each of his Employees and Delegates shall, in relation to the Scheme Company, be entitled to an indemnity out of the Property of the Scheme Company against: (i) all expenses and liabilities properly incurred by such Scheme Actuary, his Employees and/or Delegates in performing or exercising any power, right, duty or function conferred upon him under the Scheme in respect of the Scheme Company; and (ii) any liability incurred by such Scheme Actuary, his Employees and/or Delegates in defending any Proceedings, whether civil or criminal, in respect of any alleged negligence, wilful default, wilful breach of duty or trust, fraud or dishonesty on their part, in relation to the operation of the Scheme, in which judgment is given in their favour or in which they are acquitted or which are discontinued before judgment is given; or in connection with any application in any such Proceedings in which relief is granted to them by a court from liability for negligence, wilful default, wilful breach of duty or trust, fraud or dishonesty on his part in relation to the operation of the Scheme. (c) The Scheme Company may pay costs incurred by any Scheme Actuary in defending Proceedings of the nature described in clause 5.2 (b)(ii) which relate to the operation of the Scheme, provided that the Scheme Actuary undertakes to reimburse the Scheme Company (with interest) for any amount which would not, in the event, have been payable by the Scheme Company under clause 5.2 (b)(ii) . 6. The Scheme Adjudicator 6.1 Qualification, resignation and removal (a) Subject to the appointment of an alternate Scheme Adjudicator in accordance with clause 6.1 (b) , there shall be one Scheme Adjudicator who shall be an individual who is duly qualified in the reasonable opinion of the Scheme Company, in consultation with the Scheme Actuary, to discharge the function of the Scheme Adjudicator under the Scheme. If the relevant Scheme Creditor fails to object to the Scheme Company's nomination within 7 days of deemed receipt by it of the notice of the nomination, or agreement is otherwise reached between the Scheme Company and the Scheme Creditor within that period, the Scheme Company shall have the power to appoint the nominated or agreed alternate Scheme Adjudicator. If the Scheme Creditor objects to the nomination and the Scheme Company and the Scheme Creditor cannot agree on the identity of an alternate Scheme Adjudicator within 7 days, the Scheme Company shall request the appointment of a suitably qualified Scheme Adjudicator to be made by the President of the Institute of Actuaries of Australia for the time being, whose decision shall be final. The Scheme Adjudicator's appointment shall continue during the appointment of any alternate Scheme Adjudicator and he shall continue to adjudicate on other matters referred to him unless a conflict shall arise in respect of those matters in which case the terms of this clause 6.1 (b) shall apply. (d) The Scheme Adjudicator may continue to act in spite of a conflict of interest, if the Scheme Creditor in relation to whom the conflict arises, and the Scheme Company, agree in writing to permit the Scheme Adjudicator to act and, if the Scheme Adjudicator himself is willing to act, notwithstanding such conflict. Any such waiver of a conflict will only be made after the Scheme Adjudicator, relevant Scheme Creditor and the Scheme Company have been provided with (and have provided), sufficiently detailed disclosure of the circumstances and nature of the conflict to enable each of them to take an informed decision on whether the conflict may be waived without prejudicing or embarrassing any of them. 6.2 Powers, rights, duties and functions (a) The Scheme Adjudicator shall be responsible for the adjudication of Disputed Claims and the determination of Agreed Claims (Pre Set-Off) (in the case of a referral under clauses 4.5(e) , 4.5(f) or 4.5(h) ) or Final Determined Claims (in the case of a referral under clause 4.7(d) , in respect of such Disputed Claims and shall have the powers, rights, duties and functions conferred upon him by the Scheme for such purposes. (b) The Scheme Adjudicator shall be paid such remuneration for the exercise and performance of his powers, rights, duties and functions under the Scheme as may be agreed between the Scheme Adjudicator and the Scheme Company. Subject to clauses 4.6(j) and 4.6(l) , such remuneration shall be paid out of the Property of the Scheme Company as Scheme Costs. 6.3 Responsibility and indemnity (a) In exercising his powers and rights and in carrying out his duties and functions under the Scheme, the Scheme Adjudicator shall act in good faith and with due care and diligence and shall exercise his powers and rights under the Scheme to ensure that the Scheme is operated in accordance with its terms. (b) No Scheme Creditor shall be entitled to challenge the validity of any act done or permitted to be done within his powers and in good faith and with due care and diligence by the Scheme Adjudicator, pursuant to the provisions of the Scheme or in the exercise or performance of any power, right, discretion, duty or function conferred upon him under the Scheme, and the Scheme Adjudicator shall not be liable for any loss unless any such loss is attributable to his own negligence, wilful default, wilful breach of duty or trust, fraud or dishonesty. (c) Subject to the Act, the Scheme Adjudicator shall be entitled to an indemnity out of the Property of the Scheme Company against: (i) all costs, charges, expenses and liabilities properly incurred by him in the course of exercising or performing his powers, rights, duties or functions under the Scheme in relation to the Scheme Company; and (ii) any liability incurred by him in defending any Proceedings, whether civil or criminal, in respect of any negligence, wilful default, wilful breach of duty or trust, fraud or dishonesty on his part in relation to the operation of the Scheme in which judgment is given in his favour or in which he is acquitted; or in connection with any application in any such Proceedings in which relief is granted to him by a court from liability for negligence, wilful default, wilful breach of duty or trust, fraud or dishonesty on his part in relation to the operation of the Scheme. (d) The Scheme Company may pay costs incurred by the Scheme Adjudicator in defending Proceedings of the nature described in clause 6.3 (c)(ii) , provided that the Scheme Adjudicator undertakes to reimburse the Scheme Company (with interest) for any amount which would not, in the event, have been payable by the Scheme Company under clause 6.3 (c)(ii) . 7. The date of such confirmation shall be the Termination Date. This confirmation shall be given as soon as is reasonably practicable after all Final Determined Claims have been paid in full (or deemed to have been satisfied in full). The Scheme Adjudicator and the Scheme Actuary shall be released from their obligations under the Scheme on the Termination Date. (b) If the business of the Scheme Company reverts to run-off as contemplated by this clause 8.2 : (i) Agreed Claims (Pre Set-Off) determined hereunder, but which have not become Final Determined Claims pursuant to clause 4.7 , shall cease to be binding on the Scheme Company and Scheme Creditor; (ii) Final Determined Claims (which have not yet been paid), shall continue to be binding upon the Scheme Company and the Scheme Creditor (and therefore shall remain payable hereunder, if not yet paid), except where the Scheme Creditor elects otherwise, by written notice sent to the Scheme Company in accordance with clause 9.4 , no later than 30 days after the Reversion to Run-off Date, in which case, such determination shall likewise cease to be binding upon the Scheme Company and that Scheme Creditor; (iii) Final Determined Claims which have been paid by the Scheme Company will continue to be binding upon the Scheme Company and the Scheme Creditor. For this purpose a Final Determined Claim will be treated as being paid on the earlier of the Scheme Creditor receiving cleared funds for the Final Determined Claim, and 7 days after the Scheme Company has posted a cheque to the Scheme Creditor for the Final Determined Claim. (b) There shall be paid in full, out of the Scheme Company's Property, as incurred, all Scheme Costs. (b) Except as otherwise provided herein, any notice or other written communication to be given under the Scheme shall be deemed to have been received: (i) if delivered by hand, on the first Business Day following delivery; (ii) if sent by post, on the second Business Day after posting, if the recipient is in the country of despatch and otherwise on the seventh Business Day after posting; (iii) if sent by fax between 9:00 am and 5:00 pm (local time of the recipient) on a Business Day, upon receipt of a clear fax transmission report (and if not sent during this time, the fax shall be deemed received at 9:00 am, (local time), on the next following Business Day); and (iv) if sent by email between 9:00 am and 5:00 pm (local time of the recipient), on a Business Day, at the time of sending recorded by the sender's computer (and if not sent during this time, the email shall be deemed received at 9:00 am, (local time), on the next following Business Day). (c) In proving service, it shall be sufficient proof in the case of a notice sent by Post, that the envelope was properly stamped, addressed and placed in the Post. (d) For the purposes of clause 4 , the accidental omission to send any notice, written communication or other document in accordance with this clause or the non-receipt of any such notice by any Scheme Creditor, shall not affect the provisions of clause 4 . In the event that a time period expires on a day which is not a Business Day, such period shall be deemed not to expire until close of business on the Business Day next following. (b) The Scheme Creditors hereby agree that the Court shall have non-exclusive jurisdiction to hear and determine any Proceedings and to settle any dispute which may arise out of the Scheme Booklet or any provision of the Scheme, including this clause 9.6 , or out of any action taken or omitted to be taken under the Scheme or in connection with the administration of the Scheme. (c) The Scheme Creditors irrevocably submit to the non-exclusive jurisdiction of the Court. (d) Nothing in this clause 9.6 , shall affect the validity of any other provisions determining governing law and jurisdiction as between the Scheme Company and any of its Scheme Creditors, whether contained in any Reinsurance Contract or otherwise. (e) Notwithstanding the provisions of clause 9.6 (a) , the Scheme Company retains the right to bring Proceedings in the courts of any other country having jurisdiction under its own laws to hear such Proceedings. 1. 2. General 3.1 Governing law and jurisdiction (a) This Deed Poll is governed by the laws of New South Wales, Australia. (b) The Scheme Adjudicator irrevocably submits to the non-exclusive jurisdiction of the courts of New South Wales, Australia. 3.2 Waiver (a) Waiver of any right arising from a breach of this Deed Poll or of any right, power, authority, discretion or remedy arising upon default under this Deed Poll must be in writing and signed by the party granting the waiver. (d) A party may not rely on any conduct of another party as a defence to exercise of a right, power, authority, discretion or remedy by that other party. (e) This clause may not itself be waived except in writing. The directors of NRG Victory have proposed the Scheme. B. C. The Scheme Adjudicator is entering into this Deed Poll for the purpose of covenanting in favour of NRG Victory and the Scheme Creditors to perform the steps attributed to it under the Scheme. 2. General 3.1 Governing law and jurisdiction (a) This Deed Poll is governed by the laws of New South Wales, Australia. (b) The Scheme Adjudicator irrevocably submits to the non-exclusive jurisdiction of the courts of New South Wales, Australia. 3.2 Waiver (a) Waiver of any right arising from a breach of this Deed Poll or of any right, power, authority, discretion or remedy arising upon default under this Deed Poll must be in writing and signed by the party granting the waiver. (d) A party may not rely on any conduct of another party as a defence to exercise of a right, power, authority, discretion or remedy by that other party. (e) This clause may not itself be waived except in writing. The Court has directed the Chairperson to report the result of the meeting to the Court. To enable you to make an informed voting decision, further information on the Scheme is set out in the document of which the notice convening this meeting forms part. Terms used in this notice have the same meaning as set out in the Definitions in Section 11 of the document of which the notice convening this meeting forms part. This document is important and requires your immediate attention. If you are in any doubt as to any aspect of this proposal or as to the action you should take, you should consult your insurance broker or other financial or professional adviser without delay. A representative of a company attending the Scheme Meeting must present satisfactory evidence of his or her appointment to attend on its behalf unless previously lodged with the Company. Attorneys should bring with them original or certified copies of the power of attorney under which they have been authorised to attend and vote at the Scheme Meeting. Each proxy will have the right to vote on the poll and also to speak at the Scheme Meeting. The appointment of a proxy may specify the proportion or the number of votes that the proxy may exercise. Where more than one proxy is appointed, and if the appointment does not specify the proportion or number of the Scheme Creditor's votes each proxy may exercise, each proxy may exercise half of the votes. A proxy need not be a Scheme Creditor. If a proxy is not directed how to vote on an item of business, the proxy may vote or abstain from voting, as that person thinks fit. If a proxy is instructed to abstain from voting on an item of business, that person is directed not to vote on the Scheme Creditor's behalf on the poll, and the Claim the subject of the proxy appointment will not be counted in computing the required majority. Scheme Creditors who return their proxy and voting form with a direction how to vote but do not nominate the identity of their proxy will be taken to have appointed the Chairperson of the Scheme Meeting as their proxy to vote on their behalf. If a proxy and voting form is returned but the nominated proxy does not attend the Scheme Meeting, the Chairperson of the Scheme Meeting will act in place of the nominated proxy and vote in accordance with any instructions. Proxy appointments in favour of the Chairperson of the Scheme Meeting, which do not contain a direction will be used to support the resolution to approve the Scheme. Proxy and voting forms may also be handed in at the registration desk at the relevant Scheme Meeting prior to its commencement. Proxies given by Australian companies must be executed in accordance with the Corporations Act . Proxies given by foreign companies must be executed in accordance with the laws of the jurisdiction of incorporation and constituent documents. Where the appointment of a proxy is signed by the appointor's attorney, a certified copy of the power of attorney, or the power itself, must be received by the Scheme Company at the above address, by email or by facsimile transmission by 5:00 pm (Sydney time) on 11 August 2006. If facsimile transmission is used, the power of attorney must be certified. Only those Scheme Creditors will be entitled to attend and vote at the Scheme Meeting. If the resolution put to the Scheme Meeting is passed by the requisite majority, the Company intends to apply to the Court on 16 August 2006 for approval of the Scheme. The Court has directed the Chairperson to report the result of the meeting to the Court. To enable you to make an informed voting decision, further information on the Scheme is set out in the document of which the notice convening this meeting forms part. Terms used in this notice have the same meaning as set out in the Definitions in Section 11 of the document of which the notice convening this meeting forms part. This document is important and requires your immediate attention. If you are in any doubt as to any aspect of this proposal or as to the action you should take, you should consult your insurance broker or other financial or professional adviser without delay. A representative of a company attending the Scheme Meeting must present satisfactory evidence of his or her appointment to attend on its behalf unless previously lodged with the Company. Attorneys should bring with them original or certified copies of the power of attorney under which they have been authorised to attend and vote at the Scheme Meeting. Each proxy will have the right to vote on the poll and also to speak at the Scheme Meeting. The appointment of a proxy may specify the proportion or the number of votes that the proxy may exercise. Where more than one proxy is appointed, and if the appointment does not specify the proportion or number of the Scheme Creditor's votes each proxy may exercise, each proxy may exercise half of the votes. A proxy need not be a Scheme Creditor. If a proxy is not directed how to vote on an item of business, the proxy may vote or abstain from voting, as that person thinks fit. If a proxy is instructed to abstain from voting on an item of business, that person is directed not to vote on the Scheme Creditor's behalf on the poll, and the Claim the subject of the proxy appointment will not be counted in computing the required majority. Scheme Creditors who return their proxy and voting form with a direction how to vote but do not nominate the identity of their proxy will be taken to have appointed the Chairperson of the Scheme Meeting as their proxy to vote on their behalf. If a proxy and voting form is returned but the nominated proxy does not attend the Scheme Meeting, the Chairperson of the Scheme Meeting will act in place of the nominated proxy and vote in accordance with any instructions. Proxy appointments in favour of the Chairperson of the Scheme Meeting, which do not contain a direction will be used to support the resolution to approve the Scheme. Any Scheme Creditor completing and returning a proxy and voting form only will have the value of its Claims determined for voting purposes by the Chairperson of the Scheme Meeting on the basis of the information available to the relevant Scheme Company in respect of such Claims. Proxy and voting forms may also be handed in at the registration desk at the relevant Scheme Meeting prior to its commencement. Proxies given by Australian companies must be executed in accordance with the Corporations Act . Proxies given by foreign companies must be executed in accordance with the laws of the jurisdiction of incorporation and constituent documents. Where the appointment of a proxy is signed by the appointor's attorney, a certified copy of the power of attorney, or the power itself, must be received by the Scheme Company at the above address, by email or by facsimile transmission by 5:00 pm (Sydney time) on 11 August 2006. If facsimile transmission is used, the power of attorney must be certified. Only those Scheme Creditors will be entitled to attend and vote at the Scheme Meeting. If the resolution put to the Scheme Meeting is passed by the requisite majority, the Company intends to apply to the Court on 16 August 2006 for approval of the Scheme. Unless separately defined in this proxy and voting form, the defined words and expressions contained within this proxy and voting form and its accompanying Guidance Notes have the meaning given to them in the Scheme Booklet dated 5 July 2006. If you are in any doubt as to any aspect of this proposal or as to the action you should take, you should consult your insurance broker or other financial or professional adviser without delay. If it has sufficient information to do so, the Scheme Company has included in this proxy and voting form its estimate of the value of your Claim (other than in respect of IBNR Claims). That estimate is not binding on you and you may replace or amend any detail relating to your Claim that is written on this form if you wish to do so. You should review all pre-completed information carefully to see if it is accurate. Where more than one proxy is to be appointed or where voting intentions cannot be adequately expressed using this form an additional form of proxy is available on request from the Scheme Company. Proxies will only be valid and accepted by the Scheme Company if they are (a) sent to the Scheme Company at Level 21, Tower Building, Australia Square, 264 George Street, Sydney NSW 2000; or (b) faxed to (02) 9274 3033, so that they are received no later than 5:00 pm (Sydney time) on 11 August 2006. The Summary Table and Detailed Tables must be completed in accordance with the Guidance Notes on the following pages. You should read the instructions carefully. Failure to follow them may result in a Claim being rejected in whole or in part for voting purposes if the Chairperson has insufficient information to decide whether it is a fair and reasonable Claim. Scheme Creditors should note that information and estimates provided in relation to the proxy and voting form may not be protected by legal professional privilege and may be required to be disclosed in any relevant future legal proceedings. Scheme Creditors should consult their own legal advisers as to the consequences of furnishing such particulars in the event that they are, or may become, involved in any litigation. You should note that any amendments you make to the pre-completed voting form do NOT represent agreed Claims and will be subject to review in accordance with paragraph 4.5 of the Scheme. The value to be attributed for voting purposes to a Scheme Creditor's claims will be determined by the Chairperson as the assessment of the Scheme Company's net liability to the Scheme Creditor in respect of claims after any deduction, set-off or cross claim. Account will also be taken of any known deductions, set-off or cross-claim. If the sum of the deduction, set-off or cross-claim exceeds the value of the claims, the value for voting purposes will be zero. For the purposes of voting at the Scheme Meetings, claims will be converted into Australian dollars at the closing mid-market rate of exchange for the relevant currency quoted on the Reserve Bank of Australia website 11 August 2006. If the person you wish to appoint as your proxy is someone other than the Chairperson please write the name of that person. If you leave this section blank, or your named proxy does not attend the Scheme Meeting, the Chairperson will be your proxy. A proxy need not be a Scheme Creditor. A proxy may be an individual or a body corporate. 3 Votes on item of business: You should direct your proxy how to vote by placing a mark in one of the three boxes opposite the item of business. All your votes will be voted in accordance with such a direction unless you indicate only a proportion or number of votes are to be voted on an item by inserting the proportion of number of votes you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the item of business, your proxy may vote as he or she chooses. If you mark more than one box on the item, your vote on that item will be invalid. Power of Attorney: to sign under Power of Attorney, either the Power of Attorney must have been lodged with the Scheme Company for notation or the original (or a certified copy) of the Power of Attorney must accompany this form when you return it. Companies: the following person(s) must sign (a) Australian proprietary company with a sole director who is also the sole company secretary - that person; (b) Australian proprietary company with a sole director and no company secretary - that person; (c) other Australian companies - two directors or one director and one company secretary; (d) foreign company - in accordance with the laws of the jurisdiction of incorporation and constituent documents. Please indicate the office held by signing in the appropriate place. Proxy and voting forms may also be handed in at the registration desk at the relevant Scheme Meeting prior to its commencement. Where the appointment of a proxy is signed by the appointer's attorney, a certified copy of the Power of Attorney, or the power itself, must be received by the Scheme Company at the address below or by facsimile transmission by 5:00 pm (Sydney time) on 11 August 2006. If facsimile transmission is used, the Power of Attorney must be certified. Proxy and voting forms may be lodged to the Scheme Company (attention Ross Littlewood) by email to [email protected], by facsimile to +(61)(02) 92743033 or by post to Level 21, Tower Building, Australia Square, 264 George Street, Sydney NSW 2000. If submitted by facsimile, please also post the original. You should review your individual list of Reinsurance Contracts, making such amendments or additions to the Detailed Tables as may be necessary and providing appropriate information to support each amendment and/or addition. Your (re)insurance broker, agent or intermediary should be able to assist you in confirming or identifying additional Reinsurance Contracts and reference numbers. A separate Detailed Table and Summary Table must be completed for each currency in which you have a claim. If you need to complete more than one Detailed Table, please complete the Detailed Tables as required . Please check the information in the Summary Table following completion of the Detailed Tables. You should note that all claims submitted will be subject to review in accordance with paragraph 4.5 of the Scheme. 2 Scheme Company contract reference: specify the Scheme Company reference number in relation to each Reinsurance Contract under which your claim against the Scheme Company is made. 3 Reinsurance Contract name: specify the contract name that identifies the Reinsurance Contract (including type, class/classes of business and layer). This should be as per the original signed slip and/or signed contract wording. 4 Underwriting year: specify the underwriting year to which the loss is ceded. 5 Priority: specify the original attachment point of the Reinsurance Contract. 6 Limit: specify the original maximum payable by the Reinsurance Contract. 7 Index date: if the Reinsurance Contract is subject to indexation, specify the applicable indexation date. 8 Participation %: specify the percentage line underwritten by the Scheme Company for the Reinsurance Contract. 9 Claim name: specify the original insured's name, the event name or some other short description by which the incident is known. 10 Date of loss: specify the date on which the loss under the Reinsurance Contract arises. For event based policies, this is the date the incident occurred. For claims made/claims notified policies, this is the date the incident is notified. 13 Broker claim reference number: specify the Broker's (or agent's or intermediary's) claim reference number. 14 Broker Reinsurance Contract reference number: specify the Broker's (or agent's or intermediary's) Reinsurance Contract reference number. 15 Scheme Company claim reference number: specify the Scheme Company's claim reference number. 16 Ground up loss paid: the net amount paid by the Scheme Creditor applicable to the claim (taking into account any recoveries due from proportional reinsurance, subrogation, input tax credits, decreasing adjustments etc). 17 Ground up loss outstanding: the reserve held by the Scheme Creditor in respect of future amounts payable to settle the claim in accordance with industry practice. Future care costs should be discounted in accordance with industry practice. Where an amount has been provided by the Scheme Company these will be in accordance with the last advice received from the Scheme Creditor or its Broker. 18 Reinsurance Contract incurred: this is the total of columns 16 and 17 applied against columns 5 and 6. Payments which have been made will be adjusted using the applicable indexation rate from the index date in column 7 to the date of each payment. Amounts which have not been paid, will be adjusted using the applicable indexation rate from the index date in column 7 to 30 June 2006. 19 Amount due to Scheme Creditor: specify the amount due to the Scheme Creditor from the Scheme Company. For non-proportional claims this is column 18 multiplied by column 8. For proportional claims this is any current treaty account amounts due to the Scheme Creditor from the Scheme Company. 20 Amount paid to Scheme Creditor: specify the amount paid to the Scheme Creditor as at 30 June 2006. 21 Scheme Company treaty account outstanding claims: this is the amount of outstanding claims as per the last account received multiplied by column 8. 22 Amount outstanding to Scheme Creditor: for non-proportional claims this is column 19 minus column 20. For proportional claims this is column 19 plus column 21. 23 Reinstatement or burning cost premium due: specify any additional premiums due to the Scheme Company but not yet paid as a result of the claim. 24 Unsettled amounts due to Scheme Company: list separately any other amounts in respect of the claims due to the Scheme Company. B Total owing to the Scheme Company: specify the total of the entries in columns 22 and 23. C Net balance due to/from Scheme Creditor: this figure is the difference between figures "A" and "B". Unless separately defined in this proxy and voting form, the defined words and expressions contained within this proxy and voting form and its accompanying Guidance Notes have the meaning given to them in the Scheme Booklet dated 5 July 2006. If you are in any doubt as to any aspect of this proposal or as to the action you should take, you should consult your insurance broker or other financial or professional adviser without delay. If it has sufficient information to do so, the Scheme Company has included in this proxy and voting form its estimate of the value of your Claim (other than in respect of IBNR Claims). That estimate is not binding on you and you may replace or amend any detail relating to your Claim that is written on this form if you wish to do so. You should review all pre-completed information carefully to see if it is accurate. Where more than one proxy is to be appointed or where voting intentions cannot be adequately expressed using this form an additional form of proxy is available on request from the Scheme Company. Proxies will only be valid and accepted by the Scheme Company if they are (a) sent to the Scheme Company at Level 21, Tower Building, Australia Square, 264 George Street, Sydney NSW 2000; or (b) faxed to (02) 9274 3033, so that they are received no later than 5:00 pm (Sydney time) on 11 August 2006. The Summary Table and Detailed Tables must be completed in accordance with the Guidance Notes on the following pages. You should read the instructions carefully. Failure to follow them may result in a Claim being rejected in whole or in part for voting purposes if the Chairperson has insufficient information to decide whether it is a fair and reasonable Claim. Scheme Creditors should note that information and estimates provided in relation to the proxy and voting form may not be protected by legal professional privilege and may be required to be disclosed in any relevant future legal proceedings. Scheme Creditors should consult their own legal advisers as to the consequences of furnishing such particulars in the event that they are, or may become, involved in any litigation. You should note that any amendments you make to the pre-completed voting form do NOT represent agreed Claims and will be subject to review in accordance with paragraph 4.5 of the Scheme. The value to be attributed for voting purposes to a Scheme Creditor's claims will be determined by the Chairperson as the assessment of the Scheme Company's net liability to the Scheme Creditor in respect of claims after any deduction, set-off or cross claim. Account will also be taken of any known deductions, set-off or cross-claim. If the sum of the deduction, set-off or cross-claim exceeds the value of the claims, the value for voting purposes will be zero. For the purposes of voting at the Scheme Meetings, claims will be converted into Australian dollars at the closing mid-market rate of exchange for the relevant currency quoted on the Reserve Bank of Australia website 11 August 2006. If the person you wish to appoint as your proxy is someone other than the Chairperson please write the name of that person. If you leave this section blank, or your named proxy does not attend the Scheme Meeting, the Chairperson will be your proxy. A proxy need not be a Scheme Creditor. A proxy may be an individual or a body corporate. 3 Votes on item of business: You should direct your proxy how to vote by placing a mark in one of the three boxes opposite the item of business. All your votes will be voted in accordance with such a direction unless you indicate only a proportion or number of votes are to be voted on an item by inserting the proportion of number of votes you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the item of business, your proxy may vote as he or she chooses. If you mark more than one box on the item, your vote on that item will be invalid. Power of Attorney: to sign under Power of Attorney, either the Power of Attorney must have been lodged with the Scheme Company for notation or the original (or a certified copy) of the Power of Attorney must accompany this form when you return it. Companies: the following person(s) must sign (a) Australian proprietary company with a sole director who is also the sole company secretary - that person; (b) Australian proprietary company with a sole director and no company secretary - that person; (c) other Australian companies - two directors or one director and one company secretary; (d) foreign company - in accordance with the laws of the jurisdiction of incorporation and constituent documents. Please indicate the office held by signing in the appropriate place. Proxy and voting forms may also be handed in at the registration desk at the relevant Scheme Meeting prior to its commencement. Where the appointment of a proxy is signed by the appointer's attorney, a certified copy of the Power of Attorney, or the power itself, must be received by the Scheme Company at the address below or by facsimile transmission by 5:00 pm (Sydney time) on 11 August 2006. If facsimile transmission is used, the Power of Attorney must be certified. Proxy and voting forms may be lodged to the Scheme Company (attention Ross Littlewood) by email to [email protected], by facsimile to +(61)(02) 92743033 or by post to Level 21, Tower Building, Australia Square, 264 George Street, Sydney NSW 2000. If submitted by facsimile, please also post the original. You should review your individual list of Reinsurance Contracts, making such amendments or additions to the Detailed Tables as may be necessary and providing appropriate information to support each amendment and/or addition. Your (re)insurance broker, agent or intermediary should be able to assist you in confirming or identifying additional Reinsurance Contracts and reference numbers. A separate Detailed Table and Summary Table must be completed for each currency in which you have a claim. If you need to complete more than one Detailed Table, please complete the Detailed Tables as required . Please check the information in the Summary Table following completion of the Detailed Tables. You should note that all claims submitted will be subject to review in accordance with paragraph 4.5 of the Scheme. 2 Scheme Company contract reference: specify the Scheme Company reference number in relation to each Reinsurance Contract under which your claim against the Scheme Company is made. 3 Reinsurance Contract name: specify the contract name that identifies the Reinsurance Contract (including type, class/classes of business and layer). This should be as per the original signed slip and/or signed contract wording. 4 Underwriting year: specify the underwriting year to which the loss is ceded. 5 Priority: specify the original attachment point of the Reinsurance Contract. 6 Limit: specify the original maximum payable by the Reinsurance Contract. 7 Index date: if the Reinsurance Contract is subject to indexation, specify the applicable indexation date. 8 Participation %: specify the percentage line underwritten by the Scheme Company for the Reinsurance Contract. 9 Claim name: specify the original insured's name, the event name or some other short description by which the incident is known. 10 Date of loss: specify the date on which the loss under the Reinsurance Contract arises. For event based policies, this is the date the incident occurred. For claims made/claims notified policies, this is the date the incident is notified. 13 Broker claim reference number: specify the Broker's (or agent's or intermediary's) claim reference number. 14 Broker Reinsurance Contract reference number: specify the Broker's (or agent's or intermediary's) Reinsurance Contract reference number. 15 Scheme Company claim reference number: specify the Scheme Company's claim reference number. 16 Ground up loss paid: the net amount paid by the Scheme Creditor applicable to the claim (taking into account any recoveries due from proportional reinsurance, subrogation, input tax credits, decreasing adjustments etc). 17 Ground up loss outstanding: the reserve held by the Scheme Creditor in respect of future amounts payable to settle the claim in accordance with industry practice. Future care costs should be discounted in accordance with industry practice. Where an amount has been provided by the Scheme Company these will be in accordance with the last advice received from the Scheme Creditor or its Broker. 18 Reinsurance Contract incurred: this is the total of columns 16 and 17 applied against columns 5 and 6. Payments which have been made will be adjusted using the applicable indexation rate from the index date in column 7 to the date of each payment. Amounts which have not been paid, will be adjusted using the applicable indexation rate from the index date in column 7 to 30 June 2006. 19 Amount due to Scheme Creditor: specify the amount due to the Scheme Creditor from the Scheme Company. For non-proportional claims this is column 18 multiplied by column 8. For proportional claims this is any current treaty account amounts due to the Scheme Creditor from the Scheme Company. 20 Amount paid to Scheme Creditor: specify the amount paid to the Scheme Creditor as at 30 June 2006. 21 Scheme Company treaty account outstanding claims: this is the amount of outstanding claims as per the last account received multiplied by column 8. 22 Amount outstanding to Scheme Creditor: for non-proportional claims this is column 19 minus column 20. For proportional claims this is column 19 plus column 21. 23 Reinstatement or burning cost premium due: specify any additional premiums due to the Scheme Company but not yet paid as a result of the claim. 24 Unsettled amounts due to Scheme Company: list separately any other amounts in respect of the claims due to the Scheme Company. B Total owing to the Scheme Company: specify the total of the entries in columns 22 and 23. C Net balance due to/from Scheme Creditor: this figure is the difference between figures "A" and "B". Unless separately defined in this Claim Form, the defined words and expressions contained within this Claim Form and its accompanying Guidance Notes have the meaning given to them in the Scheme Booklet dated 5 July 2006. If you have no claim against the Scheme Company you need not take any further action. If you have a claim other than in Australian Dollars (AUD), complete and return additional forms for each additional currency. If you are in any doubt as to any aspect of this proposal or as to the action you should take, you should consult your insurance broker or other financial or professional adviser without delay. You should note that any amendments you may have made to the pre completed voting form do NOT represent agreed claims and will be subject to review per provision 4.5 of the Scheme. If you tick the box and make amendments, the Scheme Company will consider the amendments as your claim. To avoid doubt, if there is no change to the information you submitted previously with your proxy and voting form, you need only complete your details on the claim form, place a "" in the appropriate currency box, place a "" in the box to use the previous details submitted as your claim, sign and return the form. You should note that any amendments you may have made to the pre completed voting form do NOT represent agreed claims and will be subject to review per provision 4.5 of the Scheme. If you did not submit a proxy and voting form previously, or you believe your claim has changed, you must complete the Summary Table and Detailed Tables. The amount included in that form will become your claim against the Scheme Company. Otherwise proceed to Part B . You do not need to provide any additional details. You should note that any amendments you may have made to the pre completed voting form do NOT represent agreed claims and will be subject to review per provision 4.5 of the Scheme. Any information that has been pre-completed by the Scheme Company is intended to assist you. It is not binding upon you and you may replace or amend any information relating to your Claim if you wish to do so. You should review all pre-completed information carefully to see if it is accurate. In order to submit your claims against the Scheme Company in relation to the Scheme Business, you must complete and return this Claim Form, along with appropriate supporting information, to the Scheme Company, by email (with attachments in Microsoft Word, Microsoft Excel or pdf format only), by fax, or by post, as soon as possible and by no later than the Final Claims Submission Date, being 11:59 pm (Sydney time) on the 120th day after (but not including), the Effective Date (or if such date is not a Business Day, the first Business Day thereafter). After this date, you will not be entitled to submit a Claim Form or a revised Claim Form and no revised or further information will be accepted (except, in the latter case, in response to a request from the Scheme Company or the Scheme Adjudicator). (Step 1): Read the Guidance Notes carefully before completing the Summary Table and Detailed Tables. (Step 2): Complete or amend the individual Detailed Tables making such additions or amendments to the details as may be necessary and provide appropriate supporting information (as described in the Guidance Notes to this Claim Form and in the Estimation Methodology). Please note that any details of claims provided by the Scheme Company in the Detailed Tables is intended to assist you in completing this Claim Form and should not be regarded as a complete and accurate list of all claims you may have that may be affected by the Scheme. (Step 4): Execute this Claim Form ( Part C ) in accordance with the execution instructions. (Step 5): Submit this Claim Form by the date that is 120 days after the Effective Date to the Scheme Company (attention Ross Littlewood) by email (with any attachments in Microsoft Word, Microsoft Excel or pdf format only) to [email protected] , by fax to +(61)(02) 92743033 or by post c/o GPO Box 3973, Sydney, NSW, 2001 Australia. If submitted by email or facsimile, please also post the original. Power of Attorney to sign under Power of Attorney, either the Power of Attorney must have already been lodged with the Scheme Company for notation or the original (or a certified copy) of the Power of Attorney must accompany this document. You should review your individual list of Reinsurance Contracts, making such amendments or additions to the Detailed Tables as may be necessary and providing appropriate information to support each amendment and/or addition. Your (re)insurance broker, agent or intermediary should be able to assist you in confirming or identifying additional Reinsurance Contracts and reference numbers. A separate Detailed Table and Summary Table must be completed for each currency in which you have a claim. If you need to complete more than one Detailed Table, please complete the Detailed Tables as required . Please check the information in the Summary Table following completion of the Detailed Tables. You should note that all claims submitted will be subject to review per provision 4.5 of the Scheme. A separate Detailed Table needs to be completed in respect of each different currency. 2 Scheme Company contract reference: specify the Scheme Company reference number in relation to each Reinsurance Contract under which your claim against the Scheme Company is made. 3 Reinsurance Contract name: specify the contract name that identifies the Reinsurance Contract (including type, class/classes of business and layer). This should be as per the original signed slip and/or signed contract wording. 4 Underwriting year: specify the underwriting year to which the loss is ceded. 5 Priority: specify the original attachment point of the Reinsurance Contract. 6 Limit: specify the original maximum payable by the Reinsurance Contract. 7 Index date: if the Reinsurance Contract is subject to indexation, specify the applicable indexation date. 8 Participation %: specify the percentage line underwritten by the Scheme Company for the Reinsurance Contract. 9 Claim name: specify the original insured's name, the event name or some other short description by which the incident is known. 10 Date of loss: specify the date on which the loss under the Reinsurance Contract arises. For event based policies, this is the date the incident occurred. For claims made/claims notified policies, this is the date the incident is notified. 11 Scheme Creditor claim reference number: specify your claim reference number. 12 Scheme Creditor Reinsurance Contract reference number: specify your Reinsurance Contract reference number. 13 Broker claim reference number: specify the Broker's (or agent's or intermediary's) claim reference number. 14 Broker Reinsurance Contract reference number: specify the Broker's (or agent's or intermediary's) Reinsurance Contract reference number. 15 Scheme Company claim reference number: specify the Scheme Company's claim reference number. 16 Ground up loss paid: the net amount paid by the Scheme Creditor applicable to the claim (taking into account any recoveries due from proportional reinsurance, subrogation, input tax credits, decreasing adjustments etc). 17 Ground up loss outstanding: the reserve held by the Scheme Creditor in respect of future amounts payable to settle the claim in accordance with industry practice. Future care costs should be discounted in accordance with industry practice. Where an amount has been provided by the Scheme Company these will be in accordance with the last advice received from the Scheme Creditor or its Broker. 18 Reinsurance Contract incurred: this is the total of columns 16 and 17 applied against columns 5 and 6. Payments which have been made will be adjusted using the applicable indexation rate from the index date in column 7 to the date of each payment. Amounts which have not been paid, will be adjusted using the applicable indexation rate from the index date in column 7 to 30 June 2006. 19 Amount due to Scheme Creditor: specify the amount due to the Scheme Creditor from the Scheme Company. For non-proportional claims this is column 18 multiplied by column 8. For proportional claims this is any current treaty account amounts due to the Scheme Creditor from the Scheme Company. 20 Amount paid to Scheme Creditor: specify the amount paid to the Scheme Creditor as at 30 June 2006. 21 Scheme Company treaty account outstanding claims: this is the amount of outstanding claims as per the last account received multiplied by column 8. 22 Amount outstanding to Scheme Creditor: for non-proportional claims this is column 19 minus column 20. For proportional claims this is column 19 plus column 21. 23 Reinstatement or burning cost premium due: specify any additional premiums due to the Scheme Company but not yet paid as a result of the claim. 24 Unsettled amounts due to Scheme Company: list separately any other amounts in respect of the claims due to the Scheme Company. B Total owing to the Scheme Company: specify the total of the entries in columns 22 and 23. C Net balance due to/from Scheme Creditor: this figure is the difference between figures "A" and "B". Unless separately defined in this Claim Form, the defined words and expressions contained within this Claim Form and its accompanying Guidance Notes have the meaning given to them in the Scheme Booklet dated 5 July 2006. If you have no claim against the Scheme Company you need not take any further action. If you have a claim other than in Australian Dollars (AUD), complete and return additional forms for each additional currency. If you are in any doubt as to any aspect of this proposal or as to the action you should take, you should consult your insurance broker or other financial or professional adviser without delay. You should note that any amendments you may have made to the pre completed voting form do NOT represent agreed claims and will be subject to review per provision 4.5 of the Scheme. If you tick the box and make amendments, the Scheme Company will consider the amendments as your claim. To avoid doubt, if there is no change to the information you submitted previously with your proxy and voting form, you need only complete your details on the claim form, place a "" in the appropriate currency box, place a "" in the box to use the previous details submitted as your claim, sign and return the form. You should note that any amendments you may have made to the pre completed voting form do NOT represent agreed claims and will be subject to review per provision 4.5 of the Scheme. If you did not submit a proxy and voting form previously, or you believe your claim has changed, you must complete the Summary Table and Detailed Tables. The amount included in that form will become your claim against the Scheme Company. Otherwise proceed to Part B . You do not need to provide any additional details. You should note that any amendments you may have made to the pre completed voting form do NOT represent agreed claims and will be subject to review per provision 4.5 of the Scheme. Any information that has been pre-completed by the Scheme Company is intended to assist you. It is not binding upon you and you may replace or amend any information relating to your Claim if you wish to do so. You should review all pre-completed information carefully to see if it is accurate. In order to submit your claims against the Scheme Company in relation to the Scheme Business, you must complete and return this Claim Form, along with appropriate supporting information, to the Scheme Company, by email (with attachments in Microsoft Word, Microsoft Excel or pdf format only), by fax, or by post, as soon as possible and by no later than the Final Claims Submission Date, being 11:59 pm (Sydney time) on the 120th day after (but not including), the Effective Date (or if such date is not a Business Day, the first Business Day thereafter). After this date, you will not be entitled to submit a Claim Form or a revised Claim Form and no revised or further information will be accepted (except, in the latter case, in response to a request from the Scheme Company or the Scheme Adjudicator). (Step 1): Read the Guidance Notes carefully before completing the Summary Table and Detailed Tables. (Step 2): Complete or amend the individual Detailed Tables making such additions or amendments to the details as may be necessary and provide appropriate supporting information (as described in the Guidance Notes to this Claim Form and in the Estimation Methodology). Please note that any details of claims provided by the Scheme Company in the Detailed Tables is intended to assist you in completing this Claim Form and should not be regarded as a complete and accurate list of all claims you may have that may be affected by the Scheme. (Step 4): Execute this Claim Form ( Part C ) in accordance with the execution instructions. (Step 5): Submit this Claim Form by the date that is 120 days after the Effective Date to the Scheme Company (attention Ross Littlewood) by email (with any attachments in Microsoft Word, Microsoft Excel or pdf format only) to [email protected] , by fax to +(61)(02) 92743033 or by post c/o GPO Box 3973, Sydney, NSW, 2001 Australia. If submitted by email or facsimile, please also post the original. Power of Attorney to sign under Power of Attorney, either the Power of Attorney must have already been lodged with the Scheme Company for notation or the original (or a certified copy) of the Power of Attorney must accompany this document. You should review your individual list of Reinsurance Contracts, making such amendments or additions to the Detailed Tables as may be necessary and providing appropriate information to support each amendment and/or addition. Your (re)insurance broker, agent or intermediary should be able to assist you in confirming or identifying additional Reinsurance Contracts and reference numbers. A separate Detailed Table and Summary Table must be completed for each currency in which you have a claim. If you need to complete more than one Detailed Table, please complete the Detailed Tables as required . Please check the information in the Summary Table following completion of the Detailed Tables. You should note that all claims submitted will be subject to review per provision 4.5 of the Scheme. A separate Detailed Table needs to be completed in respect of each different currency. 2 Scheme Company contract reference: specify the Scheme Company reference number in relation to each Reinsurance Contract under which your claim against the Scheme Company is made. 3 Reinsurance Contract name: specify the contract name that identifies the Reinsurance Contract (including type, class/classes of business and layer). This should be as per the original signed slip and/or signed contract wording. 4 Underwriting year: specify the underwriting year to which the loss is ceded. 5 Priority: specify the original attachment point of the Reinsurance Contract. 6 Limit: specify the original maximum payable by the Reinsurance Contract. 7 Index date: if the Reinsurance Contract is subject to indexation, specify the applicable indexation date. 8 Participation %: specify the percentage line underwritten by the Scheme Company for the Reinsurance Contract. 9 Claim name: specify the original insured's name, the event name or some other short description by which the incident is known. 10 Date of loss: specify the date on which the loss under the Reinsurance Contract arises. For event based policies, this is the date the incident occurred. For claims made/claims notified policies, this is the date the incident is notified. 11 Scheme Creditor claim reference number: specify your claim reference number. 12 Scheme Creditor Reinsurance Contract reference number: specify your Reinsurance Contract reference number. 13 Broker claim reference number: specify the Broker's (or agent's or intermediary's) claim reference number. 14 Broker Reinsurance Contract reference number: specify the Broker's (or agent's or intermediary's) Reinsurance Contract reference number. 15 Scheme Company claim reference number: specify the Scheme Company's claim reference number. 16 Ground up loss paid: the net amount paid by the Scheme Creditor applicable to the claim (taking into account any recoveries due from proportional reinsurance, subrogation, input tax credits, decreasing adjustments etc). 17 Ground up loss outstanding: the reserve held by the Scheme Creditor in respect of future amounts payable to settle the claim in accordance with industry practice. Future care costs should be discounted in accordance with industry practice. Where an amount has been provided by the Scheme Company these will be in accordance with the last advice received from the Scheme Creditor or its Broker. 18 Reinsurance Contract incurred: this is the total of columns 16 and 17 applied against columns 5 and 6. Payments which have been made will be adjusted using the applicable indexation rate from the index date in column 7 to the date of each payment. Amounts which have not been paid, will be adjusted using the applicable indexation rate from the index date in column 7 to 30 June 2006. 19 Amount due to Scheme Creditor: specify the amount due to the Scheme Creditor from the Scheme Company. For non-proportional claims this is column 18 multiplied by column 8. For proportional claims this is any current treaty account amounts due to the Scheme Creditor from the Scheme Company. 20 Amount paid to Scheme Creditor: specify the amount paid to the Scheme Creditor as at 30 June 2006. 21 Scheme Company treaty account outstanding claims: this is the amount of outstanding claims as per the last account received multiplied by column 8. 22 Amount outstanding to Scheme Creditor: for non-proportional claims this is column 19 minus column 20. For proportional claims this is column 19 plus column 21. 23 Reinstatement or burning cost premium due: specify any additional premiums due to the Scheme Company but not yet paid as a result of the claim. 24 Unsettled amounts due to Scheme Company: list separately any other amounts in respect of the claims due to the Scheme Company. B Total owing to the Scheme Company: specify the total of the entries in columns 22 and 23. C Net balance due to/from Scheme Creditor: this figure is the difference between figures "A" and "B". The Scheme Companies have paid and are paying all of their respective creditors within normal terms of trade. Each Scheme Company is solvent and is trading in an ordinary commercial manner. Neither APRA nor any of its officers take any responsibility for the contents of this Scheme Booklet. APRA has no formal role in relation to schemes of arrangement pursuant to section 411 of the Corporations Act , but in its capacity of prudential regulator of general insurers has confirmed by letter of 29 June 2006 that it has no objection to the Schemes proceeding. ASIC has been requested to provide a statement that ASIC has no objection to the Schemes. If ASIC provides this statement, then it will be produced to the Court at the time of the Court hearing to approve the Schemes. Neither ASIC nor any of its officers takes any responsibility for the contents of this Scheme Booklet. ASIC has granted the Scheme Companies relief from disclosure of material otherwise required by paragraphs 8201 and sub-paragraphs 8203(a), (b) and (d), of Part 2 of Schedule 8 of the Corporations Regulations 2001 (Cth). He has extensive knowledge of international insurance transactions and of Asia Pacific insurance and reinsurance. Mr Moyes has worked in the insurance industry for over 30 years. Prior to joining 3 red Pty Ltd, he was the Chief Executive Officer of the Claims Management Group Limited, Asia Pacific (from April 2005 to February 2006) and Reinsurance Australia Corporation Limited, Run-off Services (from March 1994 to March 2005). Mr Moyes has broad market experience in insurance claims management and related services provided to insurance and reinsurance companies such as reinsurance debt collection and run-off of insurance liabilities. Mr Moyes has advised insurance and reinsurance companies, self-insurers and governments on all aspects of their insurance business, ranging from claims management advice and service to self-managed run-off. Mr Moyes received his LLB from the University of Technology, Sydney in 1984 and was admitted as a Barrister of the Supreme Court of New South Wales in 1988. He has published a number of articles for the Australian Insurance Institute Journal . Whilst the Scheme Companies may, at the option of the Scheme Adjudicator, discharge the remuneration, costs, charges and expenses apportioned to the Scheme Creditor, the Scheme Creditor shall be obligated to reimburse the relevant Scheme Company any amounts so discharged. The Scheme Company may, in its absolute discretion, deduct any amount to be paid by the Scheme Creditor to the Scheme Adjudicator from the Scheme Creditor's Agreed Claim (Pre Set-Off). The Scheme Adjudicator is not a Scheme Creditor, shareholder or director of either Scheme Company. The Scheme Adjudicator's remuneration is not dependent on the level at which Claims are adjudicated under the Scheme. He has been employed by Finity Consulting Pty Limited (formerly Trowbridge) since 1988. Mr Collings qualified as an actuary in 1994 after graduating from the University of New South Wales in 1988 with honours in electrical engineering. He is based in Finity Consulting Pty Limited's Sydney office. During his 18 years of general insurance consulting, Mr Collings has been involved in a wide range of projects covering pricing, reserving and capital management advice to private sector insurers and reinsurers, as well as government accident compensation schemes. In particular, he has been employed as a consultant by NRG Victory and NRG London for over 10 years, providing actuarial valuation and related services. He is currently Approved Actuary to four licensed general insurers: NRG Victory, NRG London, Lumley General Insurance and Wesfarmers Federation Insurance. As part of his responsibilities as the Approved Actuary to NRG Victory and NRG London, Mr Collings provides advice to the Scheme Companies in respect of its reserves. Mr Colling's responsibilities at Finity Consulting Pty Limited include managing the firm's Volatility and Capital Management (VCM) practice. Within the VCM practice he has prepared advice for a number of major local and overseas insurers with a focus on capital management issues such as the development of operational capital targets, risk-based allocation of capital, dividend strategy, asset mix optimisation and the analysis and restructuring of reinsurance programs. The Scheme Actuary's fees will be payable by the Scheme Companies. The Scheme Actuary's remuneration is not dependent upon the level at which Claims are agreed under the Schemes. She is currently chairperson of Recovre Holdings Limited and director of a number of companies including NRG Victory, Zurich Pty Ltd and Munich Holdings Australasia Limited. Ms Milne is also one of Australia's leading insurance and reinsurance lawyers with over 20 years experience. She is a consultant to and former partner of Clayton Utz and has acted for insureds, insurers, fund managers, professional organisations, and directors. Ms Milne is currently the Chair of the International Bar Association's Insurance Committee. She is a member of the International Insurance Society and the Australian Insurance Law Association. In 2003, Ms Milne was appointed by The Minister for Revenue and Assistant Treasurer, and Parliament Secretary to the Treasurer, to conduct a review of the Insurance Contracts Act 1984 with Mr Alan Cameron AM. This appointment recognised Ms Milne's pre-eminent position in the financial services industry. In addition, she was appointed as one of six non-government members of the Commonwealth's Medical Indemnity Policy Review Panel. Ms Milne is a director of NRG Victory. Ms Milne is also a director of Zurich Pty Ltd which is a potential Scheme Creditor. It is not a Scheme Creditor, shareholder or director of either Scheme Company (although Nancy Milne, a director of NRG Victory, is a consultant to and was a former partner of Clayton Utz). Clayton Utz's fees are payable by the Scheme Companies. Please complete a separate Summary Table and Detailed Tables for each different currency in which you have a claim. They are qualified in their entirety by the definitions within the Schemes set out in Section 6. "Alternative Claim Form" means the claim form setting out the values a Scheme Company is prepared to accept in respect of a Scheme Creditors' Claim. " ANIP " means the Australian Nuclear Insurance Pool. "APRA" means the Australian Prudential Regulation Authority. "ASIC" means Australian Securities and Investments Commission. " Best Estimate " means the average of the distribution of outcomes. A best estimate basis should be used by all Scheme Creditors when estimating Claim reserves. "Business Day" means any day other than a Saturday, Sunday or public holiday on which banks are not generally open for business in Sydney. "Chairperson" in respect of a Scheme Meeting, means Nancy Milne or in her absence, Ian Hutchinson, except that in the case of any decision or determination in relation to which Nancy Milne or Ian Hutchinson has a conflict of interest, the chairperson will be Mark Moyes, the Scheme Adjudicator. "Claim" means any claim against a Scheme Company in respect of a Liability under or in relation to a Reinsurance Contract written by or on behalf of a Scheme Company. "Claim Form" means the form to be sent out to Scheme Creditors in accordance with a Scheme and to be completed by Scheme Creditors prior to the Claims Submission Date in order to have their Claims against the applicable Scheme Company agreed or determined. "Claims Submission Date" means the deadline for submitting completed Claim Forms, being 120 days after the Effective Date. " Corporations Act " means the Corporations Act 2001 (Cth). "Court" means the Federal Court of Australia. "Disputed Claim" means a Claim referred to the Scheme Adjudicator. "Disputed Final Determined Claim Notice" means the notice that a Scheme Creditor must issue to the Scheme Company within 30 days of the Final Determined Claim Notification Date disputing the value which the Scheme Company has attributed to its Final Determined Claim. "Dispute Resolution Procedure" means the process of adjudication of Disputed Claims by the Scheme Adjudicator. "Effective Date" means, in relation to each Scheme Company, the date on which the office copy of the Court order is lodged with ASIC. "Estimation Methodology" means the methodology used in determining Claims as set out in Section 5. "Final Determined Claim Notification Date" means the date a Scheme Company notifies a Scheme Creditor of the value attributed to its Final Determined Claim following its determination. " GST " has the meaning given to it in the A New Tax System (Goods and Services Tax) Act 1999 (Cth). " Guidance Notes " means the guidance notes in respect of the Claim Form explaining how to access, obtain, complete, amend and submit a Claim Form, and the manner in which a Scheme Creditor may provide any supporting documentation to the Scheme Company. "IBNR" means Scheme Liabilities of a Scheme Creditor in respect of losses which as at the Valuation Date have been incurred but not yet reported by the Scheme Creditor to a Scheme Company. " IBNR Claims " means a Claim under a Reinsurance Contract based on Liabilities of the Scheme Company, in respect of losses which have been incurred but have not been reported to the Scheme Company, and which are subject to potential recoveries under a Reinsurance Contract with the Scheme Company. "Liability" means any debt or liability (being a liability to pay money or money's worth) of a person whether it is present or future, certain or contingent, whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion, including any liability under any enactment (in Australia or in any other jurisdiction) and any liability in contract, tort or bailment or arising out of an obligation to make restitution or in any manner whatsoever provided that such expression does not include any debt or liability which is barred by statute under Australian law or the law of any other jurisdiction which applies to that liability or is otherwise unenforceable. For the avoidance of doubt, where any obligation or liability under a contract or policy is void or, being voidable, have been duly avoided, no obligation or liability shall arise in respect of such obligation or liability. "Long Stop Date" means the expiry date for any Claim which has not been agreed between a Scheme Company and its Scheme Creditor by 11:59 pm Sydney time on the day on which the period of 365 days from the Claims Submission Date has elapsed. "Notified Outstanding Claims" means a Claim under a Reinsurance Contract based on Liabilities of a Scheme Company in respect of losses which have been notified to the Scheme Company but not yet become Paid Losses and which are subject to potential recoveries under a Reinsurance Contract. "NRG London" means NRG London Reinsurance Company Limited ABN 77 001 160 792. "NRG Victory" means NRG Victory Australia Limited ABN 47 002 971 477. "Paid Losses" means Liabilities of the Scheme Company in respect of losses of a Scheme Creditor arising pursuant to Scheme Business which have been notified to the Scheme Company which are certain in amount. "Proceedings" means any form of proceedings in any jurisdiction or forum including, without limitation, any legal proceedings, demand, arbitration, alternative dispute resolution procedure, judicial review, adjudication, mediation, execution, seizure, distraint, forfeiture, re-entry, enforcement of judgment or enforcement of any security or any step taken for the purpose of creating or enforcing a lien. "Property" means all forms of property and obligations (including money, goods, things in action, land and every description of property wherever situated) and every description of interest, whether present, future, vested or contingent or arising out of or incidental to, property and including for the avoidance of doubt, all contributions to the assets of the relevant Scheme Company. "Reinsurance Contract" means any inwards contract or policy of insurance, reinsurance or retrocession of any kind whatsoever in respect of which a Scheme Company may have Liabilities except those in respect of which the Liability of the Scheme Company would be an Excluded Liability. "Schemes" means the schemes of arrangement pursuant to section 411 of the Corporations Act . "Scheme Actuary" means Scott Collings of Finity Consulting Pty Limited and any person subsequently appointed to be the Scheme Actuary. "Scheme Adjudicator" means Mark Moyes of 3 red Pty Ltd and any person subsequently appointed to be a Scheme Adjudicator. "Scheme Business" means all of a Scheme Company's Reinsurance Contracts. "Scheme Company" means NRG London or NRG Victory or both of them as the case requires. "Scheme Creditor" means, in relation to a particular Scheme Company, a person who is or claims to be a creditor of that Scheme Company in respect of a Claim. "Scheme Liability" means any Liability (not being an Excluded Liability) to which a Scheme Company is subject as at the Valuation Date in respect of a Reinsurance Contract. "Scheme Meetings" means each of the meetings of the Scheme Creditors for a Scheme Company to consider and vote on each Scheme. "Valuation Date" means the date as at which the Scheme Liabilities will be valued, namely 30 June 2006. | scheme of arrangement two insurance companies, whose business was exclusively reinsurance, that had been in "run-off" for many years "cut-off" scheme designed to quantify and pay out all existing claims convening of meeting of creditors whether separate meetings of "classes" of creditors should be convened meaning of "class" in s 411(1) of corporations act 2001 (cth) considerations relevant to the question whether creditors should be regarded as belonging to different classes for purpose of s 411(1). held : on the facts, separate meetings of classes of creditors not called for, a single meeting of all creditors being appropriate. corporations |
I indicated then that I would deliver written reasons in due course. These are my reasons. On 1 October 2009 (the First Court Hearing) the Court granted approval to GRD for the convening of a meeting (Scheme Meeting) to consider the Scheme. The Scheme, if approved and implemented, will result in GRD becoming a wholly owned subsidiary of AMEC Australia Finance Company Limited (AMEC). GRD now seeks an order approving of the Scheme pursuant to s 411(4)(b) of the Corporations Act and an order exempting it pursuant to s 411(12) of the Corporations Act from compliance with s 411(11) of the Corporations Act . An advertisement concerning the Scheme Meeting, and giving notice of the hearing before this Court on 16 November 2009 to consider and, if thought fit, approve the Scheme was published in 'The West Australian' newspaper on 11 November 2009. The Scheme Meeting was held on 10 November 2009. The resolution to approve the Scheme was conducted by poll. 68.33% of Shareholders present in person or by proxy at the Scheme Meeting voted in favour of the Scheme. 31.67% voted against the Scheme. The votes in favour of the Scheme represented 95.93% of the votes cast on the resolution. Accordingly the majority voting requirements under s 411(4)(a)(ii) of the Corporations Act have been met. All of the Conditions of the Scheme have been satisfied or waived. Following the above advertisement neither GRD nor the solicitors for GRD have received any notice or appearance or other communication from any party intending to appear at the Court hearing which occurred on 16 November 2009 in this proceeding, save for notice from AMEC that it intended to appear at that hearing. I am satisfied that all GRD Shareholders received sufficient notification of this Court hearing and were adequately informed of their right to be heard at, and to oppose the application for approval of, the Scheme. ASIC wrote to the plaintiff's solicitors by letter dated 12 November 2009 confirming, under s 411(17)(b) of the Corporations Act , that it has no objection to the Scheme. At the approval stage, the Court considers matters that do not precisely correlate to those considered at the first meeting approval stage. The Court has additionally a residual discretion to withhold approval which is a long standing and recognised power: Re Alabama, New Orleans, Texas & Pacific Junction Railway Company [1891] 1 Ch 213 at 243. It has more recently been confirmed in Re NRMA Ltd [2000] NSWSC 408 ; (2000) 156 FLR 412 at [21] - [24] , Re Hudson Conway Ltd (2000) 33 ACSR 657: Re Kalgoorlie Lake View Pty Ltd (2005) 56 ACSR 144. First, the Court must be satisfied that there has been no misleading or deceptive conduct in contravention of s 995 of the Corporations Law which is of such materiality as to vitiate the vote. The Court's discretion to give or withhold approval at the approval hearing remains unfettered by what has occurred at the convening hearing. That approval may be given or withheld, or given on conditions. It will take account of what has been revealed or transpired since the convening hearing, as well as any matters properly raised at the approval hearing. As regards the scheme proxy, my earlier provisional conclusion not precluding its use needs now to be reviewed following the scheme meetings and in light of the voting at those meetings on the scheme and on those associated resolutions already passed. The intention is for the demutualisation special resolution to be held reasonably soon after the scheme, this having, as my earlier judgment makes clear, direct relevance to the legitimacy of the scheme proxy. So too does the very strong support for the scheme at around 80% or more assuming reliable voting figures: see paras 72 and 73 of my earlier judgment. Fundamentally, the jurisdiction is supervisory; the court is concerned to be satisfied that there has been an absence of oppression and that the compromise or arrangement is one which is capable of being accepted: see Re Dorman Long & Co Ltd [1934] Ch 635 ; Scottish Insurance Corp Ltd v Wilsons and Clyde Coal Co Ltd [1949] UKHL 3 ; [1949] AC 462 at 486. As White J said in Re Pheon Pty Ltd (1987) 47 SASR 427 at 435 in dealing with a creditors' scheme of arrangement but equally applicable to a members' scheme: "The court must leave it to the commercial sense of the creditors to judge what is reasonable in their interests. After all, it is their money which is at stake. In light of the passing of the resolutions and, in particular, the majorities achieved, it is apparent that the shareholders have resolved that the schemes are to their commercial advantage. The Scheme has been overwhelmingly approved by members. No member or creditor has provided any indication to GRD that it proposes to oppose the orders sought. ASIC has been kept fully and thoroughly informed at all stages of the process. I do not see any basis for the Court to exercise its residual power to withhold approval of the Scheme. Shareholders will receive substantial benefits from the Scheme. The independent expert has concluded that the Scheme is in the best interests of GRD Shareholders. Although, the independent expert concluded that the scheme consideration was not fair but reasonable, the basis of this conclusion was expressed clearly and openly in the Independent Experts' Report. The Independent Expert's opinion was broadly that the Scheme (being the offer of 55c per GRD Share) is "in the best interests of GRD shareholders", and though not fair it was reasonable. The Proposal does not deliver a full premium for control. However, unless a superior alternative proposal emerges before the Scheme meeting, GRD shareholders are likely to be better off voting in favour of the Proposal. Accordingly, other factors need to be taken account as to whether the Proposal is in the best interests of GRD shareholders. The assessment of the Proposal is an overall conclusion having regard to all these factors. The valuation reflects the estimated full underlying value for GRD and exceeds the price at which Grant Samuel would expect GRD shares to trade in the absence of the Proposal or speculation regarding some alternative corporate transaction. Accordingly, the Proposal is not in the fair value range. This suggests that GRD shareholders have not been offered a full premium for control. It may not be the optimal time for shareholders to sell. It should be recognised that there remains significant risk associated with the Lancashire Waste Project. If no value is attributed to Global Renewables (i.e. The scheme process establishes a clear value benchmark and a defined timetable within which alternative interested parties could act. Therefore, in Grant Samuel's opinion, the Proposal is not fair but reasonable and, accordingly, the Proposal is in the best interests of shareholders. He acknowledged the difficulty in accepting that an offer which was not fair could still be reasonable. It does so in a way that seeks to attribute different meanings to the words "fair and reasonable". The policy statement does not treat the expression "fair and reasonable" as a single portmanteau statement conveying a meaning to the listener but, rather, seeks to take each element of the expression and attribute a different meaning to it. Thus, the policy statement expressly contemplates the circumstance that an expert might conclude that a particular offer is not fair but nevertheless is reasonable. Perhaps that view stems from the impression I have that the expression 'fair and reasonable' is but a single expression intended to convey a single overall meaning which is not to be identified by reference to particular constituent elements. He stated that "Thus the reduction that has been proposed is a step that is to be taken, as a part of that overall transaction". Although Re Rancoo Ltd constitutes an example of a reduction of capital which was recognised to be such, persuasive applications of the distinction are likely to be rare. In my opinion, a scheme involving an offer of an undervalue, which is not fair, should generally not be considered reasonable unless it is accompanied by some positive compensatory feature. The fact that the security holders are unable to exact fair, or better, consideration through any avenue alternative to the scheme would not necessarily render an unfair scheme reasonable in the relevant sense. I remain of that opinion. It was disclosed at the First Court Hearing that ASIC was content with the Independent Expert's Report and the form of the Scheme Booklet (as amended). There is no evidence that the Scheme is not being proposed in good faith or that it is commercially immoral in any respect. The reasons underlying the Scheme have been clearly stated and put to all GRD members. All conditions to the Scheme will on the making of the orders sought in the minute of proposed orders either have been satisfied or waived, or in the case of 'negative conditions' will not have occurred. Section 411(12) allows the Court to exempt a body from compliance with this provision or to determine the period during which it shall comply. Orders under s 411(12) have been made in a number of cases, including Re Hudson Conway Ltd 33 ACSR 657 at 668, Re Amcor Ltd [2000] VSC 157 ; 34 ACSR 199 at 209, Re Glencore Nickel Pty Ltd (2003) 44 ACSR 210 at 225 and Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229 at 240. In my opinion, exemption from compliance with s 411(11) is appropriate for the following reasons. The current GRD Shareholders are fully informed of the Scheme. Once the Scheme becomes binding on GRD Shareholders any purported transfers of GRD Shares will not be accepted for registration, other than a transfer to AMEC in accordance with the Scheme. Accordingly, new shareholders (apart from GRD) will not be entered into GRD's register of members once the Scheme becomes binding. Upon full implementation of the Scheme, GRD will become a wholly owned subsidiary of AMEC. Further, the Court order approving the Scheme would effect no alteration to GRD's Constitution. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | scheme of arrangement court's approval of compromise s 411(4) of the corporations act 2001 (cth) expert report concluded scheme not fair but reasonable best interests of shareholders scheme approved. corporations |
The Federal Magistrate dismissed an application for review of a decision of the Refugee Review Tribunal which affirmed a decision of the respondent Minister's delegate refusing the appellant's application for a protection visa. The Federal Magistrate held that the facts did not disclose any "deliberate misleading" of the appellant and thus rejected this ground of review. The facts are not in dispute. The relevant evidence consists of various documents and two affidavits sworn by the appellant on 28 October 2008 and 9 March 2009. The appellant was not cross-examined and thus issues of demeanour and appellate deference to the Federal Magistrate's opportunity to observe witnesses giving their evidence do not arise. The appellant arrived in Australia on 3 August 2007. The agency which organised his travel put the appellant into contact with a Mr Qian. On 13 August 2007 Mr Qian introduced the appellant to a person named Mr Wang. Mr Qian told the appellant that Mr Wang was a migration agent who would look after the appellant's claims and dealings with the authorities and that the appellant should do what Mr Wang said. The appellant met Mr Wang in a café in Chinatown, Sydney. Mr Wang told the appellant to give him $1000 which the appellant did. Mr Wang asked the appellant to tell him his story and said that he, Mr Wang, would do everything else to get the appellant a visa and would speak to the Department. Mr Wang asked the appellant to sign some blank papers and told the appellant that if the appellant got a letter from the Department the appellant had better keep it. The appellant told Mr Wang why he had left China. The appellant, who cannot read or write English, signed the blank forms where requested to do so by Mr Wang. The forms in question are undoubtedly the protection visa application forms which are in evidence. Amongst other things, those forms record an answer "No" to the question "Did you receive assistance in completing this form?". All other questions relating to such assistance (including whether any agent was registered, whether any payment had been made for assistance, agent details and agent consent) have been left blank. In the section of the form entitled "options for receiving written communications" a tick appears next to a request that written communications be forwarded to the appellant at the appellant's address. A statement dated 6 August 2007 accompanies the application (apparently signed by the appellant) setting out his claims of persecution in China due to his practice of Falun Gong. Nothing on the face of the form or accompanying statement discloses the involvement of Mr Wang. The Department sent a letter to the appellant dated 13 August 2007 at the appellant's address. The appellant received that letter and called Mr Wang. The appellant told Mr Wang he had received a document and that he could not read it but that it looked important. Mr Wang advised the appellant to take the document to a person who speaks English and "check to see if work rights have been granted". Mr Wang told the appellant "if work rights have been granted you do not need to worry about anything else". The appellant took the letter to a person who read some English and spoke Mandarin. The appellant asked whether he had been given work rights. The person read the letter and replied "Yes, it says you are allowed to work". The appellant believed he no longer had to worry about his migration status in Australia. The letter in question acknowledged the receipt of a protection visa application and, amongst other things, informed the appellant that his bridging visa gave him permission to work. The Department forwarded another letter to the appellant dated 14 August 2007. It is not clear whether the appellant received this letter. In October 2007 the appellant moved house. The appellant called Mr Wang to advise him of the change of address. Mr Wang told the appellant that "your tax file number will be sent to the new address and you can work". On 18 October 2007, Mr Wang forwarded a letter to the Department under the appellant's name advising of the change of address. The Department forwarded a further letter to the appellant dated 9 November 2007 at his new address. The appellant asked a student (a Mr Liu) living in the same house to read the letter. The student did not translate the letter but told the appellant that "it's bad news". The appellant called Mr Wang and told him about the letter and Mr Liu saying it was bad news. The appellant asked Mr Wang what he should do. I will look after everything else. There is nothing more you need to do. Amongst other things, this letter also advised the appellant of his right to apply to the Tribunal for a review of the decision. Consistent with Mr Wang's advice, however, the appellant did nothing more. The appellant obtained the opportunity to work in Perth. The appellant moved to Perth to take up this opportunity. He did not inform Mr Wang or anyone else of his change of address. Unbeknownst to the appellant, on 10 December 2007, Mr Wang lodged an application for review with the Tribunal in the appellant's name. This application gave the appellant's address as previously notified by the appellant to Mr Wang. Mr Wang ticked the box "no" against the question "do you have an adviser you authorise to act in relation to this application?". Mr Wang also asked that correspondence be forwarded to the appellant's address as notified to Mr Wang. Mr Wang signed the appellant's name on the form. The appellant knew nothing about any of these actions. On 13 December 2007 the Tribunal forwarded a letter to the appellant at the address notified in the review application form acknowledging the application for review. The Tribunal forwarded a further letter to the appellant dated 8 January 2008 at the same address. This letter said that the Tribunal was unable to make a favourable decision on the information and invited the appellant to attend a hearing on 13 February 2008. The appellant was unaware of this correspondence. It is not clear from the evidence whether the appellant received and did not open these letters before his move to Perth or did not receive these letters at all because he had already moved to Perth. The appellant did not attend the hearing before the Tribunal on 13 February 2008. The Tribunal forwarded another letter to the appellant on 13 February 2008 advising him of the handing down of the decision on 4 March 2008. The appellant was also unaware of the letter and did not attend at the Tribunal to obtain the decision. In its decision of 4 March 2008, the Tribunal affirmed the delegate's decision. In May 2008 the appellant was apprehended in Perth and taken into detention. Until some time after that date the appellant was unaware that: - (i) the Minister's delegate refused the appellant's application for a protection visa on 9 November 2007, (ii) an application was lodged with the Tribunal in the appellant's name on 10 December 2007, (iii) the Tribunal acknowledged receipt of that application on 13 December 2007, (iv) on 8 January 2008, the Tribunal invited the appellant to a hearing, (v) on 13 February 2008, the Tribunal invited the appellant to the handing down of its decision, or (vi) on 4 March 2008, the Tribunal handed down its decision affirming the delegate's decision. Mr Wang completed the application for review to the Tribunal. While Mr Wang may have " forged " the appellant's signature, the matters in the application for review were consistent with the appellant's instructions (at [15]), (vi) the appellant knew that letters were to be sent to the appellant not Mr Wang and because Mr Wang's details did not appear anywhere, Mr Wang could not be expected to advise the appellant of any hearing (at [15]), (vii) accordingly, it was reasonable to assume that Mr Wang expected the appellant to call Mr Wang when the appellant received notice of the hearing date (at [15]), (viii) if the appellant had been at his address for service "that he had given to the Tribunal", then the appellant would have received the letter notifying him about the hearing and could have attended the hearing (at [16]), (ix) it was the appellant's responsibility at all times to keep the Tribunal advised of his address (at [16]), and (x) a protection visa application is a serious matter. People in the appellant's position could be expected to have some concern for the status and progress of their applications. If "an applicant fails to clearly understand the processes through which he is going because he does not ask, he cannot be placed in the same category as a similar person who does his best to understand the processes, who does ask and who is deliberately misled" (at [16]). On appeal, the Minister supported this reasoning. The Minister submitted that this is a weak case. Fraud is a serious allegation. The evidence is simply lacking. The only evidence about Mr Wang's alleged status as a migration agent comes from the appellant. The appellant does not suggest that the claims in the protection visa applications are not his claims. The letter Mr Wang wrote notifying the Department of the appellant's change of address was in the appellant's interests. Similarly, Mr Wang's lodgement of the review application with the Tribunal was in the appellant's interest. This is not a promising foundation for an argument of fraud. The appellant's case comes down to the advice he received not to worry. However, Mr Wang did not tell the appellant not to open mail. Mr Wang did not say to the appellant not to bother to get letters translated. Mr Wang did not advise the appellant not to attend the hearing before the Tribunal. The appellant chose to move to Perth after finding out about the delegate's refusal. If the appellant moved after getting the Tribunal's invitation to a hearing then he chose not to open the letter. If the appellant moved before getting the letter then he chose not to give Mr Wang his new address. The mere fact that Mr Wang was apparently committing offences, whether he was or was not a migration agent (albeit different offences), does not establish fraud. An inference cannot be drawn that Mr Wang intended to ensure the appellant did not attend the Tribunal's hearing to cover his own dishonesty. At worst, Mr Wang gave the appellant bad, perhaps negligent, advice. The parties referred to the same decisions as identifying the relevant principles. In that event, the "state of affairs merits the description of the practice of fraud 'on' the Tribunal" ( SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189 ; [2007] HCA 35 at [51] ). (2) Nevertheless, "there are sound reasons of policy why a person whose conduct before an administrative tribunal has been affected, to the detriment of that person, by bad or negligent advice or some other mishap should not be heard to complain that the detriment vitiates the decision made" ( SZFDE at [53]). (3) " SZFDE requires that the agent in question is fraudulent in a way that effects the Tribunal's Pt 7 decision-making process. An omission to notify the date of a hearing to a visa applicant may have adverse consequences for that applicant if, ...the Tribunal proceeds to make a decision under s 426A in the applicant's absence. But before that omission can properly be said to have occasioned a fraud on the Tribunal, it must itself be able properly to be characterised as a fraudulent omission vis-à-vis the visa applicant: SZFDE , at [51]. The simple fact of a failure to inform or bare negligence or inadvertence will not necessarily be sufficient to give rise to fraud on the Tribunal" ( Minister for Immigration and Citizenship v SZLIX (2008) 245 ALR 501 ; [2008] FCAFC 17 at [33] ). (4) An agent who places his or her own interests above that of the client is not necessarily engaged in a fraud, even if the conduct in question breaches the requirements of the Migration Act and Migration Regulations 1994 (Cth); what is required is "'fraudulent' conduct vis-à-vis the appellant" having the effect of disabling or stultifying the processes of the Tribunal ( SZHVM v Minister for Immigration and Citizenship (2008) 170 FCR 211 ; [2008] FCA 600 at [48] ). (5) Where a person is "complicit and knowingly involved in the decision to mislead the Tribunal" ( SZHVM at [46]), it may hardly be said that the person is fraudulently deceived in the sense that occurred in SZFDE ( SZLHP v Minister for Immigration and Citizenship (2008) 172 FCR 170 ; [2008] FCAFC 152 at [20] ). (6) Nevertheless, "there are many ways in which fraud may be manifested" ( SZIVK v Minister for Immigration and Citizenship [2008] FCA 334 at [33] ). Consistent with the appellant's submissions, I am satisfied that the Federal Magistrate erred in dismissing the claim that the (undisputed) circumstances of this case involved a fraud by a third party on the Tribunal such that its process was stultified and miscarried. Irrespective of the reason (disclosed at [3] in the Federal Magistrate's reasons), the appellant was not cross-examined on his evidence. The appellant's evidence is generally consistent with the documentary record and thus should be accepted. From that evidence the following matters are clear. Yet Mr Wang completed the protection visa application form in a manner which did not disclose his involvement. Given his negative answer to the question about the appellant receiving assistance, it may be inferred that Mr Wang did so deliberately. Moreover, he did so knowing that he had told the appellant that he, Mr Wang, would do everything to get the appellant a visa. The fact that the appellant signed blank forms does not indicate that the appellant knew about, or was complicit in, Mr Wang's decision to conceal his involvement in assisting the appellant. (2) Mr Wang's advice to the appellant during the first conversation after their meeting that "if work rights have been granted you do not need to worry about anything else" and in the third conversation that "you do not have to worry...I will look after everything else. There is nothing more you need to do" has to be considered in a context where Mr Wang must be inferred to have concealed his involvement from the Department. (3) Mr Wang thereafter lodged an application for review with the Tribunal without the appellant's knowledge. While the lodgement of the application may have been within the scope of Mr Wang's retainer by the appellant, nothing in the evidence suggests that the appellant authorised Mr Wang to forge the appellant's signature on the application for review and thereby (again) conceal Mr Wang's own involvement in assisting the appellant. (4) It may be accepted that, unlike the circumstances in SZFDE , it is not possible in this case to draw an inference from the evidence about Mr Wang's motives for concealing his involvement from the Department and Tribunal and advising the appellant that the appellant needed to do nothing as he, Mr Wang, would look after everything. In SZFDE the High Court was able to draw an inference about the motive of the agent in question at [45] ("self-protection, lest in the course of a Tribunal hearing there be revealed [the agent's] apparently unlawful conduct in contravention of restrictions imposed by Pt 3 Div 2 of the Act, particularly by s 281") because the evidence established that the agent had represented that he was a practising solicitor and a registered migration agent when he was neither. In this case it may be inferred that Mr Wang held himself out to be a registered migration agent but it is not possible to determine whether this was true or untrue at the time. Mr Wang's actual motives thus remain in the realm of speculation. However, the range of possible motives is not mere speculation. If not a migration agent, Mr Wang's taking of money to assist the appellant was an offence under s 281 of the Migration Act . If a migration agent, Mr Wang's concealment of his involvement was an offence under ss 312A and 312B of the Migration Act . Either way, the negative answers on the forms to the Department and the Tribunal to questions about his involvement were dishonest. The ticking of those "no" boxes, considered with the leaving of all other related boxes blank and the provision of the appellant's address as the address for service, disclose a deliberate scheme to conceal Mr Wang's involvement. (5) Consistent with the position in SZFDE (at [38]), Mr Wang has not given evidence and fraud is a serious matter. Despite the inability to make a finding about Mr Wang's motives, the overwhelming inference on the evidence is that Mr Wang had a reason to be dishonest with the Department and the Tribunal about his involvement as the appellant's agent. There is no other rational explanation for Mr Wang having ensured that questions in the application forms about the involvement of an agent were falsely answered and the appellant's address was notified as the place to send correspondence (despite the fact that Mr Wang must have known that the appellant did not read or speak English when Mr Wang may be inferred to have been able to do both). (6) The evidence indicates that the appellant was a victim of Mr Wang's dishonesty. Putting it another way, the advice Mr Wang gave the appellant was an aspect of Mr Wang's dishonesty. Specifically, in the third conversation Mr Wang told the appellant that the appellant needed to do "nothing" as Mr Wang would "look after everything else". Yet Mr Wang, consistent with his concealment of his involvement, completed the review form in such a way as to represent, first, that the appellant did not have any adviser acting on his behalf and, second, that correspondence should be forwarded to the appellant rather than to Mr Wang himself. As part of so doing, Mr Wang forged the appellant's signature. This is the context in which the advice in the third conversation must be considered. The advice Mr Wang gave the appellant in this conversation was not merely bad or negligent. It was false and must have been known by Mr Wang to be false. Mr Wang, who must be inferred to have intended at all times to continue the concealment of his involvement, knew that he would be completing the review application form so as not to disclose his own involvement. To do so Mr Wang must have known that he would have to use the appellant's address as the address for service. Yet he told the appellant to do "nothing" as he, Mr Wang, would "look after everything else". By reason of the advice, the appellant was induced to "do nothing" and, indeed, did nothing. If he was still at his Sydney address and received the letters from the Tribunal, he did not open them or have them translated. If he had moved to Perth before receipt of those letters, he did not inform Mr Wang of his change of address. With respect to the Federal Magistrate's reasons, I do not agree that the appellant "knew full well that letters relating to his situation would be sent directly to him and not to Mr Wang" (at [15]) in the circumstances I have described. The appellant knew that letters had been sent to him in the past but Mr Wang told him in the third conversation to do nothing as he, Mr Wang, would do everything. I also do not consider speculation about what Mr Wang may or may not have thought is open on the evidence. Further, I do not accept the reasoning inherent in the Federal Magistrate's statement that, if the appellant had been at the address for service he had given the Tribunal, the appellant would have received the Tribunal's correspondence (at [16]). The fact is that the appellant had not given any address to the Tribunal. The appellant did not even know that Mr Wang had made such an application on his behalf. For the same reason I do not see that, on the facts of this case, it was the appellant's responsibility to "keep the Tribunal advised of his address at all times" (at [16]). A person cannot be responsible for the progress of an application about which they know nothing. Finally, the Federal Magistrate's observations in the concluding sentences of [16], culminating with the finding that there was no "deliberate misleading" of the appellant, is difficult to reconcile with Mr Wang's conduct in, on the one hand, falsely answering the questions about the involvement of an agent in the applications to both the Department and the Tribunal and giving the appellant's address as the address for service whilst, on the other hand, falsely advising the appellant that the appellant need do nothing as he, Mr Wang, would do everything else. With respect to the Minister's submissions, it is true that Mr Wang did not advise the appellant not to open letters, not to get letters translated, and not to attend the Tribunal's hearing. But this is not to the point on the facts of this case. Having dishonestly concealed his involvement from the Department and the Tribunal and nominated the appellant's address for service of correspondence, Mr Wang told the appellant to do nothing as he, Mr Wang, would look after everything. Mr Wang did so in circumstances where he lodged the review application with the Tribunal without the appellant's knowledge, having forged the appellant's signature on the application form. Although the facts are different from SZFDE , Mr Wang's advice to the appellant to do nothing and leave everything to Mr Wang must be seen to be a part of his activity in acting as the appellant's agent yet deliberately and dishonestly concealing his involvement from the Department and the Tribunal. On the undisputed facts there was "'fraudulent' conduct vis-à-vis the appellant" in this case ( SZHMV at [48]). Accordingly, by reason of Mr Wang's dishonesty, the appellant did not know about the role of the Tribunal or his opportunity to attend a hearing and did not in fact attend the hearing. It is not possible to speculate about what the appellant might or might not have done had Mr Wang's dishonest conduct not occurred. By reason of Mr Wang's conduct, and adopting the High Court's language in SZFDE at [51], the Tribunal "was disabled from the due discharge of its imperative statutory functions with respect to the conduct of the review. That state of affairs merits the description of the practice of fraud 'on' the Tribunal". It follows that the Federal Magistrate erred in not finding jurisdictional error on the undisputed evidence before him and the appeal must be upheld. The Tribunal referred to the delegate's decision putting the appellant on notice of the deficiencies in his application, immediately before noting that the appellant had not submitted any further information and had not attended the hearing. The appellant submitted that the Tribunal thus adopted the deficiencies identified by the delegate as its reasons for refusal of the review application. These matters constituted information about an omission (citing NBKS v Minister for Multicultural and Indigenous Affairs (2006) 156 FCR 205 ; [2006] FCAFC 174). The Tribunal was bound to, but did not, comply with s 424A of the Migration Act (by giving the appellant "clear particulars of any information that the Tribunal considers would be the reason, or a part of the reason, for affirming the decision that is under review", ensuring the appellant "understands why it is relevant to the review, and the consequences of it being relied on in affirming the decision that is under review" and inviting the appellant to comment or respond). The Minister supported the Federal Magistrate's conclusion (at [19]) that the deficiencies the delegate identified were not the reason for the Tribunal's refusal of the application. The Tribunal simply did not reach the required state of satisfaction. This, the Minister said, is consistent with a long line of authority (for example, SZEFM v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 78 at [23] , SZEGX v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 166 at [10] , SZCIA v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 238 at [9] - [14] , and SZBZO v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 494 at [4] - [49] . The Minister also submitted that, in any event, the appellant's protection visa application is not information within the meaning of s 424A ( SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609 ; [2007] HCA 26 at [17] - [18] ). I accept the Minister's submissions. It is true, as the appellant said, that SZBYR did not overrule the decision of the Full Federal Court in SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 150 FCR 214 ; [2006] FCAFC 2. Hence, the exclusion in s 424A(3)(b) does not apply to the protection visa application ( SZBYR at [16]). The reasoning in SZBYR , however, is not as narrow as the appellant claimed. The reasoning is not limited to a decision about the weight to be given to inconsistencies between a visa application and later statements. The relevant "information" for the purposes of s 424A is information to the effect that the appellant is not a person "to whom Australia owed protection obligations under the Convention" or information that itself contains a "a rejection, denial or undermining of the ...claims to be ...[a person] to whom Australia owed protection obligations" ( SZBYR at [17]). The matters relied on by the appellant are not information but, rather, mere omissions the delegate noted in the visa application. Moreover, the Tribunal's reasons, read as a whole, indicate that its reason for affirming the delegate's decision was its lack of satisfaction on the available material. Accordingly, and consistent with the decisions cited by the Minister, I am not persuaded that the Federal Magistrate erred with respect to the application of s 424A. However, I am unable to confirm the registration of this person as a JP and the signature does not meet with legal requirements. I will witness your signature at this time as I am qualified to do so. Accordingly, the Federal Magistrate found the application for a protection visa to be invalid (at [27]). However, the Federal Magistrate considered that s 69 of the Migration Act applied with the consequence that the decision relating to the invalid application was preserved (at [30], citing SZIWV v Minister for Immigration and Citizenship [2007] FCA 1338). The Minister submitted that: - (i) the purpose of the personal identifier provisions (as disclosed in the Explanatory Memorandum to the Migration Legislation Amendment (Identification and Authentication) Act 2004 (Cth) (the 2004 amending Act)) is to enable the identity of persons to be established and authenticated, (ii) there was no issue as to the appellant's identity in the present case, (iii) there was no evidence that the author of the letter was an authorised officer for the purpose of ss 5D and 258-258G, nor was there evidence of compliance with the regime for the provision of information about the obtaining of a personal identifier set out in cl 3.21 of the Migration Regulations , and (iv) the letter did not require the appellant to provide a personal identifier, nor did it state that invalidity would be a consequence of a failure to comply. The Minister's submissions disclose that the personal identifier provisions inserted into the Migration Act by the 2004 amending Act involve a relatively complex scheme. Hence, cl 3.21 of the Migration Regulations also did not apply. Further, the mere fact that the officer made the request in breach of cl 3.21 could not alter the character of the letter from one requiring a personal identifier in accordance with s 46(2A)(ab). I do not accept the appellant's submissions on this issue. As the Minister submitted, the letter does nothing more than note that the officer could not confirm the registration of the Justice of the Peace before whom the application was signed. The letter requested the appellant's attendance to sign the application in front of the author of the letter as she was qualified to witness the signature. The appellant did not respond and the application was processed in the usual course. The letter does not, in terms or substance, require a personal identifier. It requests that the appellant sign his application again as the witnessing of that application could not be confirmed. The request is not about the identity of the appellant. Further, ss 258C and 46(2C) cannot be construed as the appellant suggested. Section 258C would be meaningless if it only applied after personal information had been provided. The section, in terms, operates as a condition precedent to an officer requiring a non-citizen to provide a personal identifier. The fact that the letter makes no reference to any of the provisions regulating the requirement to provide a personal identifier, including the extensive list of matters required to be provided by cl 3.21 of the Migration Regulations , on the facts of the present case, is not indicative of a breach of those requirements; it supports the Minister's submission that the personal identifier provisions were simply not engaged at all by the letter. For these reasons I consider that the Minister's notice of contention should be upheld. This conclusion does not affect the outcome of the appeal but I have decided the issue at the Minister's request because, apparently, it is of some practical or policy significance to the Department. My conclusion also means that the appellant is not entitled to the declaration as to the invalidity of the application sought in the further amended notice of appeal. It follows that the appeal must be allowed and consequential orders made. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | fraud of agent whether actions of agent amounted to fraud on the tribunal whether jurisdictional error s 424a migration act 1958 (cth) whether lack of detail in visa application amounted to adverse information in the form of omissions whether tribunal failed in its obligation to provide particulars of information considered the reason or part of the reason for affirming the decision under review whether a request for a personal identifier whether appellant required to provide a personal identifier migration migration migration |
It should be read in conjunction with it. For reasons which I then published, I dismissed Olivaylle Pty Ltd's application (Olivaylle). I intimated then that I would hear the parties with respect to costs. There is no dispute between the parties that costs should follow the event. The question is whether, as Flottweg AG (formerly Flottweg GMBH & Co KGAA) (Flottweg) sought following the dismissal, Olivaylle should be ordered to pay its taxed costs on an indemnity basis? If so, a related question is from which date payment of costs on that basis should be awarded? In essence, Flottweg's submission was that Olivaylle had unreasonably or imprudently rejected at least one, if not more, of a series of settlement offers which it had made, over a period between August 2006 and August 2007. In those circumstances, Flottweg submitted that costs should be awarded to it on an indemnity basis, either on and from the institution of proceedings or such later date as the Court might deem just. For its part, Olivaylle offered a critique of each of the offers to the end of submitting that there had been nothing unreasonable about their rejection such that the basis upon which costs should be taxed should be left as the usual party and party basis rather than being ordered on an indemnity basis. A power to award costs is conferred on the Court by s 43 of the Federal Court of Australia Act 1976 (Cth) (Federal Court of Australia Act). The creation of this Court as a superior court of record and one of both law and equity by ss 5(1) and 5(2) of that Act may mean that it is not strictly correct to regard s 43 just as a source of the Court's power to award costs. That is because the courts of chancery, in contrast to those of the common law, had from medieval times regarded themselves as possessed of an inherent power to award costs: Dal Pont GE, The Law of Costs (2 nd ed, Butterworths, 2009) at [6.2]. The jurisdiction of the common law courts to award costs is statutory, having its origins in the Statute of Gloucester 1278 (Eng): Dal Pont, ibid. When the separate origins of the power to award costs and that this Court is one of law and equity are recalled, it can be seen that s 43 of the Federal Court of Australia Act is in part a source of power but is in part also declaratory. Such considerations led the Full Court in Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd [1993] FCA 471 ; (1993) 45 FCR 224 at 229 to state that s 43 "complements the jurisdiction obtained by the Court as a court of equity". Be this as it may in terms of provenance, there is no doubt that the awarding of costs is a matter for the exercise of a discretion, that the discretion is a broad one or that the power extends to the ordering that costs be taxed on an indemnity basis, rather than on the usual party and party basis: Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536 ; (1993) 46 FCR 225. The judgment of Sheppard J in the latter is frequently cited for its comprehensive discussion of principle in relation to the awarding of costs on an indemnity basis. One of the circumstances which his Honour instances (at 233) which may justify the awarding of costs on an indemnity basis is an " imprudent refusal of an offer to compromise" (emphasis added). Order 23 of the Federal Court Rules (Cth) (the Rules) delineates aspects of the Court's practice and procedure with respect to offers of compromise and payment into court. It also offers guidance as to the ways in which, unless otherwise ordered in the circumstances of a particular case, the obtaining of a judgment by an applicant more or, as the case may be, less favourable than an offer of compromise will resonate in relation to liability to pay costs and the basis upon which taxation of costs will be ordered. Olivaylle commenced the present proceeding by the filing of its application in the Court's South Australian registry on 16 November 2006. claim in the proceeding includes a claim in relation to costs to which Order 62 applies. respondent includes cross-respondent . (3) Until an offer has been accepted, notice of the offer must not be filed. (2) A party may make more than one offer. (3) An offer may be expressed to be limited as to the time that it is open to be accepted, but the time expressed must not be less than 14 days beginning on the day after it is made. (2) If an offer has not been accepted, no communication with respect to the offer is to be made to the Court at the trial or hearing until after all questions of liability and the relief to be granted have been determined. (3) This rule does not apply where a notice of offer provides that the offer is not made without prejudice. As can be seen, the Rules did not then expressly deal with a situation where a respondent had made an offer of compromise which was not accepted by an applicant and that applicant's claim was subsequently dismissed. An analogous lacuna in the then rules of the New South Wales Supreme Court moved a judge of that court to observe that the costs rule "discriminates irrationally against wholly successful defendants": Notaras v Hugh [2003] NSWSC 919 at [5] per Sperling J. Various judges made recommendations that rules of practice be amended to remove this discrimination: Dal Pont, supra, at [13.16], fn 79. Order 23 r 11 was amended so as to address this lacuna by Federal Court Amendment Rules 2008 (No 1) (SLI 159 of 2008) which inserted a new sub-rule, sub-rule 11(6) into O 23 r 11. That approach is supported by authority: Review 2 Pty Ltd v Redberry Enterprise Pty Ltd (No 2) [2008] FCA 1805 at [20] per Kenny J, referring to s 59(4) of the Federal Court of Australia Act , and s 12(2)(b) of the Legislative Instruments Act 2003 (Cth) (Legislative Instruments Act ). Olivaylle's position was no different. Like Kenny J in Review 2 Pty Ltd v Redberry Enterprise Pty Ltd (No 2) [2008] FCA 1805 , I consider that such a conclusion is dictated by s 12(2)(b) of the Legislative Instruments Act . I also consider that s 12(2)(a) of the Legislative Instruments Act provides additional support for that view in that, prior to the making of the amendment to the rules, there existed a right to the exercise of a discretion with respect to the awarding of costs unfettered by any such prima facie presumption. Further, even without an expression of legislative intention such as that found in s 12(2) of the Legislative Instruments Act , the newly inserted presumption would not be classified as a mere matter of practice and procedure such that the amending rule would not be construed so as to give the presumption retrospective effect: Minister for Home and Territories v Smith [1924] HCA 41 ; (1924) 35 CLR 120 at 127-129 per Isaacs ACJ and Starke J. I therefore approach the question as to whether to award indemnity costs without presuming that the rules confer upon Flottweg the advantage of an indication as to how, prima facie , a discretion ought to be exercised. Details should now be given of the various offers made by Flottweg and of Olivaylle's responses to those offers, including its counteroffers. It is convenient in so doing also to set out Olivaylle's submission as to why I should not regard its rejection of a particular offer as at least imprudent. That demand is rejected. In particular, and without limitation, the terms of the contract expressly include that "Flottweg's liability howsoever arising should be limited to 5% of the contract price including damages for delay" (see page 15 of the order confirmation dated 8 February 2005). Our client would prefer to reach a commercial solution with your client, including in order to preserve the business relationship that was established between our respective clients which (which have been instructed) has been otherwise good. The end date of the warranty period be extended from 28 February 2007 to 30 Jun 2007. It is simply made in order to attempt to resolve the dispute on a commercial basis. The point concerning the sending of the offer before proceedings was not one chronology but rather related to the absence of a supporting rationale and was put as a way of highlighting that Olivaylle was not at that stage seized with knowledge of the case that came to be put against it. Having regard to these circumstances, it was submitted that it was not unreasonable for Olivaylle to have rejected this offer. On 21 February 2006 our client wrote to your client putting them on notice that unless the Olive Oil Line was modified or rectified to enable it to comply with the contract, our client would withdraw from the contract on 30 June 2006. Our client reiterated on 19 June 2006 that unless your client could solve the five problems as listed in that letter, it would cancel the contract. Again our client confirmed that it had provided your client with a period of grace to the end of 30 June 2006 to correct the non-conforming items. As you are aware, on 25 July 2006 Wallmans Lawyers, on behalf of our client, sent a letter to your client and amongst other things, put your client "...on notice that the period of grace has expired and our client has withdrawn from the contract. On or before 30 January 2007 your client to supply and exchange their present decanter model #Z53-4/454 for their newest decanter model #Z73-4/454 in sealed N 2 version, including SIMP drive, on the run decanter settings and adjustments, change capabilities, all electronic items pertaining to this model, including the under decanter sieve and exchange of the bowl of the Flottweg separator AT1600DL in nitrogen flushed version for your client's newest improved bowl. Your client will then proceed to water test these items. No latter than 30 January 2007 your client will have delivered and installed a new substitute 100 rpm gearbox for the inclined paste conveyors into the malaxeurs, to replace the much slower gearbox mistakenly sent, by your client, for the 2006 harvest. Your client will extend the present processing line contract warranties to 30 days after the completion of the 2008 harvest. Once the items in points 2 and 3 above have been supplied and installed and tested to our client' satisfaction, our client will then pay your client the sum of $112,169.98 (being 50% of the amount returned to your client as set out in point 1 above). After your client has complied with points to 6 above, our client will pay your client the sum of $67,301.99 (being 30% of the amount returned by your client as set out in point 1 above). After your client has corrected any deficiencies found during the 2007 olive harvest either by repair or replacement, and the process line has met all guarantees contained in the contract of 8 February 2005, our client will pay to your client the sum of $44,867.99 (being 20% of the sum returned by your client as set out in point 1 above) after deducting from that sum all of our client's reasonable legal costs. Should your client accept the above offer, Wallmans Lawyers will attend to drafting the requisite Deed of Discharge and Release. In our client's view that offer represents a much more reasonable position than has hitherto been adopted by your client. Subject to 4 below, the end date of the warranty period in respect of the design and quality of the materials in the equipment supplied (including replacement parts to be supplied) be extended from 28 February 2007 to 30 June 2007. Your client to provide a comprehensive release to our client from or in respect of any claims or obligations (present or future) in relation to the equipment supplied, including, but not limited to, oil yield, sustained oxygen level and process tonnage throughput. As an offer in principle it remains open for acceptance until 5pm on 11 September 2006 after which time it will lapse. It is simply made in order to attempt to resolve the dispute on a commercial basis. In addition, it was submitted that, when regard was had to the form of release proposed, the offer of replacement equipment had about it the quality of giving with one hand and taking with the other. Olivaylle might still have been left with a line that met none of the contractual performance criteria. It was further submitted that the offer was one in principle only, ie it was not capable of immediate acceptance. In all of these circumstances it was submitted that it was not unreasonable for Olivaylle to have rejected it. Our client reiterates the offer as set out in our facsimile of 30 August 2006. Our client instructs us to keep the offer open until the close of business on Friday 8 September 2006. Unless we hear from you before the close of business on Friday 8 September 2006, we will no longer communicate with you but only with your client until advised otherwise. This information is necessary as if the value that your client ascribes to the equipment is less that that which our client would expect it to reach on the second hand market then our client may be prepared, again without admission and without prejudice to your client's claim, to remove the equipment and pay to your client the net proceeds (after deducting our client's costs) of any re-sale. We see no reason why satisfactory arrangements could not be agreed. If your client declines or does not respond to our client's offer then our client will rely on this letter and the in-principle offer contained in it in relation to any issue of damages and mitigation to which it may be relevant. On these bases it was submitted that the offer was not one which ought to be regarded as of the type and with the consequence described by Cairns LJ, Scarman LJ and Sir George Wilmer agreeing, in the well known case, Calderbank v Calderbank [1976] Fam 93 at 105-106. Without prejudice and without admissions the respondent offers to compromise these proceedings on the basis that the respondent pays the applicant the sum of $322,000.00 (exclusive of costs) in full and final satisfaction of all claims made by the applicant in these proceedings. This offer is open for acceptance by the applicant for a period of 28 days from the date of this offer. That is, if accepted, our client will be required to pay your client's costs in an amount as taxed or as agreed. It was submitted that it was not accompanied by any explanation and that, in those circumstances it was not unreasonable to reject it. It was further submitted that, upon its expiry, it was spent, having no ambulatory effect. Thus, later developments such as the service of the filing of Flottweg's affidavit material in response to the original pre-trial directions and the opportunity thus presented for knowing the case Flottweg intended to present factually were irrelevant. More generally, I was, on Olivaylle's behalf, quite properly reminded of an observation which I had made when deciding the costs consequence of the application by Flottweg for leave to adduce evidence from Mr Lorenz, that the grant of leave might also have consequences in relation to the determination of the costs of the trial. The reminder was made as part of a submission that the case ultimately exposed to Olivaylle at trial by Flottweg was different in its evidentiary sweep to that which existed in chief at its commencement. It was further submitted on Olivaylle's behalf that there were multiple issues in the trial in which the evidence overlapped in terms of relevance. By way of example, it was submitted that, even if it were concluded that Ms Ash's evidence carried with it for Olivaylle a particular cautionary note in terms of pressing a case for damages resulting from a lost or postponed opportunity to derive profits in the American market, the evidence necessary to show that the contractual performance criteria had been breached, which was one precondition to the proving of such a loss, overlapped with proofs necessary to show that the contractually conferred right to withdraw had arisen. It was also noted that Ms Ash's evidence was not available to Olivaylle even when the time for acceptance of the last of Flottweg's offers was open. Yet further, it was submitted that the contractual right of withdrawal was novel in terms of local precedent, such that it was not unreasonable in any event for Olivaylle to press a case for a refund in full of the price paid. This was linked with the submission as to overlapping evidence by way of developing an argument that, even if Olivaylle had failed in its claim for damages in respect of the lost or postponed American market opportunity, but succeeded in proving a right to withdraw, it may well have received the whole or most of the costs of the proceeding. It was consequentially submitted that it was neither unreasonable nor imprudent for Olivaylle to have pressed ahead with the whole of its case notwithstanding the offers successively made. In this regard, it was submitted that it was necessary to guard against the application of the false wisdom of hindsight to forensic value judgements which were not unreasonable at the time they were made. In respect of each of the offers upon which Flottweg relied, Olivaylle submitted that, even if it were a necessary conclusion flowing from my dismissal of the application that it was worse off than the position offered by those letters, there was no presumption flowing from this that costs taxed on an indemnity basis must be awarded. The importance afforded by Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 11) [2001] FCA 480 ; (2001) 109 FCR 77 at 98, [88] to "sufficient particularity" in relation to an explanation for an offer and "inevitability of failure" was stressed. So, too, was stressed the need to remind myself that it was for Flottweg as offeror to show that the conduct of Olivaylle as offeree in rejecting any "Calderbank" offer was unreasonable, the application by Weinberg J in Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) [2002] FCA 224 ; (2002) 190 ALR 121 at [35] of the Full Court's statement to this effect in Black v Lipovac [1998] FCA 699 ; (1998) 217 ALR 386 at [217] --- [218] being cited in support. Flottweg's submissions did not gainsay the matters of principle for which the cases relied upon by Olivaylle stood, only the application of those principles in the circumstances of this particular case. In particular, Flottweg accepted that the mere fact that the result at trial left Olivaylle worse off than any pre-trial offer carried with it no presumptive entitlement to an award of indemnity costs. Rather, it was submitted that the question was whether the rejection of the offers (or at least one of them) was unreasonable or imprudent, the discussion and conclusions reached by Sackville J in Seven Network Ltd v News Ltd [2007] FCA 1489 ; (2007) 244 ALR 374 at [59] to [63] with respect to Black v Lipovac , supra and other authorities being adopted. Flottweg further submitted that, while it may not have been unreasonable or imprudent for Olivaylle to have instituted or, as the case may be, continued the litigation in the absence of one or more of the offers it made, at least one of those offers constituted a fair commercial compromise such that it was unreasonable or imprudent to institute or continue the litigation in the face of that offer. That sentiment, it was submitted, was evident in the approach taken by Emmett J in Ruaro v Ferrari [2008] FCA 307 at [17] . (b) Rescission was also unavailable because the Applicant had affirmed the contract: at [236]. (c) No casual connection was established, in that it was not proven that there was any lucrative American market opportunity, let alone one that had been lost: at [240]-[252]. (d) There was no delay in the processing of the Applicant's olives, and hence no loss of profits in 2005 and 2006: at [260]-[261]. (e) Even if the yield guarantee had been breached, the losses flowing from this were nominal or non-existent: at [262]. (f) While in theory breach might have entitled the Applicant to a 'reduced value' or 'capital loss' claim, no evidence was adduced to support such a claim: at [263]-[264]. (g) The wasted expenditure claim was based on conjecture rather than evidence. While Nieuwkerk and Carey might have been able to offer precision on this subject, none was sought from them. The Applicant failed to discharge its onus: at [265]. (h) The lost profits case was fantastic: [238]. (i) Jorgensen was not asked to, and did not, express any opinion as to the reasonableness of the assumptions he was asked to make (at [266]), and the factual foundation for Jorgensen's assumptions was not otherwise proven (at [268]). (j) It followed that the Jorgensen projections were quite unrealistically optimistic, and certainly not conservative (as he had assumed): at [269]. (k) There were various other flaws in the assumptions and methodology applied by Jorgensen: at [270]ff. It was submitted that Olivaylle must be taken to have been aware at the time at least some of the offers were made that it had significant difficulties in the proof of its case on quantum because, even on the first day fixed for trial it was moved to apply, unsuccessfully as it transpired, for an adjournment on the basis of apprehended evidentiary difficulties. In short, the basis for Flottweg's submission that indemnity costs should be ordered was that Olivaylle was progressively faced with what were genuine and fair commercial offers and either understood or ought prudently or reasonably to have understood that its case both as to liability and quantum had difficulties of proof and in point of law, such that it was imprudent or unreasonable to have rejected at least one of the offers made to it. I record my indebtedness to counsel for each party for their respective careful and concise submissions. As, I trust, is evident from the foregoing recitation, the arguments are not all one way as to whether this is or is not a case for the awarding of indemnity costs. To acknowledge that does not though lead inexorably to a conclusion that this cannot possibly be a case where it would be appropriate to order indemnity costs. I am bound to follow matters of principle enunciated by the Full Court. In that regard, it may be, as Buchanan J highlights in the following passage from his judgment in McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 2086 ; (2007) 164 FCR 591 at 597, [22] , that there is a difference in opinion at intermediate appellate level as to whether, for the purpose of satisfying a condition precedent to the awarding of indemnity costs and as an alternative to "imprudent", the rejection of an offer of compromise should be able to be described as "unreasonable" or "plainly unreasonable": In Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 ( Dukemaster) Sundberg and Emmett JJ said, in a case like the present where O 23 r 11 did not apply because an applicant had been wholly unsuccessful, that an applicant for a more generous award of costs than party-party costs 'must show that the rejection of the offer was imprudent or plainly unreasonable' (see at [7]). There has been doubt expressed about the soundness of the statement in Dukemaster that rejection of an offer, if unreasonable, must be 'plainly unreasonable' in the light of the earlier judgment of a Full Court in Black v Lipovac [1998] FCA 699 ; (1998) 217 ALR 386 at [217] --- [218], to which Wilcox J also referred in Coshott (see Seven Network Limited v News Limited [2007] FCA 1489 at [59] --- [62]). " I respectfully agree and, for that reason, would choose to follow the earlier Full Court authority were that to be critical to the resolution of the costs application. It is not though because in both Black v Lipovac [1998] FCA 699 ; (1998) 217 ALR 386 and Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 the alternative of imprudent rejection was acknowledged. Like Buchanan J in McDonald v Parnell Laboratories (Aust) (No 2) and, as his Honour noted (at [22]), like Heerey J in AFP Properties Pty Ltd v Kestrel Holdings Pty Ltd (No 3) [2007] FCA 2016 at [24] --- [25], it is sufficient to assess whether the rejection of any of the offers was, "imprudent". That basis of assessment accords with the exemplar given by Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited , which I have already noted, whose judgment, as Heerey J acknowledged in AFP Properties (ibid), is the locus classicus on the subject. I approach the exercise of the discretion on that basis. There was evidence led that a mediation had been conducted in the case in April 2007. Quite properly, having regard to s 53B of the Federal Court of Australia Act , no evidence was led as to anything that was said at that mediation. Obviously enough, the case proceeded further after that mediation but I draw no adverse inference whatsoever against Flottweg from that fact on the question as to whether or not this is a case for indemnity costs. So to do would, in my opinion, be subversive both of the letter of s 53B as well as the public policy of encouraging candour and genuine endeavours to settle which underpins the provision in the Federal Court of Australia Act for the referral of cases to mediation. I should record that neither party submitted otherwise. The presence of express provision in the Federal Court of Australia Act , which is taken up in the Rules of Court, in relation to mediation does though underscore the importance our system of justice places on compromise of disputes where that is prudently and reasonably possible. Public policy considerations in terms of the efficient utilisation of limited judicial resources and, perhaps more importantly, the reduction of conflict in society by reasonable compromise are evident also in Calderbank's Case and the many which have endorsed the encouragement of the making and acceptance of reasonable offers of compromise. There is, of course, another public policy consideration which is the right to call in aid the exercise of judicial power to enforce the rule of law. A balance between such policy considerations is achieved by an appropriate exercise of the costs discretion where a respondent or defendant can prove that, in the face of a particular offer of compromise, it was imprudent to insist on the exercise or continued exercise of that right. There was no submission on behalf of Olivaylle that, insofar as any of the offers put by Flottweg entailed the payment of money, a basis existed upon which it might reasonably be apprehended at the time that Flottweg might not be able to honour the financial obligation it would assume were an offer to be accepted. There was likewise no submission that, insofar as any of Flottweg's offers involved the supply of alternative equipment, that it would not be able to honour the offer were it accepted. There was no evidence which would in any event provide grounds for an apprehension about Flottweg's ability to perform any of the contracts of compromise proposed. I accept that Flottweg was ready, willing and able to perform each of the compromises it proposed and that there was no basis for apprehending otherwise. The chain of correspondence directed to the subject of compromise is not to be read in a vacuum. Flottweg's initial offer of compromise was a timely and temperate response to Olivaylle's purported withdrawal from the Contract the preceding month. It was not accompanied by any detailed explanation but it is to be remembered that Olivaylle already had the benefit of a considered response by Flottweg dated 10 July 2006, authored by Mr Colesan, in his then capacity as sales manager and in Mr Lorenz's then absence, on the subject of why oil yields were not achieved when malaxation occurred at temperatures that did not exceed 27°C, as opposed to the 35°C that Flottweg had requested. In that letter, Flottweg drew attention to information on the Australian Olive Association website, which counselled that processing olives at less than recommended temperatures left large volumes of oil in the waste paste. Flottweg's suggested malaxation temperature had been within the normal range. Flottweg had earlier provided Olivaylle with the Greek Certificate to which I refer in my main judgment. That provided support for a belief that 85% olive oil recovery was possible and that the decanter would operate at 5 tonnes per hour. As to the latter, so, too, did Mr Nieuwkerk's report of 7 June 2006 concerning the test on 25 May 2006. The point of all this is that when Olivaylle came to review Flottweg's initial offer of compromise of 18 August 2006, the evidence was not all its way in relation to whether, in key respects, the warranties in the Contract as to the performance of the line had been breached. On the subjects of whether 85% oil recovery was possible and on the speed at which the decanter would operate, there was evidence in its possession which at least gave pause for thought about the strength of Olivaylle's position. Olivaylle also knew of a residual concern that Mr Nieuwkerk had about the conveyors and that Flottweg was seeking to exercise what it regarded as its entitlement and obligation to remedy these. By August 2006, Olivaylle had deliberately denied Flottweg the opportunity so to do. As to oxygen levels, the Contract itself contained a rider about sufficient nitrogen of sufficient purity. Mr Nieuwkerk had been Olivaylle's advisor on that subject and it did not then have any evidence at that stage from anyone of relevant expertise that the contractual minimum could not be achieved with any economically feasible nitrogen supply. The asserted contractual right of withdrawal was also a novel one in terms of domestic precedent. As it transpired, neither counsels' researches nor mine disclosed a case in which an Australian court had considered the meaning and effect of a clause of this kind. That there was a degree of novelty about the meaning and effect of the clause is a factor that tends both for and against Olivaylle. When the monetary amount of the offer of 18 August 2006 is taken into account, "10% of the asserted contract price, namely $113,112.40" it seems to me, taking a prospective view of matters, that it was not imprudent for Olivaylle to have rejected this initial offer. That is so even taking account of what on the then state of the correspondence and other dealings Olivaylle knew or ought reasonably to have known would be Flottweg's case in terms of the existence of any right to withdraw, that proof of loss would be difficult because of abandonment decisions already taken in relation to the American market by the De Moya family and because all available olives for the 2005 and 2006 seasons had been able to be processed, that credit would have to be given for the sale or worth of the olive oil by then produced and the risks of litigation generally. There was a prospective alternative of at least receiving back the entire contract price albeit upon the surrendering of the production line. There was, also, the prospect that a claim against Flottweg in court might not succeed at all, but I am not persuaded that the sum offered was so large that it was imprudent to seek a better outcome by further informal negotiation. As to Flottweg's solicitor's letters of 5 September 2006 and 30 January 2007, I agree with Olivaylle's characterisation of each of these as but offers in principle. That is not to gainsay that they were put forward genuinely as a basis upon which agreement might come to be reached only to recognise that neither was capable of immediate acceptance. Further, as to the letter of 5 September 2006, the foreshadowed monetary amount was less than before but some replacement equipment was additionally to be provided along with a related warranty that effectively ended at the conclusion of the following year's processing season. Olivaylle was left to make a value judgement about not just the worth of this equipment but also whether its installation would likely result in a production line that either met the performance parameters promised or, if not, at least performed in a way that made further disputation commercially pointless. Further, as to the letter of 30 January 2007, just what the monetary worth of the offer might be is moot. Flottweg's solicitors did not in the letter disclose what Flottweg considered the production line might be worth on the second hand market. The proposal is thus not only a complicated one but also one the worth of which does not admit of immediate estimation. I can see how, even having regard to factors already mentioned, the chance of the clean break that an upholding of a right to exercise withdrawal presented was more attractive and prudently so. I do not consider that it was either imprudent to reject either of these offers. In voicing that opinion I have also taken into account that, as to the offer of 30 January 2007, litigation had not long been commenced. That then leaves the offer of 14 August 2007, as clarified by Flottweg's solicitor's further correspondence of 30 August 2007. The then docket judge had made directions on 27 July 2007 which required Olivaylle to file its material on or before 7 September 2007. Flottweg had made earlier that year one unsuccessful application for security for costs: Olivaylle Pty Ltd (ACN 080 670 640) v Flottweg GMBH & Co KGAA (ABN 95 101 547 424) [2007] FCA 56 (It was shortly to make another: Olivaylle Pty Ltd (ACN 080 670 640) v Flottweg GMBH & Co KGAA (ABN 95 101 547 424) (No 2) [2007] FCA 1892 , heard 14 September 2007). Olivaylle had the benefit of a costs order in its favour from the earlier application. The offer of 14 August 2007 met the formal requirements of O 41 of the Rules. It allowed more than the minimum required time for acceptance. That Olivaylle's solicitors felt obligated to query the position of the offer in relation to costs was, with respect, understandable. The author's parenthetical use of the expression "exclusive of costs" in the offer did admit of a reading that the monetary sum offered was an "all up" amount. Flottweg's solicitors rightly and promptly made clear the intent of the offer, well before the expiry of the time nominated for acceptance. The offer did not specify whether or not it was inclusive of interest. Had Olivaylle been able to prove past loss and damage it would have received an award of interest. The offer must, in my opinion, be treated as including some unspecified amount in respect of interest in the lump sum specified even though this was never the subject of direct inquiry by Olivaylle's solicitors. I expressly take that into account when considering the worth of the offer and the prudence of its rejection. After the clarification in respect of costs, Olivaylle was then in a position of being able to retain the line and to receive the sum of $322,000.00 within 28 days, the latter being the effect of O 23 r 4(3). It would also receive its taxed costs of and incidental to the proceedings to date insofar as it was not already entitled to the same. It was, in my opinion, a keen offer. Has Flottweg shown that it was imprudent to reject it? At that stage, Olivaylle had had the use of the production line for three seasons. In those circumstances, it was only to be expected that, should it fail in its claim to its asserted right of withdrawal, it was likely that it would be held to have affirmed the contract and elected to take such damages as it could prove for breach of contract. Though it had a separate trade practices claim seeking the exercise of powers conferred by s 87 of the Trade Practices Act 1974 (Cth) (TPA), in addition to its damages claim under s 82 of the TPA, that the line had been in its use and possession for three full seasons was no less relevant in terms of the likelihood of securing an order under s 87 declaring the Contract void ab initio . As to damages, during the period of the offer Mr Jorgensen had furnished a report the premises of which made it even more fantastic than the substitute which came to be proffered in the course of the trial upon which I commented in the main judgment. The points made by Flottweg as to Olivaylle's knowledge of the abandonment of business plans and the unreality of crop forecasts each of which formed premises on instruction for Mr Jorgensen's earlier report are, in my opinion, well made. They do not involve any element of hindsight. All that the course of the trial did was to reveal what Mr De Moya knew or must be taken to have known on these subjects at the time when the offer of 14 August 2007 was made and open for acceptance. Ms Ash's evidence certainly underscored the likely fate of a venture into the American market, but Mr De Moya knew in August 2007 about the unwillingness of the wider family to incur apprehended marketing costs. Mr De Moya also knew or must be taken to have known that Olivaylle had derived income from the sale of oil produced in the 2005 and 2006 seasons. I did not have evidence before me as to the fate of oil produced in the 2007 season but the evidence was that the line had not sat idle. Again, the fate or what was to be the fate of the 2007 season's production was a subject known during the period for acceptance of the offer by Mr De Moya, if no one else in Olivaylle. Olivaylle either knew or must be taken to have known that it would have to give credit for the income it had been able to derive from the use of the line in any assessment of its loss and damage. It follows that it then knew or should be taken to have known that the sum it was being offered was, in effect, in addition to that income. I regard that as an important factor in terms of assessing the prudence of not accepting the offer. As to Olivaylle's case in respect of the oxygen level term, it had by 30 August 2007 the benefit of Mr Carey's views. These did not descend to any detail as to what might be a sufficiency of nitrogen gas supply. There was also then the usual risk of litigation as to whether Mr Carey's views would ultimately command acceptance. Even if they did, there was not at that stage any standard either here or in the United States to which achievement of the contractually specified level of atmospheric oxygen was essential. The affidavits that Mr De Moya was shortly to swear and file did not contain revelations on this subject that came to him either during the currency of the offer or thereafter. Rather, on the whole of Mr De Moya's evidence, I am satisfied that he had during the time open for acceptance of the offer of 14 August 2007 a sincerely held belief, for which there was some scientific support, that the achievement of the contractually specified atmospheric minimum could be expected to have a beneficial effect in terms of producing extra virgin olive oil. Equally though, Mr De Moya knew that Olivaylle's use of nitrogen blanketing was novel in Australia. Axiomatically, from his research and Olivaylle's presence in the market, he either then knew or must be taken to have known that extra virgin olive oil was being produced here and abroad without the use of nitrogen blanketing. There was then an ephemeral benefit of uncertain worth about being able to market Olivaylle's extra virgin olive oil as having been produced in low oxygen conditions. In relation to the oil recovery and processing speed terms, Olivaylle knew already from the 2006 correspondence which I have mentioned that matters might not go all its way at trial on these subjects. The time by which Olivaylle had to file its evidence in chief according to the then current interlocutory timetable lapsed during the time when the offer was open for acceptance. The critique offered by Flottweg by reference to various conclusions reached at trial does not, in my opinion, impermissibly call in aid a false wisdom of hindsight. I accept that I must consider whether the rejection of the offer was unreasonable by considering, inter alia, the strengths and weaknesses of Olivaylle's case prospectively at the time when the offer was made: Seven Network Ltd v News Ltd [2007] FCA 1489 ; (2007) 244 ALR 374 at [65] and the authorities there cited by Sackville J. Rather, what the critique does is to highlight evidentiary difficulties that were present in Olivaylle's case during the time originally fixed for the filing of its evidence in chief. As events transpired, those difficulties remained thereafter but what is presently relevant about the subjects identified in the critique is that, on the bases highlighted and viewed prospectively , Olivaylle either knew or ought reasonably to have known when the offer was made that it just could not hope to receive anything remotely approaching a damages award of some $27 million, as propounded on the strength of Mr Jorgensen's first report. Its evidentiary difficulties persisted, as was candidly acknowledged on the adjournment application, but in essential elements were present in August 2007. It is true that the evidentiary foundation of the cases for each party was embellished during the trial but that does not detract from the significance of the evidentiary difficulties present in August 2007. In my concluding remarks in the main judgment I attributed the pressing of the claim to Mr De Moya's disappointed pride. Those were remarks made after reflecting on the evidence that came to be led at a lengthy trial and with the benefit of observing the witnesses who came to give evidence, including Mr De Moya. There were though elements of such a conclusion in prospect in 2007 when the offer was made and during the time for its acceptance. The premises upon which Mr Jorgensen was instructed to prepare his report are eloquent in this regard. When matters of pride are excised, what remained in prospect in August 2007 was a case in contract and under the TPA which was problematic both in terms of liability, likelihood of vindication of a right of rescission or "withdrawal", securing of any order under s 87 and damages. There was a damages cap in the Contract. On any view, the sum offered was well in excess of that cap. That cap had no role to play in the event of a vindication of the asserted right of "withdrawal", but that such a right had been engaged was conjectural. The contractual cap could not limit the amount of any damages which would fall for assessment under s 82 of the TPA and s 87 did confer a power to vary the Contract so as to delete it. These powers were though enlivened only in the event that a liability claim under the TPA succeeded. Mr De Moya had already made his preference for relying on the contractual word plain and Olivaylle already knew that Flottweg had the benefit of the Greek Certificate, to say nothing of the design input of Mr Nieuwkerk in relation to achievement of contractually required atmospheric oxygen levels and the separate advisory role that he undertook for Olivaylle in relation to the supply of nitrogen gas for those parts of the line to be blanketed. Even prospectively, proof of liability in respect of the TPA claim was fraught with the risk. A trial of at least two weeks' duration then lay in prospect. I state "at least two weeks" because, given the premises upon which Mr Jorgensen had been instructed to prepare his first report, there was then every reason to expect that the factual premises upon which that report was based would be subject to sustained challenge not only in cross-examination but also in Flottweg's case in chief. Even then, in those circumstances, there was a distinctly optimistic quality in apprehending that both evidence and submissions would conclude in the time allocated. Acceptance of the offer would therefore entail or should be regarded as entailing a considerable saving in a gap between those costs it might receive on a party and party taxation in the event of success and those which it would incur as between solicitor and client. All of these factors lie behind my description of the offer of 14 August 2007 as "keen". Flottweg's solicitor's letter of 14 August 2007 enclosing the offer did nothing more than record that enclosure. It did not, for example, convey a submission that a refusal of the offer would be imprudent or unreasonable, much less a rationale as to why that would be so. As against that, though, Flottweg had in the preceding year made known that its position in respect of the tests conducted in May 2006 was relative to its compliance with its contractual obligations. Further, by the time this offer was made, Flottweg had months beforehand filed and served its defence. Yet further, Olivaylle was legally represented. It thus had or ought to be taken to have had the ability to be advised as to what might be the consequences in terms of costs if the offer were rejected and the case either failed wholly or resulted in an award less than that offered. I have also reflected on the impact on the ultimate result of the belated calling of Mr Lorenz, especially given the initial disavowal of that course by Flottweg. I was assisted by the oral evidence that he gave and by my observation of him giving that evidence. I recall also though that email and other correspondence that he authored was already in evidence. Upon reflection, I consider that the costs consequences of the belated change of heart in calling Mr Lorenz have already been sufficiently recognised in the costs order made in the course of the trial. When all such matters are considered, I am persuaded that it was imprudent for Olivaylle to reject the offer dated 14 August 2007. The offer was open for acceptance for 28 days after its service. It is not apparent on the face of the offer's covering letter that it was sent to Olivaylle's solicitors otherwise than by post and Mr P G Forbes of Flottweg's solicitors does not attest in his affidavit read on the costs application as to the manner of transmission. I do not assume therefore that the offer was received by Olivaylle's solicitors on 14 August 2007, as opposed to a day or so later in the ordinary course of the post. Though the impact may be but a matter of days, I have inferred that it was about seven business days at least after the offer was received by Olivaylle's solicitors that the query was raised. When the offer came in coincided with what must have been a time of intense work directed to the meeting of the interlocutory directions for the filing of evidence. Some might perhaps even in these circumstances regard it as dilatory to have left the making of the query so long but nothing was made of this on behalf of Flottweg in submissions and I do not consider it fair in that circumstance to do anything other than regard 30 August 2007 as the effective date of communication of an unambiguous offer. I consider that such was the significance of the costs clarification on 30 August 2007 that Olivaylle should only be ordered to pay costs on an indemnity basis after 28 September 2007. Mr De Moya's then residence was remote from Adelaide where his solicitors practised. Though on the evidence Olivaylle had there the use of email facilities and the telephone, this was an offer and a client such that it is reasonable to apprehend that there would have been benefits in face to face discussion as between solicitor and client in relation to the offer. Olivaylle should also retain the benefit of the costs orders that have to date been made in its favour. These should be set off against the costs awarded in its favour. Costs orders made to date in Flottweg's favour should remain undisturbed. (b) The taxed amount of costs awarded in favour of Olivaylle by any earlier order in the proceeding be set off from the taxed amount of the costs awarded in favour of Flottweg by the order in paragraph (a) or any earlier order. I order accordingly. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | multiple offers of compromise judgment in favour of party making offer whether party making offer entitled to costs on an indemnity basis whether offers made were unreasonable and imprudent held final offer made was reasonable and prudent held failure to accept final offer made was imprudent. costs |
The plaintiff contends that on the evidence the Court should infer that the examinee resides out of the jurisdiction, probably in the principality of Monaco and that he wishes to avoid being served with the summons. The plaintiff also seeks an order for substituted service in a variety of different ways. 2 The plaintiff's application raises two questions. The first is whether service out of the jurisdiction should be permitted and the second is whether, assuming that such leave is granted, substituted service should be permitted at this stage if service out of the jurisdiction would be impracticable. 3 There is also an application brought in opposition to the plaintiff's ex parte application. That application is brought by the examinee's father and the company in respect of which the examinee is a director. The examinee is, of course, not represented as it is an ex parte application. However, counsel for his father and for the company which he is a director, seeks leave to be heard in opposition to the plaintiff's application. 4 For the reasons which appear below, in my view, the application for leave to serve out of the jurisdiction should be adjourned and the application to be heard must be dismissed. To date the plaintiff has been unable to effect personal service on the examinee. 6 The factual basis for the issue of summonses pursuant to s 596B CA against Mr Barry Waller and Mr Andrew Waller bears upon the plaintiff's current leave application. An affidavit of Mr John King Atkins, sworn on 24 September 2007 and filed in these proceedings sets out the basis. In short the basis is as follows. 7 In December 2002 administrators were appointed in respect of New Tel Limited (in liquidation) (New Tel) pursuant to Pt 5.3A CA. On 13 January 2003 the creditors of New Tel resolved that it be placed in liquidation. The administrators were appointed as liquidators. 8 The plaintiff is a creditor of New Tel for unpaid legal fees and disbursements and is an eligible applicant pursuant to an authorisation from the Australian Securities and Investments Commission (ASIC) dated 11 October 2004 for the purpose of CA 2001 Div 1 Pt 5.9. 9 In 2004, Wainter Pty Ltd (Wainter) of which the examinee is a director, also applied for and obtained orders for summonses for examinations of members of the plaintiff. The proposed examinations by Wainter were in relation to an agreement entered into between Wainter and New Tel in 2001. Wainter contends that it suffered loss by reason of that agreement. Wainter has a claim in respect of that alleged loss against New Tel and the plaintiff. 10 The purpose of the plaintiff's application for examination of the examinee was said to be to determine the merits of the claim by Wainter against New Tel and the plaintiff. The additional purpose was to examine the examinees to determine whether there was a failure by the directors of Cable & Telecoms Limited (CAT), to reveal to New Tel before and/or in the course of New Tel's takeover of CAT, the true worth of CAT and its assets. 11 The examinee was a director of CAT, having been so appointed on 5 June 2000. The examination would enable the plaintiff to determine whether one of the reasons for the demise of New Tel was the takeover of CAT by New Tel in late 2001 and whether the examinees may be guilty of civil or criminal wrong in relation thereto. 12 The ex parte application of the plaintiff is supported by an affidavit of Mr Andrew Ryan, a solicitor employed by the plaintiff. On 7 November 2007 the plaintiff engaged Legal Process Services (WA) (LPS) to effect service on the examinee. Several internet searches were carried out by Mr Ryan in order to attempt to locate the examinee. Those searches revealed that the examinee was a non-executive director of Chrome Corporation Limited (CCL) and Acclaim Exploration NL (Acclaim). Mr Ryan telephoned the offices of CCL and spoke with a receptionist who informed him that the examinee was overseas and would not be back for some time. He also telephoned Acclaim's offices and spoke to a non-executive director of Acclaim who informed Mr Ryan that the examinee was overseas, was not due back in Australia for some time and that he would be in the USA later in the month. He did not know the whereabouts of the examinee at that stage and the examinee had not been at his home address for some months. Mr Ryan requested the examinee's contact details. The request was declined. Accordingly, Mr Ryan left his telephone details with the request that the examinee contact him. 13 The further attempts to effect service failed. There was an adjournment of the hearing date for the summons to facilitate further service attempts. In January 2008, Mr Ryan attempted further telephone contact with the examinee through CCL and received a similar response. On 27 March 2008 Mr Ryan telephoned CCL and spoke with the Managing Director of the company. That person informed Mr Ryan that the examinee was not a resident of Australia, that the Managing Director had the examinee's email address, that he was in contact with the examinee but he would not discuss the whereabouts of the examinee with Mr Ryan. On 2 April 2008 Mr Ryan telephoned Pantheon Resources PLC and spoke to a secretary at that company who informed him that she was not authorised to tell Mr Ryan where the examinee was based. She did say that she would pass on a message to the examinee to telephone Mr Ryan. 16 On 4 April 2008 Mr Ryan telephoned Acclaim and spoke to the receptionist who advised him that the examinee was still overseas but would be back in Perth the following week. Mr Ryan left his contact details and asked her to have the examinee telephone him. 17 On 11 April 2008 Mr Ryan received a call from Mr Harry Williams, proprietor of LPS who informed him that he had spoken with the receptionist at CCL who had informed him that the examinee was then at the offices of CCL in Subiaco, Western Australia. Mr Williams informed Mr Ryan that he would attempt to serve the summons on the examinee. 18 That attempt was also unsuccessful. On 11 April 2008 Mr Ryan received a telephone call from the examinee at approximately 12.55 pm. In substance, the examinee informed Mr Ryan that he was not prepared to meet with Mr Ryan to allow Mr Ryan to effect service of the summons on him; he was 'flying around the world all the time' and was a resident of Europe; his Australian lawyers were Tottle Partners; he asked Mr Ryan to stop sending people around to his offices as no one knew where he was; and finally, that he was a resident of Monaco. 19 From these events, the plaintiff submits that I should infer that the examinee's call which was made to Mr Ryan was made as a result of Mr Ryan's calls to the companies and/or as a result of the companies' communication with Mr Ryan. It is submitted that from this the Court can be satisfied that the examinee stays in contact with the companies but that the examinee does not wish to be served with the summons and that he lives overseas, probably in Monaco. The application is ex parte. Disclosure has been detailed. To the extent that such inferences are presently relevant, I would draw them. 21 The substance of the information contained in this document is that there is no convention, treaty or other agreement in force between Australia and Monaco on the service of documents in civil proceedings. The Department suggests that a party in Australia who wishes to serve documents issued in an Australian court in civil proceedings on a party in Monaco should send a formal request through diplomatic channels seeking the assistance of the competent authorities in Monaco to serve the documents. The time taken to process a request for service will vary in each case and is difficult to estimate how long it may take. However, normally delays of at least three months can be expected, and sometimes they are substantially longer. 22 The current return date for the summons is 12 and 13 June 2008. On the basis of the information provided in this communication from the Department, I am asked to infer that it is improbable that service could be effected in Monaco before the return date of the summons. I would so infer. 23 On the basis of this evidence I am satisfied that, subject to the plaintiff complying with all the necessary formalities, there is a proper basis for an order for service out of the jurisdiction. Subject to that order being obtained, and subject to being satisfied that such service would be impracticable, there is merit in the second application for substituted service. However, the formalities touching on those topics are not insignificant issues in exercise of the discretion to make at least the first order. 24 Although the scope for granting an order under the current O 8 of the Federal Court Rules (FCR) is expansive, the exercise of the discretion has always been tempered with caution. Speaking of earlier provisions under the English rules, in GAF Corporation v Amchem Products Inc (1975) 1 Ll R 601, at 604-605, Megarry J listed six considerations which have been established by the authorities in relation to service outside the jurisdiction --- (1) this discretion should be exercised with great care; (2) the onus lies on the person seeking to serve the originating process; (3) the substance of the matter must be within one of the categories in r 1; (4) if there is a doubt as to whether a case is within one of these categories, then it should be resolved in favour of the foreigner; (5) even where a case is within a category in r 1, it is still a matter of discretion; and (6) there must be a full and fair disclosure where there is an ex parte application. See also Apple Computer Inc v Apple Corps SA (1989) 16 IPR 329 and Voth v Manildra Flour Pty Ltd [1990] HCA 55 ; (1990) 171 CLR 538. 25 There is no convention with Monaco so the question remaining is what the law of Monaco is in relation to service of an originating process issued from (in this case) an Australian court. Order 8 r 1 set out new definitions and r 2 prescribed that, subject to r 3, an originating process may be served on a person in a foreign country in a proceeding which consists of, or includes, any one or more of the kinds of proceedings mentioned in the table set out in r 2. An originating process is defined in O 8 r 1 as meaning an application commencing a proceeding, and includes a cross-claim in a proceeding against a person who was not previously a party to the proceeding. 28 As a threshold point, I consider that a summons for examination constitutes an originating process within the meaning of O 8 r 1 FCR (see Fiorentino v Irons (1997) 79 FCR 327 and In the matter of Strarch International Limited (ACN 004 779 677 (In Liquidation) [2005] FCA 829). In Carnegie Corporation Ltd v Pursuit Dynamics plc (2007) 162 FCR 375, French J (after the rule change) examined the issue in the context of an application for preliminary discovery but did so after observing in passing [51] that there had been rule changes since Strarch which in turn had followed Fiorentino . That condition must be met because it is O 8 r 2 that is relied upon by the applicants, rather than O 8 r 4 which provides for the service out of the jurisdiction of documents other than originating process. The question therefore arises whether an application for preliminary discovery is an "originating process" for the purposes of O 8 r 2. There is analogous authority in relation to like processes. In Re Sherlock (1991) 102 ALR 156 Lockhart J held that an application for orders that persons be directed to attend before the Court for examination under the provisions of the Corporations Law was not an originating process. In this his Honour followed Re Austral Oil Estates Ltd (in liq) (1986) 86 FLR 247 at 248, a decision of McLelland J of the Supreme Court of New South Wales in relation to an examination order under s 541 of the Companies (NSW) Code which was the predecessor of s 597 of the Corporations Law. In neither of those judgments was there any elaboration of the characterisation of an application for examination as falling outside the concept of "originating process". 51 In Fiorentino v Irons (1997) 79 FCR 327 , Foster J declined to follow what he characterised as the obiter observations of Lockhart J in Re Sherlock 102 ALR 156. He noted that the decision in the New South Wales Supreme Court turned upon the precise meaning of the Supreme Court Rules . He made the point that they were not framed in the same way as the Federal Court Rules were at that time. In particular, there was then no definition of "originating process" in either the Federal Court Rules or the Federal Court Act. His Honour relied upon the definition of "proceeding" in the Act. He said it was a very wide definition and he was satisfied that the issue of summons for examination was a proceeding. As to the width of the term "proceeding" his Honour referred to Re Interchase Corporation Ltd (1996) 68 FCR 481 at 487 (Kiefel J) and Pasdale Pty Ltd v Concrete Constructions (1995) 59 FCR 446 at 448 (Finn J). It may be noted that at the time his Honour made that decision O 8 r 1 did not define originating process but simply listed the kinds of proceedings in which originating process could be served on a person outside Australia. His Honour followed the reasoning of Foster J in Fiorentino 79 FCR 327 that the different approach which applied in the Supreme Court of New South Wales turned upon the different wording of the rules of that court. He granted leave to the liquidator of the relevant company in that case to serve examination summonses outside the Commonwealth in Malaysia on four named former directors of the company. 53 In my opinion and consistently with the authorities in this Court an application for preliminary discovery is an application in a "proceeding" within the meaning of that word in the Federal Court Act and therefore within the meaning of O 8. An application for preliminary discovery is therefore "an application commencing a proceeding" and is within the new definition of "originating process" in O 8 r 1. I do not consider I am entitled to draw such an inference from the content of the Department's circular. I note that under the heading 'Private Agent', the circular says 'currently the position in Monaco relating to service by private agent is not known. Accordingly, private agents should not be used'. 32 I do not consider that the terminology used in the Department's advice purports to constitute a statement as to the law relating to service of process in Monaco. Rather it is helpful practical counsel. There is no suggestion in the advice as to what the actual law of Monaco is, nor is there a suggestion in the advice that a request through diplomatic channels will necessarily result in a positive response. There must be other means of doing it, with respect, that would satisfy the Court. It would be entirely appropriate however for a suitably qualified expert to give evidence on affidavit as to the relevant law in Monaco. Indeed in Annabelle Bits Pty Ltd v Fujitsu Ltd [2007] FCA 1190 , Graham J accepted evidence on an information and belief basis pursuant to s 75 of the Evidence Act 1995 (Cth) from an officer of the Attorney-General's Department as to the practise in Japan of permitting service of documents through diplomatic channels. On that simple but seemingly reliable basis his Honour was satisfied as to, amongst other things, the requirements of O 8 r 3(2)(c) FCR: see also Re Strarch International Ltd (in liq) [2007] FCA 940. 34 It seems to me that in the absence of a convention, it is essential (as indicated by the word 'must' in par 3 of O 8 r 3(2)), that there be evidence, albeit relatively brief, as to the law of the foreign country in relation to which, service of the Australian originating process be sought. In this case there is, in my view, no such evidence and the application cannot presently be allowed. 35 Further, Practice Note No. Furthermore the advice from the Department states subsequent inquiries had revealed "the authorities in the Philippines will not assist with service via the diplomatic channel". The officer of the Department therefore suggested the applicant investigate the possibility of having the documents served privately. The Department noted the applicant has advice private service could be effected within 48 hours. (1) Where for any reason it is impractical to serve a document in the manner set out in the Rules, the Court may by motion in an existing proceeding made ex parte order that, instead of service, such steps be taken as are specified in the order for the purpose of bringing the document to the notice of the person to be served. In its terms sub-r 9(1) applies to "the Rules, " which is a reference to all the FCR, including O 8. I consider the motion presently before me is the motion required by this rule. Furthermore, I read the words "instead of service" as referring to service "in the manner set out in the Rules" so that the rule applies not only where service cannot be effected but where it is impractical for service to be in the manner set out in the Rules. While it is clear that compliance with O 8 rr 14 and 15 as to the utilisation of the diplomatic channel is impractical, it is not established on the evidence that personal service is impractical. The applicant does not oppose personal service by a private means. In my view it is preferable personal service be ordered where it is available and not opposed. Personal service is not impractical and constitutes the best mode of service, being preferable to service by post. I say this particularly because the matter which brings this application to the Court is a matter under the Bankruptcy Act 1966 (Cth) ("the Act "). What is sought to serve is notice of an application for a sequestration order. Such an application is of such fundamental importance to the application of the Act to the respondent that he should be entitled to the best mode of service as will ensure he is made aware of the proposed proceedings. I note also personal service is the mode of service which is preferred under the FCR so far as they apply to service inside the country. For these reasons I consider the applicant is entitled to an order for substituted service of the documents referred to in the notice of motion, substituted in the sense that rather than comply with the provisions of O 8, personal service is effected by private means. It would follow from there being evidence the application has been served in that manner that it is not necessary for any deeming order to be made of due service as proposed in the motion. Evidence in the normal course of such service would be filed. That document includes a recommendation that private service should be used wherever possible to avoid delays in using official channels and that a private agent should be employed in South Africa to serve documents. O7 r9 makes provision for alternative means of serving a document where for any reason it is impractical to serve a document in the manner set out in the Rules ie in this case the requirements of Division 3 of O8 concerning service in a non-Convention country. If it can, then that would be the preferable course for the reasons expressed by Nicholson J in Swan Brewery [1998] FCA 277 making an order for substituted service in the most appropriate and effective manner to bring notice of the summons to the examinee. As in Swan Brewery , I will adjourn the plaintiff's application until more complete evidence is obtained and provided on affidavit. 40 Until the entire picture is clarified, it would be inappropriate to consider the second question of whether, in this instance, orders for substituted service should be made immediately following orders for leave to serve out of the jurisdiction: see Ricegrowers' Co-operative Ltd v ABC Containerline NV (1996) 138 ALR 480 and Commissioner of Taxation v Ma [1999] FCA 1093 ; (1999) 92 FCR 569. In the latter case Emmett J held that where the respondents are out of Australia it is not appropriate to consider an order under O 7 r 9 for substituted service unless some leave is at least obtained to serve the proceedings outside the jurisdiction pursuant to O 8 FCR. The leave was opposed. The leave was supported by an affidavit of Mr Mark Blundell, solicitor who made it clear that he was not seeking to be heard on behalf of the examinee himself. It is clear that the examinee is separately represented by other solicitors. Mr Blundell also appeared on the application to be heard. 42 There is power under r 2.13 of the Federal Court (Corporations) Rules 2000 ( Corporations Rules ) to permit a creditor, amongst others, who seeks to be heard in relation to a matter, to be heard. It is clearly a power which is discretionary. 43 There is some guidance from recent authorities in relation to those relatively rare circumstances in which the discretion might be exercised. 44 In Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 1320 , Barrett J was considering two applications brought by a special purpose liquidator of One.Tel Limited. The special purpose liquidator was first, seeking to vary the function and powers he held. A second application was an application for an order extending the time within which an originating process would remain valid for service in proceedings commenced by One.Tel Limited (through the special purpose liquidator) against various entities. Those prospective defendants sought leave to be heard on the hearing of the special purpose liquidator's application. Reference was made by his Honour to the Court of Appeal decision in Corporate Affairs Commission v Bradley; Commonwealth (Intervener) [1974] 1 NSWLR 391 in which it was held that there was no inherent power in the Supreme Court to permit intervention in proceedings. His Honour also held that there was a strong indication in the rules of the court themselves that a person named as a defendant in an unserved originating process is not intended to be heard on an application for extension of the time for which the process remains valid for service. Reference was made to r 12.11(1)(e) of the Uniform Civil Procedure Rules 2005 permitting defendants to set aside proceedings which had been filed but not served. His Honour observed [10] that 'unless and until a filed process is served, the defendant has not been drawn into the proceeding'. The expectation evidenced by the rules in this area is one of being heard after the event, not before the event, in much the same way as one might expect in relation to, for example, a subpoena. Much time and effort could be wasted if an unserved defendant were heard on a question that would become entirely academic if the plaintiff eventually decided not to serve at all. Indeed, as in this case, it was the situation that they or others associated may possibly be subject to new or further examination. The question whether particular examinations might, for example, entail an abuse of process would logically be addressed if and when those particular examinations were initiated, not when the question before the court was the general question whether the purposes of the appointment will be served by pursuing examinations of a particular kind or on a particular subject. The capacity or status of a member or contributory may be rejected at once as insufficient. This company is insolvent. Its members have no tangible financial interest in the conduct of its winding up. These particular members do not stand apart from any of the other members of One.Tel which, after all, was a listed public company presumably with thousands of shareholders. For the reasons I have already given in relation to the other application, that status or capacity is insufficient. One matter involved in the extension of functions application is whether the functions or powers of the special purpose liquidator should be enlarged to enable him to make the extension of time application on which I have already said that no right of audience should be given to the PBL parties. The same result should follow in relation to a right of audience in relation to the anterior application for extension of functions and powers. As I have said, they will have the chance to challenge moves or further moves to examine them in the ordinary course if and when those moves are made in the ordinary course. Dealing again with Corporations Rules r 2.13, the State of Victoria had sought leave to be heard in relation to an appeal from an order made by a master dismissing an application made by three plaintiffs seeking reinstatement of a company that had been deregistered. The three plaintiffs had sought an order that ASIC reinstate the registration of a company called Palais de Danse Pty Ltd pursuant to the CA. Alternatively, applications were brought for termination of the liquidation. Counsel for the State of Victoria opposed the application on the grounds that the plaintiffs were not aggrieved persons. ASIC raised the same opposition. Leave to appear to the State had been granted by the master limited to the question of the standing of the plaintiffs. Although the master had granted leave to the State of Victoria, Gillard J declined it. There is a well-established principle of law that no person's rights, property or interests can be affected without giving that person a right to be heard. 26 One of the contentions of the State of Victoria is that it is entitled to appear on this application, and to establish that if a proceeding was brought against it, the proceeding would be doomed to fail. The proper place for the ventilation of the dispute between the parties and its determination is not on an application for reinstatement. 48 For similar reasons as those expressed in these two cases, I would decline the granting of leave to be heard in relation to this application. Although those represented by Mr Blundell are already involved in a range of proceedings before the court, this does not affect, in my view, the principle that these are intended to be ex parte proceedings. The remedies of, not only those who seek to be heard but also the examinee will, if needed, remain preserved until a later time. 49 Mr Blundell also sought to offer assistance in a capacity as amicus curiae . In my view, the obvious involvement of his clients which he pressed in justification of the leave to be heard precludes the independence and objectivity which would ordinarily be present in the unusual circumstances in which the Court hears from an amicus curiae . Although intervention has since been put on a statutory basis and provided for in various rules of court, it appears that intervention first was allowed in jurisdictions derived from ecclesiastical or civil law, such as matrimonial causes, probate and admiralty: Corporate Affairs Commission v Bradley (1974) 1 NSWLR 391 at 397-398. An intervener, whether pursuant to s 12 of the ADJR Act , O 6, r 8(1) of the Federal Court Rules , s 78 A of the Judiciary Act 1903 (Cth) or otherwise, becomes a party to the proceedings with the benefits and burdens of that status. Thus he can appeal, tender evidence and participate fully in all aspects of the argument. His position is quite different from that of an amicus curiae . Interveners have been allowed to appeal. Thus the Attorney-General of the Commonwealth appealed to the Privy Council in Attorney-General of the Commonwealth of Australia v The Queen (the Boilermakers' Case ) [1957] UKPCHCA 1 ; (1957) 95 CLR 529 , [1957] AC 288 though he was only an intervener in R v Kirby; Ex parte Boilermakers' Society of Australia [1956] HCA 10 ; (1956) 94 CLR 254 in the High Court. The Attorney-General appeared as amicus curiae to argue among other things that a previous decision of the court had been given per incuriam. This is a case where the Crown sought to be made a party, which application was refused. An amicus curiae has no rights in the matter. He can file no pleadings or motions of any kind. He can reserve no exception to any ruling of the court, and of course cannot prosecute an appeal. It has been held in this state that an amicus curiae may, on leave, file briefs, argue the case, and introduce evidence. " More recently, in Commonwealth v Tasmania [1983] HCA 21 ; (1983) 158 CLR 1 , counsel for the Tasmanian Wilderness Society appeared as amicus and seems to have fulfilled the traditional role. Other cases are referred to in the Report of the Law Reform Commission on Standing In Public Interest Litigation (ALRC 27) pars 284-290. Counsel for the Attorney General appearing as amicus curiae have often been heard to make submissions in the public interest. But there is no prescription of the circumstances in which it may or may not be proper for a court to hear an amicus. As Sangster J pointed out in Johnson v Sammon (1974) 7 SASR 431 at p 433, the function of an amicus has not been defined by English authority. In his article "The Amicus Curiae Brief: From Friendship to Advocacy" 72 Yale LJ 694 at 696, Professor Krislov put the point succinctly when he said, "In short, through lack of precise rules, the English courts developed a highly adaptable instrument for dealing with many of the problems that arise in adversary proceedings. " No strict rules have been developed, no doubt because no person has the right to address the court as an amicus, and it is for the court to accept the assistance of the amicus if it seems proper to the court to do so. In particular, in the present state of the Anglo-Australian authorities (and the same would appear to be so in the United States) no clear line appears to differentiate that which can never be included as part of the role of an amicus curiae from what in a given case, and as a permissible exercise of discretion, the court may permit or require of an amicus. The general principle is that the parties are entitled to carry on their litigation free from the interference of persons who are strangers to the litigation. But there is an overriding right of the court to see that justice is done. An amicus may be heard if good cause is shown for doing so and if the court thinks it proper. Nothing in these reasons should be understood to delimit or restrict the availability of or effectiveness of this valuable tool. 50 For completeness I should clarify that in the interests of what I considered to be the more expeditious disposition of the proceedings, I agreed to provisionally hear argument from Mr Blundell while expressly reserving the right to decline his application if I considered, on reflection, that it should not be granted. I do, on reflection, consider leave should not be granted and accordingly refuse the application. 51 It follows that the plaintiff's ex parte application dated 28 April 2008 will be adjourned. The application to be heard on the ex parte application be refused. Submissions, if any, as to costs are to be filed and served within 7 days of the ultimate determination of the plaintiff's application, failing which there will be no order as to costs. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | examination summons service unable to be effected within australia characterisation of the nature of the process for the purpose of service out of the jurisdiction application on an interlocutory basis nature of evidence required to support a statement as to the law of the foreign country evidence on information and belief as to the law of the foreign country is essential when no convention between australia and the foreign country whether order for substituted service can be made immediately subsequent to and when it is clear that foreign service is impracticable whether leave to be heard should be granted to the applicant's father leave declined leave to address as amicus curiae declined corporations law evidence practice and procedure |
The decision was based upon the delegate's lack of satisfaction that the application had been certified or authorised by s 190C(4) of the NTA. The applicant seeks review of that decision. When this matter came before the Court for directions the Court was informed that the Registrar and the authorised delegate would abide the outcome of the Court's decision and did not intend making submissions in the matter. The State of Queensland, which had been named as the second respondent, did not propose making any submissions. The Court expressed concern about the lack of a contradictor particularly given the issues then raised by the application, some of which concerned the conduct of the delegate. In consequence the Attorney-General for the Commonwealth undertook the role of intervenor in the proceeding (see s 84A NTA). (I shall refer to the Attorney-General in these reasons as 'the intervenor'). Background to the Decision Statutory Requirements An application for native title determination is made to the Federal Court and then referred to the Registrar (s 61 and s 63 NTA). Provision for delegation of the Registrar's powers is made by s 99. When the Registrar is given a copy of the claimant application the Registrar must consider the claim made in the application in accordance with the section: s 190A(1). Section 190A(3) provides that, in considering a claim under the section, the Registrar must have regard to certain information, including information contained in the application and any other documents provided by the applicant. The Registrar may also conduct searches, have regard to relevant information supplied by the Commonwealth, a State or Territory in relation to the requirement of s 190B or s 190C ' and may have regard to such other information as he or she considers appropriate '. It requires representative bodies to make all reasonable efforts to achieve agreement with the other applicants and to minimise the number of applications with respect to the same land or waters. A failure to comply with the subsection does not however invalidate the certification of the application. Section 190D(2) provides that if the applicant is given a notice that the Registrar does not accept the claim for registration, the applicant may apply to the Federal Court ' for a review of the Registrar's decision not to accept the claim'. The First Application The review sought is of the third in a series of decisions by the same delegate as to whether applications and amended applications, said to have been made on behalf of the Wakaman People, should be accepted for registration. It is necessary to refer to each of the applications given the submissions made and the delegate's reasons with respect to the last of them. In that approach I refer to the first of the decisions as 'the first application' although it proposed the second set of amendments to the original application on behalf of the Wakaman People # 2 and was brought after the application in Wakaman People # 1. On 9 August 2004 (incorrectly referred to by the delegate as 9 April 2004) the persons named as applicant in these proceedings lodged an application for a determination of native title under s 61(1) of the NTA. Previous authorisation meetings had been held. The decision, dated 18 April 2005, not to accept the application for registration, was based upon the requirements as to authorisation and as to the identification of the claim group not being met. It cannot be determined from the description whether the intended meaning is that the Wakaman People are all the descendants of the named apical ancestors or whether it means that all Wakaman People are descended from those apical ancestors (but that persons identifying with other groups may also share those ancestors). It is also not clear whether the principle of the descent of rights asserted here is cognatic, such that any one descendant of the named apical ancestors take their descent or identity from either their father or their mother and choose whether or not he or she identifies with the claim group. If this is the case, there might be persons in these descent groups who do not identify as members of the Wakaman People. So far as concerned the question of authorisation, the delegate considered further information would be necessary to overcome two difficulties. The first arose from the delegate's finding concerning the claim group description and the second appeared to be a lack of evidence surrounding the authorisation meeting, by reference to observations in Moran v Minister for Land and Water Conservation for the State of New South Wales [1999] FCA 1637 at [33] --- [35] ('Moran'), to similar effect. The second (the amended) application On 16 December 2005 leave was granted to amend the Wakaman People # 2 application pursuant to s 64 of the NTA. The description of the claim group was amended and the applicant now relied upon certification by the NQLC instead of evidence of authorisation for the purposes of s 190C(4). The document was described as a certificate under s 203BE. In relation to the requirement of authorisation, it was said that the process undertaken involved a combination of the traditional laws and customs of the native title claim group, which recognised persons having particular interests, as authorised to speak for the group and decide matters pertaining to the rights and interests claims, and the consent of the majority of the senior members of the group. The authorisation was also said to have involved extensive consultation with members of the group. So far as concerned the requirements of s 203BE(2)(b) it was said that the identification of the native title claim group had involved the engagement of a consultant anthropologist who had undertaken extensive research in the region and the description of the native title claim group had been the subject of consideration by the members of the group. Instructions had been given to the legal representatives of the claimants. Anthropological reports in respect of the claim group had been subject to peer review by a senior anthropologist who concluded that the claim group ' as presently described in the application was properly constituted '. Although the application did not overlap any other application, the requirements of s 203BE(3) were also addressed. The amended application drew a " preliminary assessment" by the delegate. The assessment listed, in summary form, the requirements of s 190B and s 190C. Under each requirement the materials in the application which were relevant to it were identified. The delegate than provided an opinion as to whether the test was satisfied and whether further information was required, with or without comment. The requirement that the authorisation of the applicant be either certified or satisfactory evidence of authorisation supplied (s 190C(4)(a) and (b); s 61(1)) , was not assessed or commented upon. It is not necessary to refer to that correspondence. What followed was a further amendment of the description of the native title claim group in an application dated 30 January 2006. The description of the Wakaman People is now limited to ' ... all of those persons who are descendants of' (the same persons whose names were listed in the previous two applications are again listed here). In Sch R to the application which was entitled ' Certificate or Authorisation [see Act, s 190C] ' a copy of a certificate was to be provided ' if the application has been certified by each Aboriginal/Torres Strait Islander Body ... '. In response it was said that a certificate from the NQLC was attached. It is not in dispute that the certificate attached was a copy of the same certificate which had been provided with the second application. In his decision dated 10 February 2006 the delegate explained that his decision was made in short form ' in accordance with the policy of the Registrar '. The delegate elected to give reasons in that form having come to the conclusion that ' the further amended application was not, or is not, authorised in its amended form. Any further testing of the application as either to its merits or procedural compliance could be either misleading of meaningless '. The delegate addressed the requirements of s 190C(4)(a) and (b) in the reasons which followed. He referred to the reasons which had been provided in both the earlier Wakaman People # 2 application and the Wakaman People #1 application. In both those matters the claim group had been described by reference to the list of persons from whom the Wakaman people were said to be descended and the known apical ancestors of the Wakaman People, the delegate observed. He set out passages from the earlier reasons in which he had identified the problems with the description of the group. Although the legal representative had recently written to the delegate, saying that each of those matters had been corrected, the delegate did not accept ' that these submissions accurately reflect the earlier decision. It is not the role of the delegate to be an anthropologist, but if such terms are used in an application then I must interpret them as best I can. ' My conclusion is that the description now given, whether it would satisfy s.190B(3)(b) , which I do not decide, is that of a differently constituted group. The certificate was executed on 7 th December 2005 and in form, with one exception, is in accordance with the requirements of s.190C(4)(a) and s. 203BE (2) and (4). The description of the Native Title Claim Group has been the subject of consideration by the members of the Native Title Claim Group, and instructions given to the legal representatives of the claimants. Anthropological Reports in respect of the claim group, including a report specifically commissioned to deal with assertions by the dissenter, have been subject to Peer Review by Senior Anthropologist Dr Nancy Williams who concluded that the claim group as presently described in the application was properly constituted. My examination of the files held by the Registrar in relation to this and the other Wakaman applications does not assist. It suggested something in the nature of an estoppel and was not pressed on the hearing of the application. It was also sought to identify errors in each of the delegate's decisions. It is not necessary to undertake such an assessment, since the application before the Court is limited to review of the third decision and the reasoning leading to it. Nevertheless the delegate has incorporated part of his earlier reasons in the third decision and it may therefore be necessary to have regard to them. The primary submission for the applicant at the hearing was that the delegate had neither the duty nor the power to go behind the certification provided with respect to the third application. The intervenor submits that the delegate's duties under s 190C(4) required him to be satisfied that the application had been certified under s 203BE. That necessarily refers to the third application. If he was not able to conclude that the certification in question applied to that application, he could not be so satisfied. The applicant also submitted that the delegate was in error in finding that the native title claim group described in the third application was a wider, and significantly different, group from that referred to in the previous application, which had been subject of certification. The intervenor submitted that the conclusion that there had been a significant change was obviously correct because the words ' and who identify as Wakaman People ' in the second application referred, at least potentially, to a smaller group. In that regard it was submitted that a person might be a biological descendant of a named ancestor, but not identify themselves as a member of the group claiming native title, but some other group to whom they are also related. The third application may refer to a larger group because it has all biological descendants as part of the group regardless as to whether they consider themselves to be a member of it. Whilst the applicant's case for review is based upon the identification of an error on the part of the delegate, it is not submitted that the Court is limited to a review based upon questions of law. The intervenor does not argue against that contention, given the decision of the Full Court in Western Australia v Strickland [2000] FCA 652 ; (2000) 99 FCR 33. I had previously expressed a view different to that in Strickland (in Powder v Registrar, National Native Title Tribunal [1999] FCA 913 ; (1999) 92 FCR 454) but consider that I am now bound by the decision of the Full Court. In Strickland the Full Court held that the power given by s 190A to the Registrar by the NTA to make decisions in respect of the registration of an application made to the Court is the exercise of an administrative power in respect of a matter in which the Court is exercising jurisdiction (at [63]). The legislation does not specify the nature or the extent of the Court's review under s 190D(3) or impose any limitation upon the material that may be taken into account. Jurisdiction is conferred by s 190D(2) and (3) in the broadest of terms (at [64]). A review under s 190D is not restricted to considerations and determination of a question of law. Section 190D(4) makes it plain that the review extends to determinations of issues of fact. The NTA does not proceed upon the premise that determinations of fact in the relevant controversy have been settled by the administrative determination and that the only matter in respect of which jurisdiction is conferred upon the Court is any controversy on questions of law. The Honours said that ' the review proceeding enlivens the jurisdiction of the Court in respect of the whole matter ' (at [65], referring to TNT Skypak International (Aust) Pty Ltd v Commissioner of Taxation (Cth) (1998) 82 ALR 175 at 178, 180 --- 181). Their Honours concluded that it was Parliament's intention that the right of review would place before the Court the controversy constituted by the issues of fact and law raised between the parties and that, upon a ground of review being established, appropriate orders may be made to do justice as between parties (at [66]). In each of the applications no attempt had been made to name all of the persons who comprised the native title claim group. It was therefore necessary that the Registrar or his delegate be satisfied, pursuant to s 190B(3)(b) , that the persons who comprised the claim group were described sufficiently clearly so that it could be ascertained whether any particular person was a member of that group. It may be seen from the delegate's reasons on the third application that he did not consider that the description of the claim group failed to meet this requirement. Clearly it was satisfied by a description of the group as being all of the descendants of named ancestors. I put to one side whether there is any real difference between this description and that in the first application. And the inconsistency found by the delegate between the description in the third application and the one which had preceded it was not applied to the satisfaction of this statutory condition. The delegate refused to register only because he was not satisfied as to the requirements of s 190C(4). The delegate reasoned that the certification earlier provided could not relate to the application brought on behalf of a wider, and therefore different, group. I propose to deal with the function and effect of certification and the Registrar's or delegate's role in connection with it, before turning to the issue concerning the description of the group in each of the two applications. In Northern Territory of Australia v Doepel and Others [2003] FCA 1384 ; [2003] 133 FCR 112 ('Doepel') Mansfield J discussed the Registrar's general functions under s 190A to 190C of the NTA, those sections being part of the extensive amendments introduced by the Native Title Amendment Act 1998 (Cth). As his Honour observed (at [12]), they separate the judicial decision-making processes under the Act from the administrative processes relating to registration. The Tribunals task, his Honour considered, was not one of finding the real facts in every respect on the balance of probabilities or some other basis. Its role was not to supplant the role of the Court in adjudicating upon the application for determination of native title or generally to undertake a preliminary hearing of the application. Section 190C is largely directed to the terms of the application, as does s 190B(3) (at [16]). Section 190C(2) did not involve the Registrar going beyond the application nor require the undertaking of some form of merit assessment. So far as concerned the description of the native title group, its focus was not upon its correctness but upon the adequacy of the description, so that the members of it could be ascertained (at [36] and [37]). His Honour considered that s 190C(4) contained conditions of a different nature and that the contrast between the requirements of paragraphs (a) and (b) of subs (4) is dramatic (at [78]). In the case of subs (4)(a), the Registrar is to be satisfied about the fact of certification by an appropriate representative body. His Honour later observed that, in determining whether the certificate was in accordance with s 203BE, the Registrar is required to address the terms of the certificate. The Registrar was not required to go beyond that point to be satisfied that the requirements of subs (4)(a) was met (at [80]). The contrast between paragraphs (a) and (b) of subs (4) indicate that responsibility in the former rests with the representative body which is required to address the requirements of s 251B; and in the case of paragraph (b) the responsibility lies with the Registrar. It was to be noted, his Honour observed, that s 203B(2) emphatically states that the representative body ' must not ' provide its certificate unless it is of the opinion that all persons in the claim group have authorised the applicant to make the application. In his Honour's view it followed that s 190C(4)(a) does not leave some residual obligation upon the Registrar, once satisfied of the matters to which it expressly refers, to revisit the certification of the representative body (at [81]). I respectfully agree. The intervenor submits that the delegate did not consider the correctness of the matters certified, but was concerned to ensure that the application before him, the third application, had been certified, as s 190C(4)(a) required. I do not understand the submission to be directed to the act of certification by the NQLC. It is implicit in the submission that it is part of the delegate's function under the NTA to consider whether the certification is of the particular application under consideration. So much may be accepted, but it is not obvious that the delegate viewed the matter in this way. Before turning to what the delegate's findings about the claim group were directed to, in the context of certification, it is necessary to clarify one matter which arises from the terms of the certification dated 1 December 2005. The certificate, it will be recalled, had been prepared for the purpose of the second application. It was expressed to relate to the proceedings upon that application and bore no reference to the later, third, application. It was not suggested by the delegate, or the intervenor in submissions, that the certificate could not apply to the third application for this reason alone. Such an approach would be unduly technical and not appropriate to procedures under the NTA. The matter should be approached by applying the certification to the third application, as the applicant and the NQLC, which was a participant, clearly intended. Putting aside the change in the way in which the claim group was described, there is no dispute that the content of the third application was the same as that preceding it. It referred to the same lands and the process utilised for authorisation was the same, as were the persons participating in it. The NQLC must then be taken to say, amongst other things, that the members of the native title group referred to in the application had authorised those persons to be the applicant and to bring the application in the way required by the NTA. The delegate's response to this, it may be inferred, was that this could not be correct because the group now involved was different. This opinion has relevance only to the question of authorisation. That the delegate viewed the matter in this way is confirmed by his concluding observation that re-certification or re-authorisation was necessary. The delegate clearly did not consider the certificate, so far as it related to authorisation, to be conclusive or correct. The NTA provisions relating to registration do not give the Registrar or a delegate the authority to consider these matters. So far as concerns the composition of a native title claim group, s 190B(3)(b) requires the Registrar (or delegate) to be satisfied as to the sufficiency of the description of the group for the purpose of facilitating the identification of any person as part of that group. Section 61(4) also requires information as to identification for the same purpose. By s 190C(2) the Registrar must ensure that this information is contained in the application, together with evidence about the authorisation. None of these provisions require or permit the Registrar to be satisfied about the correctness of these matters, as his Honour pointed out in Doepel . The Registrar's functions do extend to a consideration as to whether the authorisation of the person or persons to bring the application has been made as required by the NTA. This would include consideration of the process of authorisation used and whether ' all ' the members of the claim group participated in it (although the NTA does not require that every member of the group be present or that all those present agree: Lawson on behalf of the 'Pooncarie' Barkandji (Paakantyi) People v Minister for Land and Water Conservation for the State of New South Wales [2002] FCA 1517 at [25] and Moran at [48]. A consideration of aspects of the authorisation process is not to be undertaken by a Registrar where the application in question has been certified in accordance with s 203BE. Certification means that the function has been carried out by the representative body and there is no basic function for the Registrar to carry out. The conditions set by s 190B and s 190C were met by the third application and the test for registration under s 190A(6) satisfied. It follows, in my view, that the delegate was obliged by that provision to accept the claim for registration. It is not necessary to consider whether the delegate was correct in his assessment that the claim groups as described were different. I shall however state my views on that matter in short form. The intervenor seeks to support the delegate's conclusion in that regard by a process of reasoning different from that expressed by the delegate. The delegate considered that the reference to ' cognatic ' descent in the second application limited the number of persons said to be descended from the same apical ancestor. Nothing turns upon the latter description, the apical ancestor being the common ancestor at the apex of a genealogy. The delegate did not explain what it was about ' cognatic ' descent which was limiting. There was no evidence from an anthropologist as to its meaning in kinship systems, but there seems little dispute in dictionary definitions of the term. The Oxford English Dictionary refers to cognatic descent as being from a common ancestor. Elsewhere it is explained that the descent may be through males or females and is not limited to one or the other sex. The intervenor submitted that the claim group could be seen to be different and larger following the removal of the requirement, stated in connection with the second application, that a person identify as one of the Wakaman People before they could be said to be a member of the group. Without the requirement any biological descent would qualify. It may be observed that identification with a group may be relevant to findings of fact about membership of the group, which may be made later in the proceedings. The registration process is concerned with the clarity of the description of persons making up a claim group, so that it may be determined whether a person is a member of it. A requirement of self-identification would not appear to meet such an objective and might be thought to provide grounds for refusal of registration. The intervenor's argument proceeds from a description of a group which is uncertain in its operation, hardly a strong basis for comparison. At a practical level it cannot be known whether descendants will or will not identify with the group. A conclusion that a group described as descendants, regardless of their opinion as to membership, will be larger is merely conjecture. I will make an order setting aside the delegate's decision and propose to make further orders requiring the Registrar to accept the application for registration and including details of the claim in the Register of Native Title Claims. Before making the second order I will hear further submissions from the parties as to whether that order should be expressed to take effect at an earlier time than the present, if the applicant presses for such an order. A claim was made to one but there was no argument of substance on the point. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. | delegate's refusal to accept claim for registration nature of court's jurisdiction to review requirements for registration registrar or delegate's functions certification of application by representative body whether registrar may consider authorization process where application certified whether earlier certification may apply to later application whether later application referred to different group meaning of 'cognatic descent' whether delegate may consider change of description and effect limits on delegate's functions where certification. native title |
2 Idameneo owns or controls 129,413,984 shares in the first defendant (Symbion Health) representing approximately 20 percent of the issued share capital of that company. 3 The second to sixth defendants (the Directors) are, and at all material times were, the directors of Symbion Health. 4 Symbion Health and Healthscope Limited (Healthscope), another public company whose securities are listed on the ASX, have entered into a Transaction Implementation Deed dated 8 October 2007 (TID). In substance, Symbion Health has agreed to sell, and Healthscope has agreed to buy, Symbion Health's "Diagnostics Businesses" in consideration for the issue by Healthscope to Symbion Health of shares in Healthscope which are to be distributed to the Symbion Health shareholders in implementation of a reduction of the capital of Symbion Health. 5 By its amended originating process, Idameneo seeks declaratory and injunctive relief based on two aspects of the TID. First, Idameneo complains that cll 3.1 and 5 of the TID provide for a selective reduction of capital, not an equal reduction of capital, of Symbion Health. Idameneo seeks an injunction restraining Symbion Health from implementing the proposed capital reduction unless, as a selective reduction, it is approved by a resolution passed by all ordinary shareholders of Symbion Health in accordance with s 256C(2)(b) of the Corporations Act 2001 (Cth) (the Act), rather than, as an equal reduction, by an ordinary resolution as is proposed at present. 6 Second, Idameneo complains that the Directors have contravened s 181(1) of the Act in so far as cll 13.8 and 13.9 of the TID impose obligations on Symbion Health, specifically, the obligation for the payment by Symbion Health of a "break fee" to Healthscope (the Symbion Health Break Fee). Idameneo seeks an injunction restraining Symbion Health from paying, and the Directors from causing or procuring it to pay, the Symbion Health Break Fee. The basis of Idameneo's claim is that the entry by Symbion Health into the TID, in so far as it obliges Symbion Health to pay the Symbion Health Break Fee, was procured by the Directors exercising their powers otherwise than in good faith in the best interests of Symbion Health and for a proper purpose in accordance with s 181(1) of the Act. In February 2007, Healthscope and a private equity consortium controlled by Ironbridge Capital Pty Limited (Ironbridge) and Archer Capital Pty Limited (Archer) (the IAC Consortium) approached Symbion Health with a view to the merger of Symbion Health's Diagnostics Businesses with the businesses of Healthscope, and the IAC Consortium's purchase of the C & P Businesses. (More precisely, Symbion Health owns the Diagnostics Businesses through its wholly owned subsidiary, Symbion Healthcare Holdings Pty Limited (SH Holdings), and so, although I speak of the sale of the Diagnostics Businesses, the sale is actually of the shares in SH Holdings (the Sale Shares). ) The proposal at that time was that Healthscope would acquire all of the shares in Symbion Health pursuant to a scheme of arrangement under Pt 5.1 of the Act between Symbion Health and its members, followed by a sale by Symbion Health (which would, by then, have become a wholly owned subsidiary of Healthscope) of the C & P Businesses to the IAC Consortium for cash. The consideration moving from Healthscope to the shareholders in Symbion Health was to be a mixture of cash and shares in Healthscope. 8 Accordingly, Symbion Health and Healthscope entered into a Scheme Implementation Deed dated 29 May 2007 (SID) pursuant to which, subject to conditions precedent being satisfied, Healthscope agreed to acquire all of the issued shares in Symbion Health pursuant to a scheme of arrangement under Pt 5.1 of the Act (the Original Scheme). 9 By cl 8.6(a) of the SID, Symbion Health agreed to pay Healthscope a "Symbion Break Fee" of $27.86 million (or $20.97 million if a certain "C&P Break Fee" of $10.4 million as defined in the SID had been paid) in the event that any of the facts, matters and circumstances described in cl 8.6(a) should occur. Clause 8.7 of the SID also provided for payment by Healthscope of a "Healthscope Break Fee" of $27.86 million. Clause 8.6(e) provided expressly that neither the Symbion Break Fee nor the C&P Break Fee was payable merely by reason of the fact that the Original Scheme was not approved by the Symbion Health shareholders. 10 In fact, the Original Scheme was not approved by the Symbion Health shareholders. A meeting of the shareholders was held on 11 September 2007 to consider the Original Scheme but less than 75 percent of the votes cast were in favour of the scheme: see s 411(4)(a)(ii)(B) of the Act. Excluding the shares held by Idameneo, 99.2 percent of the shares voted at the meeting were voted in favour of the scheme and those shares were held by 81.1 percent of the shareholders who voted. Including the shares owned by Idameneo, 73.9 percent of the shares voted were voted in favour of the scheme. This percentage was, however, just below the 75 percent threshold required. 11 Once the Original Scheme failed to gain shareholder approval on 11 September 2007, cl 8.6(a) of the SID ceased to operate so that any obligation of Symbion Health to pay a break fee to Healthscope came to an end. 12 By the time of the meeting on 11 September 2007, thought had already been given by Symbion Health and Healthscope to an alternative proposal. In broad terms, this alternative proposal, as agreed to in the TID, involves two transactions: the "Diagnostics Transaction" and the "C & P Scheme" (together, the Transactions). The Diagnostics Transaction itself involves two elements: first, Symbion Health agrees to sell and Healthscope agrees to buy the Diagnostics Businesses (as noted earlier, actually the shares in SH Holdings) for consideration consisting of new Healthscope shares (the Consideration Shares) for each share in Symbion Health; and, secondly, the Symbion Health shareholders will be asked to approve of a reduction of the capital of Symbion Health (Capital Reduction) by way of the distribution (by Symbion Health) of the Consideration Shares to Symbion Health's shareholders in implementation of the Capital Reduction (Share Distribution Dividend). 13 After completion of the Diagnostics Transaction, Symbion Health would be left owning the C & P Businesses. By the C & P Scheme, assuming it to be approved by the requisite majority of Symbion Health shareholders, a nominee of the IAC Consortium, will acquire by way of scheme of arrangement all of the shares in Symbion Health for a cash consideration of approximately $1,148 million. 14 Both the Diagnostics Transaction and the C & P Scheme are subject to fulfilment of certain conditions precedent. The C & P Scheme is subject to implementation of the Diagnostics Transaction, but the Diagnostics Transaction is not conditional upon the implementation of the C & P Scheme. Accordingly, the Diagnostics Transaction may be implemented without the C & P Scheme being implemented, or both may be implemented, or neither may be implemented. 15 Another condition precedent to the implementation of the C & P Scheme is the passing of a resolution by Symbion Health shareholders that Symbion Health grant financial assistance in connection with the purchase of its shares by the nominee of the IAC Consortium. As outlined above at [4] and [12], by the TID, Symbion Health has agreed to sell, and Healthscope has agreed to buy, Symbion Health's Diagnostics Businesses in consideration of the issue of Healthscope shares to Symbion Health which Symbion Health undertakes to distribute to its shareholders by way of the Capital Reduction. 18 The TID provides for a "Symbion Health Break Fee" and a "Healthscope Break Fee". Each is an amount of $19.575 million. Accordingly, the TID provides for reciprocal break fees equal in amount, although, of course, the circumstances in which each break fee becomes payable are not identical. 19 Clauses 13.8, 13.9 and 13.11(a) provide for the Symbion Health Break Fee, while cll 13.8, 13.10 and 13.11(b) provide for the Healthscope Break Fee. 21 By cl 13.8(b) Healthscope and Symbion Health agree that they have both requested that provision be made for payment of the break fees referred to in cll 13.9 and 13.10 "without which neither party would have entered into [the TID]", and that the Boards of both companies believe that it is appropriate for the companies to agree to the payments referred to in cll 13.9 and 13.10 "in order to secure each other's participation". 23 Clause 13.9 contains the undertaking by Symbion Health to pay Healthscope the Symbion Health Break Fee. It identifies the circumstances in which the Symbion Health Break Fee is payable, but I need not refer to them, beyond stating that the Symbion Health Break Fee is not payable merely because the shareholders of Symbion Health fail to approve, inter alia, the relevant resolutions (cl 13.9(d)). Section 256C(2) , however, provides that if the reduction is a selective reduction, it must be approved by, relevantly, a resolution agreed to at a general meeting by all ordinary shareholders. 28 Idameneo's contention is that because of the special provision relating to overseas shareholders referred to below, the terms of the proposed reduction are not the same for each holder of ordinary shares. It contends that the terms of the reduction are different according to whether the holder of ordinary shares is an overseas resident to whom an in specie distribution by Symbion Health of shares in Healthscope is not permissible under the law of the shareholder's place of residence. (3) Any person who is involved in a company's contravention of subsection (1) contravenes this subsection. (4) A person commits an offence if they are involved in a company's contravention of section 256B and the involvement is dishonest. DSPA Completion takes place when Symbion Health transfers to Healthscope all of the shares in SH Holdings, and Healthscope issues the Consideration Shares to Symbion Health. As noted at [12] above, the Consideration Shares are the new Healthscope shares to be allotted and issued by Healthscope to Symbion Health as the consideration provided for in the Diagnostics Sale and Purchase Agreement for the sale by Symbion Health to Healthscope of the Diagnostics Businesses. The expression "Record Date" means 7.00 pm on the date which is five business days after the date of the meeting of the Symbion Health shareholders or such other date as is agreed between the parties. It is convenient to think of the Record Date as being 7 December 2007 (the date which is five business days after Friday 30 November 2007). 32 The expression "nominee" is a reference to the person nominated by Symbion Health as the person who is to take a transfer from Symbion Health of those Consideration Shares in respect of which Ineligible Overseas Shareholders would, but for their ineligibility, be entitled to become registered (see below). The expression "Share Distribution Dividend", referred to at [12] above, is defined in the TID to mean the payment of a special dividend by Symbion Health by the distribution in specie by Symbion Health to Participating Shareholders (the persons registered in the Symbion Health Share Register as the holder of Symbion shares as at the Record Date) "(or in the case of Ineligible Overseas Shareholders, to a nominee in accordance with clause 5.8)", of that number of Consideration Shares the directors of Symbion Health resolve to distribute. It is plain from the terms of the TID itself that the terms of the Capital Reduction are not "the same for each holder of ordinary shares". 7. It inevitably follows that there are differences in terms of the reduction, and, consequently, that the Capital Reduction is "selective" within the meaning of section 256B(2) of the Act. 38 First, Idameneo refers to Div 2 of Pt 2J.1 of the Act (ss 257A---257J), dealing with share buy-backs. Section 257B(2) provides that an "equal access scheme" is a scheme that satisfies the conditions set out in s 257B(2), one of which is that "the terms of all the offers are the same" (para (e)). The ASC will be able to exempt the company from the more stringent requirements for selective buy-backs. (Emphasis added. Idameneo submits that the contrast between s 256C and s 257D demonstrates that the legislature intended s 256C to operate strictly. 39 Secondly, Idameneo refers to s 619 of the Act which occurs in Pt 6.4 dealing with the formulation of takeover offers. Section 619(1) provides that all of the offers made under an off-market bid must be the same. Idameneo submits that s 619(3) shows that the legislature was well able to provide specially for overseas shareholders, and, not having done so in s 256C, must have intended that section to operate strictly. 40 I note that Symbion Health submits in response that s 619(3) was introduced into the Act with effect from 13 March 2000 and therefore cannot be resorted to as to the proper construction of s 256C. 41 Thirdly, Idameneo refers to s 611 of the Act, the table in which sets out acquisitions that are exempt from the prohibition in s 606. Item 10 in that table is concerned with rights issues, and one of the conditions of the Item 10 exemption is that "the terms of all the offers are the same" (para (e) of Item 10). Section 615, however, provides that Item 10 applies even though the conditions set out in that item are not satisfied in respect of foreign holders of the company's securities in the circumstances set out in the section --- circumstances which are the same, mutatis mutandis , as those set out in s 619(3) (see [39] above). 42 Again, Idameneo submits that s 615 demonstrates that the legislature was well able, when it wished to do so, to provide specially for overseas shareholders --- a step that it refrained from taking in the case of s 256C. 43 In its submissions, Symbion Health (I will refer to Symbion Health, but in fact its submissions were also those of the Directors) refers to the historical context and purposes of Pt 2J.1 of the Act. Symbion Health refers to the discussion by Santow J (as his Honour then was) in Re Tiger Investment Company Ltd [1999] NSWSC 1290 ; (1999) 33 ACSR 438 at [29] ---[31] and to para 10.15 of the Explanatory Memorandum that accompanied the Company Law Review Bill 1997 (Cth) (which introduced s 256C). Symbion Health submits that what emerges from the Explanatory Memorandum and his Honour's discussion of it is that reductions of capital "have the capacity to advantage some shareholders over others", and that the policy underlying the provisions is directed to ensuring that a dominant shareholder (or dominant shareholders) do not secure for themselves such an advantage. 44 Symbion Health submits that if the present capital reduction is properly to be characterised as a selective reduction, the result would be anomalous. It is clear, according to the submission, that the special provision for Ineligible Overseas Shareholders in the TID does no more than ensure that they receive the cash equivalent of their entitlement to Consideration Shares, in order to avoid a contravention of the law in certain foreign jurisdictions. To characterise the proposed reduction as a selective one would, from a practical perspective, almost entirely preclude any public company from effecting a distribution of capital by the distribution of shares. 45 Symbion Health further submits that Schedule 3 to the TID sets out, not one resolution, but two resolutions, only the first of which is the Capital Reduction Resolution (the Capital Reduction Resolution and the Ineligible Overseas Shareholders Resolution were set out as Resolution 1 and Resolution 2 respectively at [30] above). Symbion Health contends that the Capital Reduction Resolution conforms precisely to the terms of s 256B(2)(b) and (c). It does not distinguish between Australian and overseas shareholders (Symbion Health submits that while certain shareholders may be entitled to a greater or lesser number of Consideration Shares than a precise pro rata allocation, such differences are expressly permitted by s 256B(3) of the Act). 46 The Capital Reduction Resolution is not conditioned for its operation on the passing of the Ineligible Overseas Shareholder Resolution, although the operation of the latter is conditioned upon the passing of the former. The Capital Reduction Resolution gives all shareholders as at the Record Date an enforceable entitlement to the Consideration Shares, immediately upon that resolution taking effect: Symbion Health refers to Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) [1948] HCA 28 ; (1948) 77 CLR 143 at 157. 47 According to Symbion Health, the Ineligible Overseas Shareholders Resolution merely establishes a procedural mechanism which can operate only after Symbion has allocated Consideration Shares to Ineligible Overseas Shareholders on the same terms as it does to all other shareholders. 48 Symbion Health also relies on the judgment of Santow J in Re ETRADE Australia Ltd (1999) 30 ACSR 516 ( ETRADE ). It refers to the statement by his Honour (at 517) to the effect that in that case a distinction was to be drawn between the reduction of capital by the allocation of cash pro rata according to a certain formula on the one hand, and the application of the shareholders' cash entitlement (by reason of a scheme of arrangement before his Honour) in the purchase of shares previously acquired by the scheme company. 49 Finally, Symbion Health refers to the decision of Emmett J in Re AMP Ltd (2003) 48 ACSR 540 ( AMP ) in which his Honour appears to have had no difficulty in accepting that an equal reduction of capital was involved, even though cl 3.3 of the scheme before him was an "ineligible overseas shareholders" provision. 52 No director of Symbion Health has given evidence. Idameneo submits that this fact, particularly in the circumstances in which the Directors are defendants, should lead me to infer that nothing they could have said would have shown that they did take into account the matter mentioned. Idameneo cites Dilosa v Latec Finance Pty Limited (1966) 84 WN (Pt 1) (NSW) 557 at 582. 53 Idameneo reminds me that mere subjective good faith or a belief by the Directors, or any of them, that their purpose was proper is not sufficient to satisfy s 181(1) of the Act, at least where no reasonable director could have arrived at that state of mind. 54 In response, Symbion Health emphasises that the burden of proving a breach of the duty imposed by s 181(1) and the general law rests on Idameneo. 55 First, senior counsel for Symbion Health took me to numerous documents for the purpose of showing that the Symbion Health Break Fee was agreed to after a wide range of options regarding the future development of Symbion Health's business had been considered, and that the decision was taken to proceed with the revised transaction structure on the basis of professional advice. He points out that Idameneo does not challenge that decision: it attacks merely the inclusion of the undertaking in cl 13.9 to pay the Symbion Health Break Fee. Senior counsel submits that the evidence shows that Healthscope would not have proceeded with the transaction in the absence of the inclusion of a provision for a break fee payable by Symbion Health. It follows, according to the submission, that liability to pay the Symbion Health Break Fee was a necessary price to pay in order that the revised transaction proceed. 56 Secondly, Symbion Health submits that the evidence is overwhelming that the Directors did consider the Diagnostics Transaction, including the provision for the Symbion Health Break Fee, to be in the best interests of Symbion Health. 57 Thirdly, the undertaking to pay the Symbion Health Break Fee does not operate if a court or the Takeovers Panel should conclude that any part of the fee constitutes a breach of the Directors' statutory or fiduciary duties, or "unacceptable circumstances" within the meaning of the Act: cl 13.11(a) of the TID. 58 Fourthly, there is a reciprocal obligation imposed by cl 13.10 of the TID on Healthscope to pay the Healthscope Break Fee, equal in amount to the Symbion Health Break Fee. This fact, according to the submission, indicates that the Directors were acting prudently. 59 Fifthly, senior counsel refers to APN News & Media Limited (2007) 62 ACSR 400 in which I noted (at [44]---[45]) that break fees are a common feature of agreements between bidding and target companies in the context of mergers and takeovers. Senior counsel also referred to the Takeovers Panel's recognition of this fact in its Guidance Note 7: Lock-up Devices . The Symbion Health Break Fee of $19.575 million can be expected to be of the order of 0.74 percent to 0.78 percent of the total equity value of what is being sold --- below the "ceiling" of one percent of the total equity value of a target company suggested by the Takeovers Panel. 60 In any event, the question presently before the Court is not identical with that which might come before the Takeovers Panel or before a court under s 411 of the Act: the only question here is whether the Directors did not act in good faith in the best interests of Symbion Health or for a proper purpose. According to Symbion Health's submission, on the evidence it was well open to the Directors to think that it was in the best interests of Symbion Health that that company should enter into the TID incorporating the Symbion Health Break Fee provision. Symbion Health cites News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 ( News v ARL ) at 524---525 and Victoria v Sutton [1998] HCA 56 ; (1998) 195 CLR 291 at [77] per McHugh J. Symbion Health submits that Healthscope's rights against Symbion will be directly affected if Idameneo obtains the relief it seeks, because Healthscope will lose the benefit of the Symbion Health Break Fee provision. Similarly, Healthscope's rights will, according to Symbion Health, also be directly affected by the relief relating to the proposed Capital Reduction, since the effect of the relief sought in that respect is that approval of the Capital Reduction by all ordinary shareholders of Symbion Health would be required, and Idameneo has made it clear that it will oppose the capital reduction. Thus, the Diagnostics Transaction will be doomed to fail. 62 Idameneo replies, first, that Healthscope is aware of the proceeding and could have sought to be heard, and, secondly, that any "rights" that Healthscope might have in relation to the issues agitated in the proceeding are co-extensive with those of Symbion Health, so that they are sufficiently protected through and by Symbion Health's defence. In relation to the Capital Reduction issue, in particular, Idameneo submits that whatever rights Healthscope may have are limited by the Act, and compliance with the Act cannot be adverse to such "rights". 64 Idameneo had notice prior to the hearing that Symbion Health would rely on its failure to join Healthscope as a reason why none of the relief sought should be granted: see Defence filed on 6 November 2007 paras 36---38, carried forward into the Defence to the Further Amended Statement of Claim, paras 34---36. 65 In News v ARL 64 FCR 410, a Full Court of this Court addressed a submission that a proceeding at trial had been defectively constituted, and that orders made in it should be set aside, for lack of necessary parties. If made, the order will be set aside. Order 6, r 7 is not directed to that type of situation, but to cases where there is a curable defect, for example the misnaming of a party. (2) The Court may in any proceeding determine the issues or questions in dispute so far as they affect the rights and interests of the parties. The subrule must be read in the context in which it appears (set out above). It means only that a proceeding will not necessarily be defeated at the outset for non-joinder: further inquiry is necessary. It may be possible to determine the issues or questions in dispute only in so far as they affect the rights and interests of those parties who have been joined (r 7(2)). Again, an order may be made adding a necessary party (r 8(1)). 67 In Victoria v Sutton [1998] HCA 56 ; 195 CLR 291 McHugh J gave as a reason for setting aside orders of the Industrial Relations Court of Australia, a want of necessary parties. Because that is so, it is the invariable practice of the courts to require such a person to be joined as a party if there is an arguable possibility that he or she may be affected by the making of the order. A declaration that Symbion Health is not bound by the provision for payment of the Symbion Health Break Fee and an injunction directed against payment of it directly affect Symbion Health's contractual obligations of Symbion Health to Healthscope and Healthscope's contractual rights against Symbion Health. 70 It is not practicable to formulate the relief sought in respect of the Symbion Health Break Fee so that it will affect only the rights and interests of the parties to the proceeding and not those of Healthscope. Idameneo necessarily seeks relief that will affect the rights and interests of Healthscope too. 71 Because of the non-joinder of Healthscope, the relief that Idameneo seeks in respect of the Symbion Health Break Fee cannot be granted. 72 The result is the same in relation to the capital reduction aspect of the case. 73 By cl 3.1(f) of the TID Symbion Health agrees, relevantly, to effect the Capital Reduction, pay the Share Distribution Dividend, and comply with cl 5.3 in relation to the implementation of the Capital Reduction and the Share Distribution Dividend. By cl 5.1(c) of the TID, Symbion Health undertakes, relevantly, to implement the Capital Reduction and the Share Distribution Dividend. By cl 5.3(b) Symbion Health undertakes, relevantly, to effect the Capital Reduction and to effect payment of the Share Distribution Dividend. Importantly, the expression "Capital Reduction" is defined in cl 1.1 of the TID to mean an equal reduction of capital under s 256C of the Act. 74 The relief sought by Idameneo in relation to the Capital Reduction would prevent Symbion Health from performing the various contractual obligations it has undertaken to perform because it would prevent a capital reduction taking place as an equal reduction of capital under s 256C of the Act. This would be significant for Healthscope because if the reduction is not able to be effected as an equal reduction, it will not be able to be effected at all because the only other form of reduction is a selective one which will require the approval of all shareholders, and at least one shareholder, Idameneo, will not approve of it. 75 Because of the non-joinder of Healthscope, the relief that Idameneo seeks in respect of the Capital Reduction proposed cannot be granted. 76 I do not accept Idameneo's submission that the objection of want of parties is overcome by reason of the fact that Healthscope knows of this proceeding and of the relief being sought in it, and has not itself applied to be joined. 77 I accept that Healthscope knows of this proceeding and has a lively interest in it. Indeed, Healthscope has appeared before me on a motion to set aside a subpoena to produce documents served on it by Idameneo. I accept that Healthscope knows the issues that arise for decision in the proceeding. 78 The fact remains that it is incumbent on Idameneo as plaintiff to join all proper parties. Moreover, if Healthscope knows all about the proceeding, it must know that Symbion Health has raised the defence that none of the relief sought by Idameneo can be granted in the absence of Healthscope as a party. Desiring to see Idameneo's claim fail, Healthscope is entitled to rely on that defence succeeding. I see no reason why Healthscope should be required to apply to be joined in order to defeat Symbion Health's defence and thus aid Idameneo on its path to success. 79 Notwithstanding my conclusion that the proceeding is defectively constituted, I will address the merits of the two substantive issues that were argued. In my view, it is only the Capital Reduction Resolution that provides for a reduction of share capital, and the reduction for which that resolution provides is the same for each holder of ordinary shares. 81 The first reason for this conclusion relates to the distinctness of the two resolutions. 82 The Ineligible Overseas Shareholders Resolution assumes that the Capital Reduction Resolution has already been passed and that all of the holders of the ordinary shares at the Record Date are entitled pro rata to a distribution of the Consideration Shares. 83 Resolution 2 (the Ineligible Overseas Shareholders Resolution) is expressed to be "subject to and conditional upon the approval of Resolution 1 [the Capital Reduction Resolution]" but Resolution 1 is not expressed to be subject to and conditional upon approval of Resolution 2. If Resolution 2 were not passed, the Directors would have to take all necessary steps in order to make a lawful in specie distribution of the Consideration Shares to all overseas shareholders. This might, for example, necessitate the filing of a prospectus in the overseas jurisdiction. The evidence does not establish that there is any overseas jurisdiction in which there is an absolute prohibition on a resident's becoming a shareholder in Healthscope. 84 In ETRADE 30 ACSR 516, Santow J distinguished between a resolution for the reduction of capital which provided for a distribution of cash to the shareholders, and a logically subsequent application of their cash entitlements to the acquisition of shares in another company. Under the scheme of arrangement that was before the court, the shareholders in a company were required to acquire shares in another company. His Honour said that such cases concerned the question of "the precise point at which the reduction of capital ceased its work and an associated scheme of arrangement took over" (at 516). (There is also the usual provision for shareholders with foreign addresses having their pro rata allocation of shares allotted or transferred to a nominee for sale and the proceeds accounted for to the shareholder with the foreign address. ) However, that characterisation would not be an accurate statement of what in fact is brought about by the reduction of capital. The reduction of capital in legal terms allocates cash pro rata according to the formula in the documentation. Only after that, and solely by force of the scheme, that cash is required to be applied in purchasing ICM shares previously acquired by the scheme company, ETRADE Australia Ltd. The two steps are telescoped, so that the shareholder never physically receives the cash, but they remain conceptually distinct. In those circumstances, there is clearly enough what s 256B(2) defines as an "equal reduction". That is to say, the reduction relates only to ordinary shares including those created by virtue of the exercise of pre-existing options, it applies in proportion to the number of ordinary shares held and the "the terms of the reduction are the same for each holder of ordinary shares". Being thus an equal reduction, it may now be effected merely by an ordinary resolution. The Capital Reduction Resolution gives rise to an entitlement in each such shareholder to a certain number of the Consideration Shares, even if "the shareholder never physically receives" those Consideration Shares, to adopt the words of Santow J. The entitlement to a certain number of the Consideration Shares and the ultimate receipt of cash representing the proceeds of the sale of them "remain conceptually distinct" as his Honour said of the entitlement to cash and receipt of shares in ETRADE 30 ACSR 516. 86 Similarly, in AMP 48 ACSR 540, an application for orders under s 411 of the Act in respect of a scheme of arrangement, Emmett J had no difficulty in recognising the distinction between a "Capital Adjustment Resolution" which gave rise to a "Cancellation Entitlement" in the Scheme Shareholders on the one hand, and the application of that Cancellation Entitlement by the Scheme company as consideration for the issue to the Scheme Shareholders of an appropriate number of shares in a different company. While there was no argument on the question, the reduction was recognised by his Honour as an equal reduction distinct from the logically subsequent application of the Cancellation Entitlement of each Scheme Shareholder (see [6]---[8]). In that case a distinction was drawn in the Scheme conditions, appropriately in my view, between the Capital Adjustment Resolution which effected the reduction of share capital on the one hand, and "Scheme mechanics" that included both the application of the Cancellation Entitlement and the treatment of ineligible overseas shareholders on the other hand. 87 A second submission made by Symbion Health, outlined above at [43], is that, independently of the formal distinctness of the two resolutions, the proposed reduction is an equal reduction. The submission is that para (c) of s 256B(2) ("the terms of the reduction are the same for each holder of ordinary shares") is to be construed in the light of the purpose of the provision. That purpose is stated in s 256A as being "to ensure fairness between a company's shareholders". Symbion Health refers to the Explanatory Memorandum to the Company Law Review Bill 1997 (Cth) which introduced s 256C. Where a selective reduction is approved by a special resolution, a vote may not be cast in favour of the resolution by a person who is to receive consideration as part of the reduction, or whose liability in respect of amounts unpaid on shares is to be reduced. ... This is intended to ensure that the resolution's approval reflects the wishes of the company's disinterested shareholders and corresponds to the approach taken in section 257D of the Bill in relation to shareholder approval for a selective share buy-back. (Emphasis added. I do not think that para (c) of s 256B(2) is concerned with characteristics peculiar to a particular shareholder (in this case the operation of the laws of the place of residence of a particular overseas shareholder) that have nothing to do with equality of treatment of shareholders by the resolution or by its operation on their rights under the constitution of the company. There is no suggestion that the Ineligible Overseas Shareholders provision has "the capacity to advantage some shareholders over others" in the relevant sense of "aptness to advantage some shareholders over others". 89 The law, whether Australian or foreign, may have a wide and diverse range of impacts on shareholders in an Australian company who reside overseas. Revenue laws come to mind. The effect of those laws may be that the ultimate net effect of a distribution will be different as between Australian resident shareholders and a particular overseas resident shareholder. A reduction of capital can be an equal reduction notwithstanding the operation of such laws on the special position of the overseas shareholders. Indeed, tax considerations may be seen to produce differential ultimate net effects of a capital reduction even as between particular Australian resident shareholders, but it could not be suggested that the reduction is made a selective one on that account. 90 The presently contemplated overseas laws preventing in specie distributions are also laws of general application that cause a procedural difficulty for overseas resident shareholders in realising their entitlements. I do not think that a procedure of the kind expressed in the Ineligible Overseas Shareholders Resolution is the concern of para (c) of s 256B(2): such a procedure is designed to facilitate equality of treatment of shareholders rather than to prevent it. 91 I am not persuaded to a different view from that expressed above by reference to the other provisions of the Act which senior counsel for Idameneo identified. To my mind, it is clear that in the context of the Capital Reduction Resolution and the Ineligible Overseas Shareholders Resolution ss 256B and 256C have the operation just outlined. 92 A third reason why Idameneo should not be granted the relief that it seeks in respect of the Capital Reduction is that it is not certain that there will be any Ineligible Overseas Shareholders. I set out the definition of "Ineligible Overseas Shareholders" in the TID at [34] above. The identity of any Ineligible Overseas Shareholders is to be determined as at the Record Date (7 December 2007), and it cannot be known until that date arrives which, if any, shareholders in Symbion Health will be shown in its Share Register as having overseas addresses. Moreover, identification of those of them who fall within the definition of "Ineligible Overseas Shareholders" will depend upon a process of ascertainment of the laws of the overseas country of residence relating to the distribution in specie of Healthscope shares to the overseas shareholder and, where such laws permit such a distribution after compliance with conditions, whether Healthscope in its sole discretion regards the conditions as acceptable. 93 The evidence shows that as at 13 November 2007 there were 43 foreign jurisdictions in which 266 Ineligible Overseas Shareholders, as the term is defined in the TID, resided. The shares held by those shareholders comprised 0.14 percent of the issued share capital of Symbion Health. Inquiries made as to the positions in those countries revealed that in the case of 34 of them (where 106 shareholders resided, holding 0.03 percent of Symbion Health's issued share capital), the envisaged in specie distribution is permissible unconditionally. 94 In the case of two of the foreign jurisdictions where less than 20 Symbion Health shareholders resided (representing less than 0.006 percent of Symbion Health's shareholders), approval of the in specie distribution would have to be obtained from the appointed regulator, and, in addition, Symbion Health would have to provide a prospectus, or, if the appointed regulator granted appropriate relief, a prospectus-like document, to the regulator for registration. 95 In a further foreign jurisdiction where there were less than 150 Symbion Health shareholders (representing less than 0.1 percent of Symbion Health's share capital) certain additional regulatory requirements would need to be met before the in specie distribution could be made. 96 Finally, in six foreign jurisdictions where 34 Symbion Health shareholders resided (representing 0.02 percent of Symbion Health's share capital) there had been no response as at 15 November 2007, the date of the hearing. 97 The affidavit evidence to which I have referred was read, not for the purpose of proving foreign law, but for the purposes of demonstrating that it should not be accepted that there will necessarily be any Ineligible Overseas Shareholders as at 7 December 2007. 98 The appropriate time for the seeking of relief is after the Record Date (7 December 2007). Until then, the application is premature in so far as it relates to the Capital Reduction Resolution. 99 In conclusion, the TID provides for an equal reduction of capital. In the alternative, it would be premature to grant any relief in respect of the Capital Reduction proposed because it cannot yet be known whether there will be any Ineligible Overseas Shareholders. 100 I turn now to an issue that arose late in the hearing. It emerged that the form of the Capital Reduction Resolution expressed in the notice of meeting that was Annexure E to the Explanatory Memorandum was different from that for which the TID provided as Resolution 1 in Schedule 3 (the latter appears at [30] above). As noted earlier, the amended originating process seeks relief in respect of the latter and all that I have said above relates to it. 101 Whereas the form of the Capital Reduction Resolution for which the TID provides in Resolution 1 in Schedule 3 uses the expression "DSPA Completion (as defined in the Diagnostics Transaction Implementation Deed)", the form of resolution in the notice of general meeting uses the expression "the completion of the Diagnostics Transaction". The significance of the distinction is this: the expression "Diagnostics Transaction" is defined in the Explanatory Memorandum in such a way as to include the Capital Reduction itself. Thus, the form of resolution as stated in the notice of the general meeting was circular, providing for approval of a capital reduction which was subject to, inter alia , the same capital reduction having taken place. 102 Subsequent to the hearing on 15 November 2007, Symbion Health dispatched to its shareholders a letter of that date enclosing a substituted page 390 of the Explanatory Memorandum which was the first page of Annexure E, the notice of the Symbion Health Diagnostics General Meeting. The substituted page 390 amended the original version of that page by deleting the expression "the completion of the Diagnostics Transaction" and substituting for it "DSPA Completion (as defined in the Diagnostics Transaction Implementation Deed)". That is to say, the replacement page 390 brings the form of Capital Reduction Resolution in the notice of the Symbion Health Diagnostics General Meeting into line with that for which the TID provides in Resolution 1 in Schedule 3. 103 By consent of the parties, I made an order in chambers admitting into evidence the notice to shareholders dated 15 November 2007 and gave directions for the making of written submissions in relation to it. 104 In supplementary written submissions dated 19 November 2007, Idameneo submits that the substituted page 390 is itself wrong and that the reference to "Diagnostics Transaction" in the proposed Capital Reduction Resolution in the notice of meeting had been correct after all. 105 Idameneo's supplementary submissions referred both to particular parts of the Explanatory Memorandum and to that document as a whole for the purpose of establishing that the original form of the Capital Reduction Resolution in the notice of meeting was in conformity with it. 106 I accept Idameneo's submission (in its written supplementary submissions dated 19 November 2007) that a purpose of the Explanatory Memorandum was to enable shareholders to decide whether to approve of the Diagnostics Transaction as a whole. ) I accept Symbion Health's submission (in its written supplementary submissions dated 20 November 2007) that the Diagnostics Transaction comprises several transactions, of which that found in the Diagnostics Sale and Purchase Agreement is but one. Signing and completion of the Diagnostics Sale and Purchase Agreement is to occur simultaneously on satisfaction or waiver of the conditions precedent set out in the Diagnostics Transaction Implementation Deed. The Capital Reduction and the distribution by Symbion Health of those shares to its shareholders are logically and chronologically subsequent to DSPA Completion. 109 Idameneo points out that "Completion" is defined in cl 1.1 of the TID to mean "completion of the Diagnostics Transaction ...", the same words as were included in the original form of the Capital Reduction Resolution found in the notice of general meeting (the original form of page 390). Idameneo refers to the obligations that cll 5.3(b), 5.4 and 5.6 of the TID impose on Healthscope and Symbion Health "at Completion" and "in respect of Completion". However, I do not think that the interdependence of Completion and DSPA Completion that these provisions recognise detracts from the fact (expressly recognised in cll 5.3(b) and 5.6(b) of the TID) that the acts effecting the Capital Reduction, and the payment of the Share Distribution Dividend in the form of the distribution of the Consideration Shares, all by Symbion Health, are to take place "immediately after DSPA Completion and such that the Consideration Shares can be registered by Healthscope (or the Healthscope share registry) in the names of the Participating Shareholders and the nominee immediately after DSPA Completion " (emphasis added) (see concluding words of cl 5.3(b) of the TID). 110 DSPA Completion and Completion will take place on the same day. Clause 5.6(b) of the TID provides that all actions required to be performed in respect of Completion "are to be taken to have occurred simultaneously at DSPA Completion and Completion ( other than actions contemplated by clause 5.3(b), which are taken to have occurred immediately after the Consideration Shares are issued to Symbion Health )" (emphasis added). The words in parentheses emphasised by me show that the Capital Reduction, and the payment of the Share Distribution Dividend in the form of the distribution of the Consideration Shares to the Participating Shareholders and the nominee for the Ineligible Overseas Shareholders, are to be taken to have occurred after the Consideration Shares are issued to Symbion Health. One might ask how it could be otherwise. 111 In summary, while "Completion" can be seen to refer to completion of more than one transaction on the one day and to include DSPA Completion, particular aspects of Completion are treated specially, namely, the Capital Reduction and the payment of the Share Distribution Dividend in the form of the distribution of the Consideration Shares, which are to take place after (albeit immediately after) the Consideration Shares are issued by Healthscope to Symbion Health, that is to say, after (albeit it immediately after) DSPA Completion. 112 Since the Capital Reduction is part of the Diagnostics Transaction, the original form of the proposed Capital Reduction Resolution in the notice of meeting which made shareholder approval of the Capital Reduction subject to and conditional upon "Completion" was circular and nonsensical. The provisions of the TID to which I have referred demonstrate that the intention was that the shareholder approval of the Capital Reduction be subject to and conditional upon DSPA Completion alone. 114 There is a well-known line of authority to the general effect that it is the province of directors, not the courts, to identify where the interests of a company lie, and that the courts do not exercise a supervisory function over the business judgments of directors: see, for example, Harlowe's Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Co NL [1968] HCA 37 ; (1968) 121 CLR 483 at 493; Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821 (PC) at 832. Unlike a company's power to issue shares with which the cases just cited were concerned, the power to agree to the inclusion of a break fee provision in a complex contract of the TID kind, being sui generis , is even less apt to being circumscribed by any more detailed rules than the general duty expressed in s 181(1). 115 Idameneo's complaint is not that no reasonable board of directors could have come to the conclusion that it was in the best interests of Symbion Health that it enter into the TID: rather, the complaint relates to one provision in the TID, the Symbion Health Break Fee provision. But in the circumstances of this case, such a severance of the provision is not possible in my opinion. 116 As noted at [6] above, Idameneo seeks a declaration that Symbion Health is not bound by the TID "insofar as it contains clauses 13.8 to 13.9", and an injunction restraining Symbion Health from paying the Symbion Health Break Fee. The basis of the claim for this relief is that the Directors contravened s 181(1) of the Act by causing Symbion Health to enter into the TID "insofar as it contains clauses 13.8 and 13.9". 117 The limited nature of Idameneo's complaint and of the relief it seeks highlights a difficulty in its claim. The TID is composed of many provisions. It may be that the Symbion Health Break Fee provision is "outweighed" by other provisions that are to the advantage of the Symbion Health shareholders. Considered in isolation, the Symbion Health Break Fee provision is disadvantageous to Symbion Health but only in the same sense that, taken alone, a purchaser's promise to pay a purchase price is to the disadvantage of the purchaser. But neither the promise to pay the Symbion Health Break Fee nor the promise to pay a purchase price can be considered in isolation. The promise to pay the Symbion Health Break Fee was part of the price that Symbion Health agreed to pay for the benefits it gained under the TID. 118 The present point is perhaps illustrated by cl 13.8 itself. That clause gives identical reasons for the inclusion of both the Symbion Health Break Fee provision in cl 13.9 and the Healthscope Break Fee provision in cl 13.10, yet Idameneo attacks only Symbion Health's promise in cl 13.9 to pay the Symbion Health Break Fee, without adverting to Healthscope's reciprocal promise in cl 13.10 to pay the Healthscope Break Fee. 119 Idameneo's attack on the Symbion Health Break Fee is not based on the amount of it by reference to some general principle, such as that it is oppressive to Symbion Health shareholders, or on the circumstances in which it is to become payable. As noted at [59] above, the Symbion Health Break Fee is less than the one percent referred to in Guidance Note 7: Lock-up Devices of the Takeovers Panel. It is not payable merely if Symbion Health's shareholders do not pass the ordinary resolution proposed. 120 Symbion Health's complaint is that, as cl 13.8 shows, the amount of the Symbion Health Break Fee has been arrived at on the basis that it is to compensate Healthscope for, inter alia, costs it incurred in pursuing the Original Scheme. The argument seems to be that the Directors should have insisted that Healthscope leave those costs out of account and that if they had done so, the amount of the Symbion Health Break Fee would have been less. 121 It is not known, however, that Healthscope would have been willing to enter into the TID at all if it had not contained provision for a Symbion Health Break Fee of $19.575 million, or if it contained a break fee provision for a lesser amount. Moreover, I infer that if the Directors had told Healthscope that it must exclude from consideration its sunk costs on the Original Scheme, Healthscope would at least have insisted that Symbion Health do likewise. Accordingly, assuming that Healthscope remained interested in negotiating out or down the Symbion Health Break Fee, Symbion Health would have been required to negotiate out or down the Healthscope Break Fee. Perhaps they would have been reduced by and to the same amount. There are other possibilities: Healthscope may have been willing to renegotiate the Symbion Health Break Fee provision provided other terms of the TID were renegotiated to its advantage and to Symbion Health's disadvantage. 122 Having regard to the unknowable consequences of a negotiating out or down of the Symbion Health Break Fee provision, would such a course have proved to be in the best interests of Symbion Health? Would it have proved to be in the best interests of Symbion Health to retain the TID as it is? These were questions for the Directors. 123 In summary, Idameneo does not establish that the Directors breached their duty by causing Symbion Health to enter into the TID merely by pointing to the fact that, according to the TID, Healthscope arrived at the amount of the Symbion Health Break Fee by including Healthscope's sunk costs on the Original Scheme. As noted at [21] above, according to cl 13.8(b) of the same TID, Healthscope would not have entered into the TID if it had not contained the Symbion Health Break Fee provision. 124 Senior counsel for Symbion Health took me to documentary evidence showing that the question of the Symbion Health Break Fee was considered by the Directors over a lengthy period and that they were advised by merchant bankers UBS Warburg. For example, at a meeting of the Board on 22 May 2007, there was discussion of the circumstances in which break fees would be payable by Symbion Health and by Healthscope respectively. 125 I accept that the documentary material demonstrates that Symbion Health's Board of Directors did give consideration to the question of the Symbion Health Break Fee and the Healthscope Break Fee over a long period and had the benefit of external independent advice in relation to the matter. This evidence does not enable me to make more detailed findings as to the course of consideration of break fees by the Board, but it is some supportive evidence for my conclusion that Idameneo has not demonstrated a breach of duty on the part of the Directors in the present respect. 126 Symbion Health's failure to call the Directors to give evidence does not fill the gap in Idameneo's case: Idameneo has not placed before the Court any evidence of a breach of directors' duties that calls for responsive testimony. I certify that the preceding one hundred and twenty-seven (127) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | reduction of capital whether an equal reduction of capital or a selective reduction of capital two proposed resolutions, one for the reduction of capital and the other providing specially for payment of the proceeds of sale of transferred shares to overseas shareholders who were not entitled under the law of their countries to take an in specie distribution of shares held by the company in another company whether the second resolution prevented the first from being an equal reduction of capital to be approved of by an ordinary resolution of shareholders. held : the proposed reduction of capital was an equal reduction of capital. directors' duties merger agreement directors agreed to the inclusion of a "break fee" provision in the transaction implementation deed (tid) earlier failed scheme for which the scheme implementation deed had provided for break fees that had not become payable because the scheme had not been supported by the statutory majorities of shareholders revised proposal tid provided for sale of particular businesses in return for shares in purchaser company followed by reduction of capital of seller, to be implemented by distribution of shares in specie to its shareholders tid provided for reciprocal break fees identical in amount amounts of break fees arrived at by including "sunk costs" on the failed scheme whether, by reason of this fact, tid had been entered into in breach of the directors' duty to act in good faith in the best interests of the corporation under s 181(1) of the corporations act 2001 (cth). held : the suggested contravention of s 181(1) of the corporations act 2001 (cth) was not established on the evidence. parties merger agreement member of one corporate party to the merger agreement seeking declarations and injunctions in respect of that party's obligations pursuant to merger agreement other party to merger agreement not a party to proceeding. held : other party to merger agreement a necessary party to proceeding. corporations corporations practice and procedure |
Within 14 days of the service of this Order or within 14 days of Thursday, 4 May 2006 whichever is later, the Second Respondent shall make and swear to the best of the Second Respondent's knowledge, skill and ability and file and serve an affidavit describing full details of all accounts with any bank, financial institution or other party whether in the name of the Second Respondent or his name together with others or accounts in the name of a company of which the Second Respondent is or has been a director from 1 April 2001 up to and including the date of this Order, including the name of the institution, the full account number, the style and designation of the account and any other details which enable the account to be properly identified for the period 1 April 2001 up to and including the date of this Order. Within 14 days of the service of this Order or within 14 days of Thursday, 4 May 2006 whichever is later, the Second Respondent shall make and swear to the best of the Second Respondent's knowledge, skill and ability and file and serve an affidavit describing full details of the nature, extent and approximate value of the Second Respondent's assets and liabilities whether within or outside Australia specifying whether those assets are held alone, jointly or in conjunction with others or held in the name of a nominee or otherwise held on behalf of the Second Respondent. I swear this Affidavit in response to Paragraphs 7 and 9 of the Orders of this Honourable Court made 28th April 2006. I do so upon the ground that I claim the privilege against self incrimination. In so doing, I refer, amongst other things, to the Amended Statement of Claim filed on the 14th July 2005 and the reasons of Greenwood J delivered on the 3rd May 2006. In answer to Paragraph 9 of the Orders I provide details to two accounts, but in doing so I do not generally waive my right to assert privilege against self incrimination. 6 In comprehensive reasons for judgment for the orders made by Greenwood J on 28 April and published on 3 May 2006, [2006] FCA 495 , extending to some 55 pages and 152 paragraphs, his Honour outlined the affidavit evidence that was before him and which led him to the making of the asset preservation orders, including the orders in question. I also accept that the monies were transferred for the purpose of the agreement of 30 March 2001 and were to be applied for investment purposes on the terms and conditions of that agreement. Moreover, I accept that the Applicant has not received any part of the US$2 million and no explanation has been given either orally or in correspondence or by affidavit in these proceedings as to the location of the funds, the nature of the investment, the entity holding the funds, whether the funds have been invested at all or any explanation of any dealing in relation to the funds. The first entry on 1 March 2001 is the receipt of US$1 million from Mr Roger de Saint Quentin... The account shows a credit entry on 4 April of US$2,000,100.00 described as "One Our Clients". The account shows two debit entries on the following day, 5 April 2001. The first is a withdrawal of US$250,000.00. The second is an amount of US$1,760,000.00. The description field for the second account contains the letters CPFS. The document does not bear an account number. CPFS may be an acronym for Commercial and Primary Financial Services Pty Ltd ("CPFSP/L"). Document "A19" is a bank statement for that company for an account at the Bank of Queensland Ltd Account BSB 124-001 --- USD Foreign Currency Account 170415, for the period 1 June 2001 to 1 July 2001. On 6 June 2001, a total of US$250,000.00 was transferred to two accounts at the Bank of Queensland Ltd, 93-170415 and 90-170415. On 19 June 2001, US$110,000.00 was transferred to Account 94-170415. On 1 July 2001, the closing balance of the account was US$725,000.00. Interest on the account of US$3,774.86 was credited to Account 90-170415. Nor were the documents relating to the Bank of Queensland Accounts 90-170415, 93-170415 and 94-170415 produced to the solicitors on execution of the Anton Pillar order. However, the statements that were produced for CPFSP/L show that monies were transferred from the CPFSP/L account to each of Accounts 90, 93 and 94 --- 170415. The date of the credit in the First Respondent's account is close to the instruction date by Mr Severin to the Applicant's bank. If acted upon reasonably promptly, the international electronic transfer to the First Respondent's account is likely to have occurred on or about 4 April. I am also prepared to infer for interlocutory purposes that the substantial transfer on 5 April to "CPFS" was a transfer to the USD account at the Bank of Queensland of CPFSP/L. Further, I infer for interlocutory purposes that withdrawal of US$250,000.00 occurred with the consent and approval of Mr Wallader. I infer from the facts of the conduct alleged against Mr Wallader that he has dealt with the Applicant's funds so as to obfuscate the ultimate transfer or use of the funds. 11 The affidavit of Mr Wallader speaks only of the shareholdings there specified. The reference in his Honour's reasons for judgment, particularly at par 98 and following, to the company, Commercial and Primary Financial Services Pty Ltd, is important. As par 101 set out above shows, there were, at about the appropriate time of the transfer from the applicant to the Bank of Queensland account, references to a number of bank accounts in addition to those which are referred to in Mr Wallader's affidavit. Nor were documents relating to the Bank of Queensland accounts 90-170415, 93-170415 and 94-170415. Whether relevant information concerning the disposition of the funds advanced might be revealed in the banking records of some or all of the companies is unknown. A substantial proportion of the funds were transferred to another company controlled by Mr and Mrs Wallader. Mr Wallader chooses not to admit the receipt of the funds and has elected not to swear any affidavit disclosing the treatment of the funds. In the period since the receipt of the funds, the Applicant has expended significant sums in improving assets under his control or under the control of proprietary entities of which he is a director. Although there is no evidence that the actual funds transferred on or about 30 March to the First Respondent have been applied in a particular way (apart from the transfer of substantial funds to the account of CPFSP/L and the withdrawal of $US250,000.00) or to a particular asset, the inference is open that Mr Wallader has applied the moneys to his own advantage or to the advantage of himself and his wife whether directy or by the vehicle of companies controlled by him. 17 I prefer the view of Meagher JA. In this way the privilege is preserved. I am further of opinion that a defendant against whom an order of disclosure of assets has been made whose privilege against self-incrimination will be infringed by compliance with the order according to its terms is entitled to have the order set aside: Crest Homes Plc v Marks (at 855); cf Australian Competition and Consumer Commission v McPhee & Son (Aust) Pty Ltd [No 2] (1997) 77 FCR 217. In considering these matters, it is necessary to remember that the privilege protects not only information which is directly self-incriminatory but also information which might indicate a line of inquiry which might produce incriminatory information: Sorby v Commonwealth [1983] HCA 10 ; (1983) 152 CLR 281 at 291-292. 21 The order made by Greenwood J in the present case is not one compliance with which will infringe Mr Wallader's privilege against self-incrimination. It is an order which might involve Mr Wallader in providing material which might incriminate him in the commission of an offence, but, in my judgment, he is entitled, in answering that order, to claim the privilege against self-incrimination, as he has done. In my opinion, none of that material indicates that the privilege against self-incrimination, in respect of answering the obligations imposed by par 7 of Greenwood Js orders, has been waived. Thus, in Istel Ltd v Tully [1993] AC 45 at 53, 55, Lord Templeman described the privilege exercisable in civil proceedings as "an archaic and unjustifiable survival from the past" and concluded that "[t]here is no reason why the privilege should be blatantly exploited to deprive ... plaintiffs of their civil rights and remedies if the privilege is not necessary to protect [the defendant]". But the court will not allow the defendant the benefit of the privilege when to do so would enable him to take advantage of his own fraud or other wrong-doing, so as to defeat the just claims of the plaintiff in a civil suit. The party against whom such an order is made is left to object to producing particular documents or providing particular information on the ground that such production or provision may tend to expose him to a penalty (see Mayor of County Borough of Derby v Derbyshire City Council [1891] AC at p 553. If circumstances arose where the only means of protecting the right against self-incrimination and self-penalization were to excuse a party in limine from discovery or interrogatories, such circumstances should, in my view, be seen as exceptional and as justifying a departure from the general rule. Further, a respondent in a proceeding that is solely for the recovery of a pecuniary penalty should not be ordered to disclose information or produce documents that may assist in establishing his or her liability to the penalty: Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Livestock Corporation (1979) 42 FLR 208; Pyneboard Pty Ltd v Trade Practices Commission [1983] HCA 9 ; (1983) 152 CLR 328 at 336. The privilege can only be abrogated by statute: Reid v Howard [1995] HCA 40 ; (1995) 184 CLR 1. As the privilege is not subject to judge-made exceptions or qualifications, it cannot be abridged or undermined in consequence of a Court accepting undertakings proffered by the applicant designed to avoid or diminish the danger that provision of the information would expose the respondent to a penalty. The provisional disclosure of information may set in train a process that may lead to the imposition of a penalty or may lead to the discovery of real evidence in support of the imposition of a penalty: Reid v Howard (at 6). 29 It is plain, too, having regard to the material set out from Greenwood Js reasons, that there are reasonable grounds for thinking that disclosure of the information sought by par 7 may tend to incriminate Mr Wallader, in particular in respect of misappropriation. Nonetheless, and importantly, it may be possible for the applicant to secure that information by avenues other than by compulsion from Mr Wallader. There are procedures by discovery and, in particular third party discovery, which may be highly relevant to the transactions which occurred about the relevant time. 30 The final matter relates, in this regard, to s 128 of the Evidence Act 1995 (Cth). However, this does not apply to a criminal proceeding in respect of the falsity of the evidence. Concerning s 128(2) , I am of the view that there are reasonable grounds for that objection. 32 An oral application to the court was made late in the course of submissions on the Motion by Mr Catlin, counsel for the applicant in the principal proceedings, to require the witness to give evidence under s 128(5) , on the basis that the interests of justice require that the witness give the evidence, I am not presently satisfied that the interests of justice require the disclosure by Mr Wallader of information which may tend to incriminate him. 33 I am not satisfied that the information is not otherwise available. Further, there is the fundamental distaste of compulsion to disclose information that may be relevant to the commission of criminal offences. 34 Essentially, what the applicant in the principal proceedings is seeking is that by orders in aid of asset preservation, probative evidence in the civil claim will be compulsorily obtained. No doubt, Mr Wallader, at the trial, can be asked questions concerning what happened to the $2 million. It would be open to him, in respect of some of those questions to claim privilege, but, as Greenwood J noted, failure to account for what happened to the money would permit inferences to be drawn. I make it plain that no adverse inference can be drawn from the claiming of privilege on the grounds of self-incrimination; however, a failure to disclose what in fact occurred in relation to the money may be a very different matter. 35 I am not persuaded that this subsection does not apply to a witness refusing to make an affidavit of the kind required by Greenwood J. In my view, the maker of an affidavit is a 'witness' within the meaning of s 128(5). The section also is set in the background of a witness giving evidence with the Court having certain discretions as to whether in all the circumstances it should require the witness to answer a possibly incriminating question. This scenario suggests that it is applicable only where the witness is in Court. It is, in my view, capable of applying to affidavit evidence. 40 More importantly, I am not satisfied that the interests of justice presently require the second respondent to give this evidence, which is in the nature really of a compulsory discovery, particularly where that information might be able to be obtained by third party discovery. 41 The present application seeking to invoke s 128(5) is not directed to seeing that the asset preservation order is efficacious. It really is seeking substantive disclosure in the principal proceedings. I can understand the concern of the applicant to find out where the money went, but in my opinion, the procedure under s 128(5) has not been shown to be the appropriate way to obtain the information. 42 For the above reasons, all I propose to do is to declare that the disclosure order, par 7, made by Greenwood J on 28 April did not abrogate or modify the privilege against self-incrimination, and Mr Wallader is still able to claim that privilege in an affidavit. 43 The costs of and incidental to the Notice of Motion of the second respondent in the principal proceedings should be his costs in those proceedings. | claim for privilege against self-incrimination compliance with an asset preservation order whether reasonable grounds for witness objecting to giving evidence whether interests of justice require the disclosure of information that will tend to incriminate the witness application of s 128(5) evidence act 1995 (cth) to affidavit evidence practice and procedure |
2 The application is made pursuant to O 52 r 17 which empowers the Court to order a stay of execution under a judgment under appeal. There are two competing principles on this application. First, there is the principle that a person ought not to be deprived of the fruits of a judgment whilst the losing party appeals against that judgment. There is the further principle where a party who has an arguable right of appeal ought not to have the appeal rendered nugatory by the successful party at trial being allowed to dissipate the fruits of the judgment. That second principle was considered by Brennan J in Jennings Construction Limited v Burgundy Royale Investments Pty Limited (1986) 69 ALR 265. The judgment was handed down by Mansfield J on 4 December 2006 and on that occasion at the behest of the applicant, his Honour stayed the order until yesterday. Yesterday the applicant lodged his notice of appeal and made this application. The application could not be heard last night and has been heard during today. The moneys still remain in Minter Ellison's Trust Account. 3 The applicant seeks an order restraining the joint receivers, managers and liquidators from paying out those moneys to themselves pending the hearing of the appeal. 4 It is likely, I think, that the appeal could not be heard before May of next year. 5 The proceeding concerns a claim by the applicant that he advanced $750,000 in two separate loans to Mr Mercorella. He claims that those loans were advanced in March and April of 2004 and that Mr Mercorella agreed to repay the loans together with interest on each of the loans at the rate of $20,000 per month. The interest that was payable under each of the loans seems to have no relationship to any interest rate because it is asserted that, in relation to each of the loans, Mr Mercorella was to pay $20,000 per month by way of interest apparently, notwithstanding whatever the amount of the principal then outstanding. The interest rate is in the order of 60 per cent per annum. 6 The joint receivers and managers and liquidators were appointed on 8 August 2005. On 19 July 2005 Mr Sobey had registered a caveat over a property at 22 Jerningham Street, North Adelaide claiming to be entitled to an equitable interest in the property by reason of these loans and a loan agreement said to be dated 19 July 2005. 7 Shortly after their appointment, the joint receivers and managers and liquidators wrote to Mr Sobey on 12 August 2005 requesting him to provide evidence of the transaction so that they might determine whether or not he was entitled to claim the security which was said to arise out of the loan agreement. In fact, Mr Sobey and his solicitors did not reply to that letter and further requests were made. On 13 December Mr Sobey's solicitors produced documentation which they said evidenced the security over the property. The documentation was an undated loan agreement and a memorandum of mortgage. 8 At the same time, they produced a draft application and a draft affidavit which they said would be issued on behalf of Mr Sobey to establish his entitlement to the security over the property. That application was never issued nor was the affidavit ever sworn. Instead, after some considerable delay on the part of the applicant, on 23 August 2006 the joint receivers and managers and liquidators of themselves brought an interlocutory application for directions in relation to Mr Sobey's claim. The matter was managed by Mansfield J, who was also the trial Judge. He gave certain directions with which Mr Sobey did not comply. 9 As a result of Mr Sobey's failure to comply with Mansfield J's directions, a hearing date which had been set for 6 November was vacated and a further hearing date was arranged for 24 November. On 24 November, Mr Sobey's counsel sought an adjournment of the proceeding so that he might bring in evidence from a psychologist to the effect that Mr Sobey was not in a position to conduct the proceedings. He relied for his application on an affidavit of Mr Sobey's solicitor sworn on 21 November 2006 to which was annexed a report dated 20 November 2006 of Dr Wright, who is an occupational physician treating Mr Sobey. 10 The report and other medical evidence shows that Mr Sobey underwent surgery in August 2006 and complications developed. One of those complications was a pulmonary embolism and that gave rise to a chest infection which required drainage. Dr Wright was specifically asked whether Mr Sobey could give detailed instructions in relation to the action. He said that Mr Sobey was not medically fit to provide detailed instructions. He passed no opinion on whether or not he could give general instructions in relation to the matter. 11 His report does indicate that Mr Sobey would not be medically fit to undergo cross-examination of half a day. The trial Judge refused the application for the adjournment and proceeded to hear the matter. In refusing the adjournment his Honour had regard to the history and the delay by Mr Sobey in the institution of any proceedings and in relation to Mr Sobey's refusal or neglect in complying with any directions. He was not satisfied that Mr Sobey's solicitors could not address the matters which were under consideration and, therefore, refused the application for an adjournment. He, therefore, made the orders to which I have referred and which are now sought to be stayed pending the appeal. 13 Whilst there are a number of grounds of appeal in the notice of appeal, essentially two matters are raised. First, it is said that the trial Judge was wrong to refuse the adjournment. Secondly, it is said that if the trial Judge was right to allow the adjournment, the trial Judge was wrong to conclude that Mr Sobey's claim of an equitable interest failed. 14 As to the first, the applicant has sought to support that claim by tendering on this application a report of a psychologist, Mr Tony Walsh. That report was obtained after the hearing on 4 December 2006. In that report, Mr Walsh has concluded that Mr Sobey has limitations in his ability to give instruction and this will continue for a period of three months or so. No explanation has been made, I think, as to how then, in those circumstances, instructions were given to Mr Sobey's solicitors to lodge the notice of appeal or to bring this application. 15 There is evidence that today Mr Sobey gave his wife a power of attorney. No explanation has been given as to how he might be in a position to give those instructions to his solicitor to prepare the power of attorney or that he would understand the terms of the power if, in fact, he has limitations on giving instructions. 16 I am not satisfied that the first ground is arguable. I am not satisfied that anything has been put that would suggest that the trial Judge erred in relation to the exercising of a discretion in refusing the adjournment. 17 As to the second ground, likewise, I am not satisfied that the ground is arguable. The evidence before the trial Judge which he has detailed in his reasons, coupled with the absence of evidence from Mr Sobey, clearly indicated that there were serious inconsistencies in the claim brought by Mr Sobey. I am not satisfied, therefore, that that ground either is arguable. 18 In the circumstances, I am not disposed to grant any further stay of the order made by Mansfield J on 4 December 2006 and, for those reasons, the application for a stay is dismissed. There will be an order that the applicant pay the respondent's costs of the application. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application for stay of order pending appeal grounds of appeal not arguable application dismissed. practice and procedure |
The remaining two Appellants are her two daughters. The Appellants arrived in Australia as visitors on 4 December 2007 and applied for Protection (Class XA) visas on 31 December 2007. Those applications were rejected by a delegate of the Minister on 17 January 2008. On 11 February 2008 review was sought by the Refugee Review Tribunal. The Tribunal accepted that the now First Appellant is a Christian. A statement annexed to her application for refugee status stated in part that " (t)he Christians in India are facing severe harassment including abduction and torture ...". The Tribunal affirmed the decision under review. An application was then filed with the Federal Magistrates Court. That Court on 4 December 2008 published its decision and reasons for decision dismissing the application: SZMIP v Minister for Immigration and Citizenship [2008] FMCA 1665. An application by the First Appellant's younger sister for a protection visa had previously been considered by a differently constituted Tribunal and the sister's application was granted. A Notice of Appeal was filed in this Court on 31 December 2008. The First Appellant appeared before the Court unrepresented, although she did have the benefit of an interpreter. Subsequent to the hearing she has filed further " Written Submissions ", which have been considered notwithstanding the fact that they were filed without leave. The jurisdiction which is relevantly conferred on this Court is to entertain an appeal from a decision of the Federal Magistrates Court. The first two purported Grounds of Appeal identify no error said to have been committed by that Court. No appellate jurisdiction is conferred on this Court to entertain any appeal from a decision of the Refugee Review Tribunal. Even if that difficulty be left to one side, the problem confronting the Appellants is only compounded by the fact that (as framed) the first two purported Grounds of Appeal do not comply with Order 52 r 13(2)(b) of the Federal Court Rules , namely the requirement to state " briefly, but specifically, the grounds relied upon in support of the appeal ". A statement that a Tribunal has " declined to exercise its jurisdiction " or has committed " jurisdictional error " does not satisfy that requirement. In attempting to provide a " useful practical guide ", it has been said that a " notice of appeal which cannot be used to provide a sensible framework for the appellant's submissions " will " almost certainly " fail to comply with the requirements of Order 52 r 13(2)(b): Commonwealth v Evans [2004] FCA 654 at [35] , [2004] FCA 654 ; 81 ALD 402 at 411 per Branson J. The statements set forth by the present First Appellant do not " provide a sensible framework " within which the appeal may proceed. Why it is said that the Tribunal declined to exercise its jurisdiction is left unspecified; as is the " jurisdictional error " said to have been committed. The content of the present Notice of Appeal is no better than a statement that " the Honorable [sic] Judge failed to follow necessary laws applicable to me ", a statement which likewise was held not to comply with Order 52 r 13(2)(b): NAXD v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 243 at [3] per North, Dowsett and Conti JJ. The repetition of the statements made by the present Appellants --- and many other appellants before this Court --- is no better than the " standard form notice of appeal " employed in migration cases which long ago attracted the criticism of Conti J: SZEZJ v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 946 at [5] ; SZDLQ v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 696 at [5] ; SZEZE v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 122 at [6] . Neither of these two difficulties --- namely the failure to identify any error committed by the Federal Magistrate nor the failure to identify with acceptable precision the " ground of appeal " --- is considered to be a mere matter of form: SZJJC v Minister for Immigration and Citizenship [2008] FCA 614 at [15] . Both are considered essential to this Court only exercising such jurisdiction as has been committed to it by the federal legislature. To the extent that meaning can be given to these first two Grounds of Appeal , however, they are in any event without substance. Even if they can be construed as an inelegant way of contending that the Federal Magistrates Court erred in not concluding that the Tribunal had failed to exercise its jurisdiction or committed jurisdictional error, neither contention is sustainable. DECLINED TO EXERCISE ITS JURISDICTION? Other than construing this first Ground of Appeal as but another way of expressing the more broadly expressed concern as to " jurisdictional error ", it is difficult to give this first Ground any meaning. The simple fact is that the Tribunal did exercise the jurisdiction entrusted to it. The task entrusted to the Tribunal was to review the decision of the Minister's delegate. On 11 February 2008 the Tribunal acknowledged receipt of the application seeking review and on 13 March 2008 invited the Appellants to attend before it at a hearing to be held on 21 April 2008. A hearing was in fact conducted on that date and took in excess of two hours. Before the Tribunal the Appellants were represented by a solicitor being a registered migration agent. An invitation to the Appellants to attend the handing down of the Tribunal's decision was forwarded on 7 May 2008. The decision provided by the Tribunal discloses the materials which were before it, a careful analysis of the facts and contentions advanced before it for resolution, and its reasons. If this first Ground of Appeal were intended to raise an argument that was not raised before the Federal Magistrate, leave to raise any such argument would have been refused. Even assuming this Court has jurisdiction to entertain a fresh argument, leave should not be granted to any party to raise an argument so lacking in detail that the argument sought to be advanced cannot be meaningfully understood. This first Ground of Appeal , however, is best understood as seeking to raise no new argument but as an alternative way of seeking to advance the First Appellant's arguments as to " jurisdictional error ". The Grounds of Appeal were apparently drafted by a " friend " of the First Appellant, being a person who has now left Australia. As best as the First Appellant was able to explain what was intended to be embraced by this Ground of Appeal , via the interpreter, it would appear to be a ground alleging that the Tribunal failed to consider her " fear as a result of my sister's adverse experiences ". As such it adds nothing to the second purported Ground of Appeal . A comparable argument, however, was advanced before the Federal Magistrate. Consequently, Tribunal failed to perform its statutory duty as the Tribunal's failure to consider the above claims. To the extent that the ground can be understood, it is again a ground without substance. There is some uncertainty as to the precise argument sought to be advanced. It is not readily apparent, for example, whether the argument is that: (i) there was a lack of consistency in the conclusions reached by differently constituted Tribunals --- namely, in the sister's case the application for a protection visa was granted, whereas the present First Appellant was unsuccessful; or (ii) the Tribunal " did not sufficiently deal " with the claims being made in the sense that the conclusion of the present Tribunal was a conclusion open to it upon the facts before it but that the Tribunal did not sufficiently explain the course whereby it reached its conclusion; or (iii) The Tribunal " did not sufficiently deal " with a particular claim, namely that the present First Appellant had a " fear as a result of my sister's adverse experiences ". Unless the alleged errors are identified with sufficient particularity, it is self-evident that difficulties may be encountered in their resolution. However the second Ground of Appeal may be construed, and assuming the " Particulars " now sought to be relied upon are the same as those relied upon before the Federal Magistrate, it should be rejected. Even if the second Ground were construed as a contention that the Federal Magistrate erred in not acceding to the contention as expressed, it is without substance. Before the Federal Magistrate it would appear as though an argument was advanced by the First Appellant as to there being " some general unfairness in the fact that her sister had been granted a visa and not her arising out of the same factual basis ". The Tribunal was aware of the sister's earlier application and referred (for example) to the different circumstances confronting them and to the different information available upon which decisions were required to be made. The applicant said that she had taken the risk of coming to Australia expecting protection and I accept that it must seem odd to the applicant that her sister obtained a favourable decision from the Tribunal (differently constituted) while I have not accepted her own claims. However there are factors which have led to this result. Obviously it was not relevant in the applicant's sister's case, as I consider it to be in the applicant's case, that substantial parts of the applicant's statement appear to have been copied from the statement accompanying her sister's application. Moreover, whereas the applicant's sister's claims were confined to activities in Kerala, the applicant claims to have been involved with the coordinator and secretary of the AICC in collating information and in meeting dignitaries and priests from churches in Tamil Nadu, Bombay and Delhi, making it more likely that her activities would have been reported on the AICC Internet site. Likewise, whereas the applicant's sister claimed that she and her husband had been detained at the Trivandrum Police Station in August 2006, the applicant claims that she was detained with two members of the AICC which I consider makes it more likely that these events would have been reported, as referred to above. Finally, although the decision of the Tribunal in relation to the applicant's sister's application was made in January 2007, the attention of the Tribunal (differently constituted) was not apparently drawn to the advice obtained by the Australian Department of Foreign Affairs and Trade in September 2006 from Professor Varghese and Mr Manakkat which, as I have said, I consider casts doubt on whether the applicant is telling the truth. I cannot see that the Tribunal either erred in law or failed to consider the relevant circumstances of the sister's case and to apply them to the first named applicant's case. Apthorpe v Repatriation Commission (1987) 13 ALD 656 at 665 per Davies, Lockhart and Gummow JJ; Pepaj v Minister for Immigration and Multicultural Affairs (unreported, FCA, Merkel J, SG 101 of 1998, 25 November 1998); Re Confidential and Australian Prudential Regulation Authority [2005] AATA 1264 at [22] , [2005] AATA 1264 ; 91 ALD 435 at 439; SZFYW v Minister for Immigration and Citizenship [2008] FCA 1259 at [11] . After citing the passage from the judgment of Brennan J, French J (as he then was) observed that "... decision-makers can be consistently wrong or consistently unjust ... ": Federal Commissioner of Taxation v Swift (1989) 18 ALD 679 at 692. Paramount among them is the fact that inconsistency in the treatment of those amenable to the law involves an element of injustice. Particularly where there is competition or correlativity between rights, advantages, obligations and disadvantages, equality of treatment under the law is an ingredient of modern concepts of justice and the rule of law. It is important that those who constitute the Tribunal should, in their search for the correct or preferable decision in the particular case, be entitled to pay regard both to decisions of the Tribunal in other matters and to policies enunciated and developed by those entrusted with the primary administration of the relevant law. As Smithers J pointed out in Gungor and Minister for Immigration and Ethnic Affairs [Unreported (Administrative Appeals Tribunal, 30 th May 1980)] consistency must ultimately be related to policy and is safely sought by reference to policy only when the policy is appropriate and acceptable. Decision makers may be consistently wrong and consistently unjust. The Tribunal is not bound by either its own previous decisions or by the content of government policy. There have been and will be cases in which the Tribunal concludes that it should refuse to follow a previous decision of the Tribunal or reject or disregard the dictates of a relevant policy of the government. The existence of such cases serves to emphasize the fact that each applicant to the Tribunal is entitled to have his or her application for review decided on its own particular merits. The desire for consistency should not be permitted to submerge the ideal of justice in the individual case. The task of the administrator is to resolve a case upon the materials presently available and in accordance with law. The difficulty confronting the present First Appellant is that no error is discernible in either the conclusion in fact reached by the Tribunal or the Federal Magistrate. The reasons for decision of the Tribunal disclose that it was well aware of the contrary outcome of the sister's application and it went on to explain the basis upon which it reached that contrary result. As pointed out by the Federal Magistrate, the task of the Tribunal was to resolve the case before it and it was not bound by a decision of a differently constituted Tribunal based upon different factual material. See: SZHKA v Minister for Immigration and Citizenship [2008] FCAFC 138 at [18] , [2008] FCAFC 51 ; 171 FCR 1 at 8 per Gray J. There is no " inconsistency " or " inelegance " of the kind envisaged by Brennan J, nor is there any error. A broadly expressed contention that the present Tribunal did not " sufficiently deal " with a claim has been understood as meaning that the factual conclusion reached was a conclusion open to the Tribunal upon the materials presented but that the course whereby that conclusion has been reached has not been exposed. In its terms, it requires no more than that the Tribunal set out the findings which it did make. Neither expressly nor impliedly does this section require the Tribunal to make , and then set out, some findings additional to those which it actually made. In Singh , significance was attached to the use of the word "material" in s 430(1)(c). It was said [2000] FCA 845 ; ((2000) 98 FCR 469 at 481 [47] - [48] ) that "material" in the expression "Material questions of fact" must mean "objectively material". Even if that were right, it would by no means follow that the Tribunal was bound to set out findings that it did not make. But it is not right to read "material" as providing an objective or external standard of materiality. A requirement to set out findings and reasons focuses upon the subjective thought processes of the decision-maker. All that s 430(1)(c) obliges the Tribunal to do is set out its findings on those questions of fact which it considered to be material to the decision which it made and to the reasons it had for reaching that decision. Understanding s 430 as obliging the Tribunal to set out what were its findings on the questions of fact it considered material gives the section important work to do in connection with judicial review of decisions of the Tribunal. It ensures that a person who is dissatisfied with the result at which the Tribunal has arrived can identify with certainty what reasons the Tribunal had for reaching its conclusion and what facts it considered material to that conclusion. Similarly, a court which is asked to review the decision is able to identify the Tribunal's reasons and the findings it made in reaching that conclusion. The provision entitles a court to infer that any matter not mentioned in the s 430 statement was not considered by the Tribunal to be material. This may reveal some basis for judicial review by the Federal Court under Pt 8 of the Act, or by this Court in proceedings brought under s 75(v) of the Constitution . For example, it may reveal that the Tribunal made some error of law of the kind mentioned in s 476(1)(e) of the Act, such as incorrectly applying the law to the facts found by the Tribunal. It may reveal jurisdictional error. The Tribunal's identification of what it considered to be the material questions of fact may demonstrate that it took into account some irrelevant consideration or did not take into account some relevant consideration. Whatever uncertainty may have prevailed prior to Yusuf, notwithstanding the unambiguous terms of s 430, there now remains no uncertainty as to the proper construction of s 430 or the requirements imposed: eg. SZJOC v Minister for Immigration and Citizenship [2008] FCA 1342 at [20] per Graham J; SZKMS v Minister for Immigration and Citizenship [2008] FCA 499 at [52] per Lander J. In the present proceeding, the Tribunal set forth in its reasons those findings of fact material to its decision. Even in the more confined context of findings relevant to the First Appellant's submissions as to the perceived discrepancy in the outcome of her own application as opposed to that of her sister, the Tribunal made findings of facts as to the differences between the two applications. The difficulty confronted by the First Appellant is the simple fact that the Tribunal did make findings of fact relevant to the claims being advanced. Contrary to the contention of the First Appellant, the Tribunal did consider the claims being advanced before it. No breach of s 430 can be discerned. Finally, if the " Particulars " provided are intended to convey a contention that the Tribunal failed to consider a particular claim, namely the claim as to a " fear as a result of my sister's adverse experiences ", that was a claim not advanced before the Tribunal for resolution. That was the conclusion of the Federal Magistrate. No error is discernible in that conclusion. No error is exposed by the Tribunal failing to resolve a submission not advanced before it: NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 , 144 FCR 1. The Tribunal is required to deal with the case raised by the material or evidence before it ... There is authority for the proposition that the Tribunal is not to limit its determination to the 'case' articulated by an applicant if evidence and material which it accepts raise a case not articulated --- Paramananthan v Minister for Immigration and Multicultural Affairs [1998] FCA 1693 ; (1998) 94 FCR 28 at 63 (Merkel J); approved in Sellamuthu v Minister for Immigration and Multicultural Affairs [2001] FCA 1802 ; (1999) 90 FCR 287 at 293 --- 294 (Wilcox and Madgwick JJ). By way of example, if a claim of apprehended persecution is based upon membership of a particular social group the Tribunal may be required in its review function to consider a group definition open on the facts but not expressly advanced by the applicant --- Minister for Immigration and Multicultural Affairs v Sarrazola (No 2) [2001] FCA 263 ; (2001) 107 FCR 184 at 196 per Merkel J, Heerey and Sundberg JJ agreeing. It has been suggested that the unarticulated claim must be raised 'squarely' on the material available to the Tribunal before it has a statutory duty to consider it --- SDAQ v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 120 ; (2003) 199 ALR 265 at 273 [19] per Cooper J. The use of the adverb 'squarely' does not convey any precise standard but it indicates that a claim not expressly advanced will attract the review obligation of the Tribunal when it is apparent on the face of the material before the Tribunal. Such a claim will not depend for its exposure on constructive or creative activity by the Tribunal. He also referred to the observation by von Doussa J in SCAL v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 548 that '[n]either the delegate nor the Tribunal is obliged to consider claims that have not been made' (at [16]). An asylum claimant does not have to pick the correct Convention "label" to describe his or her plight, but the Tribunal can only deal with the claims actually made. This does not mean that the Tribunal is only required to deal with claims expressly articulated by the applicant. It is not obliged to deal with claims which are not articulated and which do not clearly arise from the materials before it. The Tribunal's obligation is not limited to procedural fairness in responding to expressly articulated claims but, as is apparent from Dranichnikov , extends to reviewing the delegate's decision on the basis of all the materials before it. See also: SZEIV v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 1798 at [30] to [31] and [56] to [57] per Bennett J; SZGBI v Minister for Immigration and Citizenship [2008] FCA 599 ; Kasupene v Minister for Immigration and Citizenship [2008] FCA 1609. That which is not to be permitted is for a claimant to " reformulate his claims on an ex post facto basis ": SZLWI v Minister for Immigration and Citizenship [2008] FCA 1330 at [23] , [2008] FCA 1330 ; 171 FCR 134 at 140 per Gilmour J. Cases may thus be envisaged where an unrepresented party before the Refugee Review Tribunal does not advance a submission or an argument which is readily apparent upon the materials before it. In such cases perhaps an argument may emerge which could later be advanced before a Federal Magistrate. But such is not the present case. The rejection of this argument is also sufficient to dispose of the first purported Ground of Appeal , as explained during the hearing of the appeal. It is also sufficient to dispose of the application as made during the course of the hearing for further time within which to adduce evidence as to the Tribunal's failure to inquire into her " fear as a result of my sister's experiences ". It was for the First Appellant to advance such claims as she wished to have resolved by the Tribunal. The claim as now made was not a claim made before the Tribunal and it did not " clearly emerge " from such materials as were before the Tribunal. It was no part of the task entrusted to the Tribunal to make out the First Appellant's claim for her. Since no error emerges from the manner in which the claims were resolved by the Tribunal, it would be of no utility to allow the First Appellant a further opportunity in which to adduce evidence of inquiries not made by the Tribunal in resolving a claim not advanced. The application, in effect, to adjourn the hearing of the appeal to allow for this further opportunity to adduce further evidence is thus rejected. Again, however, it would appear that this final Ground is an attempt to maintain that the Federal Magistrate erred in rejecting an argument raised before that Court as to a breach of s 424A of the Migration Act 1958 (Cth). Before the Federal Magistrate it was contended that there had been a breach of s 424A(1)(a) arising out of the failure " to provide ... in writing particulars of the country information ...". It suffices to say the country information is specifically excluded from the provisions of s.424A(1) and (2) by the provisions of sub-s.424A(3)(a) and is further excluded in this particular case by the provisions of s.424A(2)(A). In these circumstances I am unable to provide the first named applicant with the relief which she seeks. No error in the decision of the Tribunal was discerned by the Federal Magistrate. And no error has been identified in this Court --- be it either on the part of the Tribunal or appellable error on the part of the Federal Magistrate. The Appeal should be dismissed with costs. The First Appellant is to pay the costs of the First Respondent either as agreed or as taxed. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | failure to identify grounds of appeal from decision of magistrate standard form notice of appeal lack of consistency in decisions no error in not resolving a claim not previously advanced appeal dismissed migration |
The form of order has not been precisely articulated by the applicant, but I will proceed on the basis that an order is sought that the firm Russell Kennedy and Ms Saunders be restrained from acting as solicitors for the first respondent in these proceedings. The background to these proceedings and the role of each of Ms Saunders and Russell Kennedy have been set out in my judgment delivered on 14 March 2007: see Bahonko v Nurses Board of Victoria (No 2) [2007] FCA 351. Essentially, Russell Kennedy are the solicitors on the record representing the first respondent, and Ms Saunders is a solicitor in the employ of Russell Kennedy and has been involved in these proceedings. Other relevant circumstances are referred to later in these reasons. 2 The Court's jurisdiction to restrain a legal practitioner from acting in proceedings is an exceptional one and discretionary. It must be exercised with appropriate caution and due weight must be given to the public interest in a litigant not being deprived of the legal practitioner of its choice without due or good cause: Grimwade v Meagher & Ors [1995] 1 VR 446 at 452; Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404 at [35] and [51]. The cost, inconvenience or impracticality of requiring a legal practitioner to cease to act may provide a reason for refusing to grant relief: Geelong School [2006] FCA 1404 at [51] ; Kallinicos v Hunt [2005] NSWSC 1181 ; (2005) 64 NSWLR 561; Black v Taylor [1993] 3 NZLR 403 and Bowen v Stott [2004] WASC 94. 3 The Court must be careful not to intervene unless it is absolutely required in the circumstances of the case. Further, the Court should be mindful that sometimes applications for restraining legal practitioners may be misused or quite inappropriately pursued by a party to proceedings. It would appear that the applicant is concerned that Ms Saunders was a member of the Public Interest Law Clearing House ('PILCH') in 2004 when PILCH refused to assist the applicant to bring proceedings against the first respondent, and in the process of considering the applicant's request to PILCH Ms Saunders obtained "confidential documents" from the applicant. I have circumstantial evidence of that. 8 In any event, the alleged confidential information is not described, and therefore this Court cannot determine whether there could be any risk or danger that it may be used to the detriment of the applicant in this proceeding. The authorities are clear that the confidential information must be identified to such an extent that the claim of confidentiality can be assessed by the Court: see Spincode Pty Ltd v Look Software Pty Ltd & Ors [2001] VSCA 248 ; (2001) 4 VR 501 at [22] ; Carindale Country Club Estate Pty Ltd v Astill & Ors (1993) 42 FCR 307 at 314; Sent v John Fairfax Publication Pty Ltd [2002] VSC 429 at [65] to [68]. 9 In these circumstances, I cannot be satisfied that there is any danger of misuse of confidential information by either Ms Saunders or Russell Kennedy. 10 As to there being any breach of a fiduciary duty of loyalty there is simply no material to support such a contention against Ms Saunders or Russell Kennedy. Whatever may be the ambit of the concept of the fiduciary duty of loyalty, no relationship that may have been said to exist, between the applicant on the one hand and Ms Saunders and Russell Kennedy on the other, gives rise to any fiduciary duty of loyalty. 11 I now turn to consider the issue of the Court's inherent jurisdiction to restrain legal practitioners from acting in a particular case as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice, where such a course is required in the interests of justice: Geelong School [2006] FCA 1404 at [24] , [32] and [33]. The crucial question is whether, on the evidence before the Court, a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that the legal practitioner be restrained from acting for its client in the proceedings: Geelong School [2006] FCA 1404 at [35] . 12 I deal first with the position of Ms Saunders. Serious criminal allegations have been made against Ms Saunders by the applicant. They are denied by Ms Saunders. For the purposes of this application I do not regard it as necessary or appropriate to rehearse in these reasons the details or merits of the allegations. I have, however, come to the view that there is a real likelihood that in these proceedings, assuming the matter proceeds to trial, the conduct of Ms Saunders will require evaluation and assessment and she may well feel compelled to justify or defend her conduct. 13 In Holborow v MacDonald Rudder [2002] WASC 265 at [23] , Heenan J said that the power to exercise supervisory jurisdiction over legal practitioners had been invoked in cases where the subject matter of the litigation was likely to involve an evaluation of the conduct of the legal practitioner. In Bowen v Stott [2004] WASC 94 at [53] and [55], Hasluck J said that it may be appropriate to invoke this power in cases where the legal practitioner may feel compelled to justify or defend his or her conduct in representing a client, or where the practitioner's credibility is at stake as a potential witness. 14 I have not reached the conclusion that there is a real likelihood that the conduct of Ms Saunders will require evaluation in these proceeding just because the applicant has made a number of serious allegations against Ms Saunders. Ms Saunders herself is acutely aware of the seriousness of the allegations themselves and that the allegations necessarily involve an evaluation of her conduct. In the course of an application made on Ms Saunders' behalf that Ms Saunders be excused from cross-examination on the basis of the privilege against self-incrimination, counsel for Ms Saunders stated that the application to remove Ms Saunders from acting in these proceedings was based upon, and inextricably linked with, the very allegations of criminal conduct alleged against her, and that it was clear from the material before the Court that the applicant intended to pursue these criminal charges. It is apparent from the nature of the allegations made by the applicant that they go beyond the context of the hearing to remove Ms Saunders, and extend to matters that are likely to be raised in the proceedings themselves. In fact, specific reference is made to Ms Saunders' past conduct, going back, it seems, to 2003. 15 I again stress that all allegations are denied by Ms Saunders, and that obviously it is not sufficient to simply rely upon allegations of criminal conduct against a legal practitioner as the sole basis for the court making a restraining order. The court will need to determine whether there is a real likelihood of an evaluation of the conduct of the legal practitioner occurring in the proceedings, or whether there is a real likelihood that the legal practitioner will need to justify or defend himself or herself in the proceedings. Without going into all the elements of the allegations made by the applicant against Ms Saunders, the conclusion I have reached is based upon Ms Saunders' own evaluation as evidenced by and in the course of her application before me not to be cross-examined on the basis of the privilege of self-incrimination. Whilst such application by Ms Saunders was made in the context of the applicant's application to restrain Ms Saunders (and Russell Kennedy) from acting, it is obvious that, by the nature of the allegations and the stated intent of the applicant, there is a real likelihood of an evaluation of the conduct of Ms Saunders in the proceedings, and a real likelihood that Ms Saunders will need to justify or defend herself in the proceedings. 16 The need for independence and being personally remote from the subject matter of the dispute requires that Ms Saunders no longer be involved in these proceedings. I am aware that this has the consequence of causing extra cost and inconvenience to the first respondent. However, the undesirability of Ms Saunders being involved in the circumstances of this case outweighs that consideration. In my view, a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires Ms Saunders be restrained from acting in these proceedings. 17 The position in relation to Russell Kennedy is different. Russell Kennedy is a firm of solicitors, and no allegation is made specifically against any of its partners. It may be said that Russell Kennedy has an interest in the litigation because of the allegations made against its employee, Ms Saunders. In this indirect way it could be said that Russell Kennedy in the course of the litigation may need to justify or defend Ms Saunders. In my view, such a possibility is remote. 18 I do not consider that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires Russell Kennedy, as a firm of individual partners, be restrained from acting in this proceeding. The matters alleged by the applicant against Russell Kennedy relate to the issue of the receipt of "confidential documents" and to the applicant's application for an injunction restraining Ms Saunders and Russell Kennedy from acting, but do not relate to the main issues in these proceedings. Of course, the criminal proceedings of the type as threatened by the applicant against Ms Saunders could not be brought against the firm Russell Kennedy, but would need to be brought against individual partners. No such specific proceeding has been identified by the applicant as a possibility or likelihood by reference to any specific partner. This stands in stark contrast to the position of Ms Saunders. 19 As I have said, the jurisdiction to be exercised here is discretionary. The cost, inconvenience and impracticality of requiring legal practitioners to cease to act may provide a reason for refusing relief. There are no direct and relevant allegations of improper conduct on behalf of any individual partners of Russell Kennedy that relate to the issues that will be agitated in these proceedings if or when the matter proceeds to trial. The first respondent, having been deprived of the services of Ms Saunders, should not be deprived of retaining Russell Kennedy in these proceedings which would involve even greater cost and inconvenience to the first respondent. 20 I will make orders in light of these reasons upon hearing from the parties. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. | inherent jurisdiction officers and processes of the court restraining legal practitioners from acting test to be applied relevant considerations practice and procedure |
These provisions are found in Div 2A of Part V of the TPA, which is entitled 'Actions against Manufacturers and Importers of Goods'. Where a person acquires goods, as defined in Div 2A, from an intermediary who in turn acquired the goods from the manufacturer, ss 74B and 74D afford the person a right of action for compensation directly against the manufacturer. Section 74B applies where the goods were not reasonably fit for their indicated purpose. Section 74D applies where the goods were not of merchantable quality. Indeed, it is common ground between the applicant and the respondent that in its application to this case the term 'goods', where it is used in ss 74B and 74D , means 'goods of a kind ordinarily acquired for personal, domestic or household use or consumption'. 7 The applicant alleges that at various dates between February 1994 and June 2001, the respondent supplied insulation products known as Sisalation 496, Sisalation 498 and Permastop 496 (collectively ' the products') to various builders or contractors involved in the construction of twenty warehouses. The products were incorporated into the structure of the warehouses. The applicant has either acquired or leased those warehouses. 8 The applicant alleges that the products were not fit for their purpose and/or were not of merchantable quality, in contravention of ss 74B and 74D . As a result, the applicant claims it suffered loss and damage in respect of which it is entitled to compensation from the respondent. Sisalation 496, Sisalation 498 and Permastop 496 were part of that product range. The respondent's reflective foil insulation products were sold under the registered trade mark 'Sisalation TM '. It also sold a combined reflective foil laminate with a glass wool blanket adhered to it under the trade mark 'Permastop TM '. 10 In 1998, ACI Insulation was renamed Insulation Solutions, but it remained a business conducted by ACI Australia Ltd until 2002. ACI Australia Ltd has had three changes of name. In general terms, a reflective foil insulation product comprises a reflective foil facing adhered to a kraft paper backing that is reinforced in various ways, such as by the inclusion of a layer of fibreglass. Reflective foil insulation products of this type are also commonly referred to as 'reflective foil laminates'. I will adopt that terminology in these reasons, unless I am referring to reflective foil insulation products more generally or the context requires me to be more specific. They are also produced in a range of weights and strengths and with different finishes. Thus, reflective foil laminates can be graded as light duty, medium duty, heavy duty or extra heavy duty. These descriptions usually refer to the durability of the material. 15 Prior to the development of reflective foil laminates, 'sarking' was used in the building industry as a pliable water resistant membrane. Now often combined with reflective foil to provide thermal insulation benefits. The evidence indicates that the term 'sarking' is still sometimes used to describe reflective foil laminates. When used in roofs and walls, reflective foil laminates operate as a barrier against water or wind-driven rain entering the building. (2) Vapour barrier. Reflective foil laminates operate as a barrier to water vapour by preventing condensation from forming on the inside of the building. (3) Thermal insulation. Reflective foil laminates provide a barrier against radiant heat and are often used in conjunction with a bulk insulation to provide the required insulation performance. 17 Some reflective foil insulation products have additional attributes. For example, when perforated, insulation foils can be used to provide an acoustic barrier. Some reflective foil insulation products have an anti-glare coating and/or a decorative (usually white) facing. The particular attributes of white-faced foil laminates are discussed in detail below. 18 The process of installing reflective foil laminates in commercial, industrial and residential buildings is generally very similar. Where the product is installed in a domestic roof, it is laid over the roof joists under the roof battens. This creates an air space between the roof tiles or other cladding and the reflective foil laminate which maximises the insulation effect. Similar installation techniques apply where sheet metal is used as a roofing product. Where the product is installed in domestic walls, it is generally affixed to timber studs with fixing plates. Reflective foil laminates are usually installed horizontally and joins in the material are sealed with a specialised tape. When installed in this way, the reflective foil laminate blocks any moisture that permeates through the external facing of the wall and allows any condensation to fall onto flashing at weephole level and so drain away. Again, this method of installation ensures an airspace between the product and the external wall (and to a lesser extent any internal cladding) which tends to maximise the thermal insulation effect. Reflective foil laminates are installed in commercial and industrial buildings in much the same fashion. One difference, however, is that in commercial applications the span between the ceiling or roof purlins may be greater and a layer of light metal mesh is often laid first as a safety measure for roof workers and to help support the foil. It is also more likely that reflective foil laminates will be left exposed in industrial applications, rather than being covered by plasterboard or the like so as to provide a more finished internal ceiling or wall. 19 Reflective foil laminates are commonly installed in conjunction with an insulation 'blanket' manufactured from spun fibres of glass or other material in order to enhance the thermal insulation of a building. The reflective foil laminate can be installed first and the blanket material laid adjacent to it. The blanket material can be purchased separately but manufacturers also offer a combined product consisting of a reflective foil laminate that has glass insulation material or another form of insulation blanket adhering to one face of the foil. The large number of reinforcing glass strands in combination with strong kraft paper provide Sisalation&tm; 498 with enhanced strength. Sisalation&tm; 498 is, therefore, most suitable for the support of bulk insulation or as an independent decorative lining wherever strength, hygiene, cleanability, corrosion resistance or aesthetics are important. Sheets of the material can be sealed together with a suitable low permeability pressure sensitive tape to prevent condensation damage to bulk insulation and structures. This anti-glare coating was applied for safety reasons; it enabled roofers to install the material without exposure to reflected sunlight which may cause blinding glare. Sisalation 496 (discussed below) was essentially the same product as Sisalation 498 except for this blue anti-glare coating. It was manufactured using the same process as was previously used by ACI Insulation to adhere a glass wool blanket to its standard reflective foil laminate. The ACI Building Blanket is a flexible and resilient thermal insulation material made of Glasswool bonded with a thermosetting resin. Support and vapour barrier for the Building Blanket is provided by a heavy duty Sisalation facing that has a unique corrosion resistant and aesthetically pleasing, white polypropylene face. In combination with a glass wool blanket, it was marketed as Permastop 496. There does not appear to be a product data sheet produced specifically for Sisalation 496 as it was only used to form Permastop 496. Sisalation 430WP was advertised and promoted by way of a product data sheet which included two other ACI Insulation reflective foil laminates, namely Sisalation 430 and Sisalation 433. The sole difference between Sisalation 430WP and the two other products was that Sisalation 430WP had a white facing on one surface. The description of Sisalation 430 WP in the product data sheet was that it 'is similar to Sisalation 430 but in addition one surface is extrusion coated with white polyethylene'. The product data sheet stated that Sisalation 430 'is used for insulating roofs, walls and floors of houses, industrial, commercial and institutional buildings'. 26 Between 1993 and 1997, ACI Insulation also produced a number of other white-faced reflective foil insulation products. They included a lighter weight Sisalation 495, which had the same white facing as Sisalation 498. The contemporaneous marketing literature in relation to Sisalation 495 was essentially the same as that for Sisalation 498. ACI Insulation also produced a small quantity of white-faced Sisalation 960. It was manufactured using very heavy duty reflective foil insulation material. 27 In 1998, Sisalation 498 and Permastop 496 were replaced with new white-faced foil laminate products. These products were and continue to be marketed as 'Sisalation 437/440'. It is also suitable for livestock and agricultural buildings, where hygiene is maintained by regular cleaning with water and detergents. When installed as an exposed internal roof lining, the white reflective properties will enhance lighting. Sisalation 437 can be coated in a variety colours. It is not a white-faced foil laminate --- it has one aluminium face that is coated blue to reduce problems with reflective glare during installation. In this respect, it is very like Sisalation 498. The data sheet also contains a single description of the function of both Sisalation 437 and Sisalation 440 that refers to their common insulation, energy efficiency, vapour barrier and fire performance properties. 29 The current Sisalation product range also includes Sisalation 465, 466 and 484, each of which has a polymer coating. The product data sheets for these products specify that they are designed for use in 'demanding applications' that require extra resistance to puncturing and tearing, and are ideally suited as sarking and insulation under roofs for residential buildings. 30 During the relevant period, ACI Insulation's competitors also marketed white-faced reflective foil insulation products, and did so in a manner similar to ACI Insulation. 31 Since 1989, Bradford Insulation, a division of CSR Limited and ACI Insulation's largest competitor during the relevant period, has manufactured white-faced foil laminates under the name 'Thermoplast'. Typical applications are as a decorative finish on exposed roof and wall linings, environments requiring enhanced lighting characteristics and aesthetic appeal, as SPI facing, corrosive environments or environments requiring a cleanable chemically compatible surface. Ideal as a lining in sporting complexes such as basketball stadiums and gymnasiums. It describes Thermoplast 980 as '[a] polymeric surface for where a cleanable, corrosive resistant surface or decorative finish is required. Available in white. Also available in a perforated version for acoustic applications. Also incorporated is a fibreglass reinforcing mesh for added strength. The aluminium outer face of Insulco 533W foil is coated blue to provide a safe anti-glare surface when working in direct sunlight. This product is recommended for use where the white surface is exposed as an internal lining. For a full listing of the white surfaces chemical resistance please contact your local Insulco branch. When the product is to be installed in an unknown non-standard atmosphere Tasman Insulation recommend a sample be first tested for it's [sic] chemical resistance to ensure product life. The products provided an attractive internal lining material where there was no ceiling or wall lining to conceal the insulation material. Where the products were left exposed in industrial or commercial buildings, they were particularly suitable if requirements of hygiene, cleanability or corrosion resistance were important. 36 Sisalation 498 and Permastop 496 were mostly produced upon receipt of orders for construction of particular commercial or industrial buildings. Upon receiving an order, ACI Insulation would manufacture the requisite quantity to meet the order. At any particular time, ACI Insulation did not keep more than a small quantity of Sisalation 498 and Permastop 496 in stock. 37 During the relevant period from 1993 to 1997, the prices charged by ACI Insulation for Sisalation 498 and Permastop 496 were approximately 25 per cent to 50 per cent higher than the prices of other reflective foil laminates used in residential or domestic applications. The premium varied so widely because the price depended upon competition at the time that orders were placed for the manufacture of Sisalation 498 and Permastop 496. In some instances, it' s 40 to 50 per cent, and then in the other two examples it seems to be 25 and 26 per cent? These products were made - were not normal stock lines that we would stock in hardware stores. They were driven by large projects, whether it be a Bunnings store, or whether it be a supermarket, or a chicken shed, and that was really driven by competitive pressures. We would price project by project in order to get that order. Mr Kennedy, a plumber and roofing contractor called on behalf of the respondent, said that in his experience white-faced sarking is only specified or requested for the lining of commercial and industrial buildings in special circumstances. His personal experience was that no one had ever requested white-faced sarking for a residential project. He had never installed it in a domestic residence, and he had never seen white-faced sarking installed in a domestic residence. Mr D'Arcy said that he knew of no situation in which Permastop 496 had been installed in a domestic residential building. He was aware of only one situation in which Sisalation 498 was installed at domestic premises; it involved the use of the material under a carport and veranda at a residence in Western Australia. In Mr D'Arcy's view, the products were neither designed nor intended for domestic residential use and were used in almost every instance in commercial or industrial buildings. Mr Quigley, an architect called by the respondent, gave evidence that foil laminates would not be a suitable lining for a residential building; if left exposed, it would not provide the standard of finish required by the occupier and it would not be durable enough to withstand general wear and tear. He had neither designed nor seen residential buildings which have used white-faced foil laminates. This was not unexpected, in his view, as white-faced foil laminates were used in industrial and commercial buildings where the product was exposed left inside the building as the wall lining. 40 The witnesses who gave evidence on behalf of the applicant were more inclined to think that white-faced foil laminates could be suitable for residential or household applications, such as use in an attic, wine cellar, garage, workshop or games room. Mr Mould, an architect, was aware of one instance in which a white-faced foil laminate product had been utilised in a residential garage in Flinders, Victoria. Dr Eilenberg, a building industry consultant and former university lecturer in building construction and technology, said that while white-faced foil laminates are primarily advertised for use in factories or warehouses, they can also be used in domestic garages or carports. There is no dispute between the parties about the facts set forth above. The area of contention lies in the significance that should be attached to those facts in the context of the statutory question posed by s 74A(2)(a). 42 The applicant accepts that the particular goods in issue in this proceeding, namely Sisalation 496, Sisalation 498 and Permastop 496, are not ordinarily acquired for personal, domestic or household use or consumption. The respondent accepts that reflective foil insulation products are used in a variety of buildings, including residential buildings, and may be regarded as goods of a kind ordinarily acquired for personal, domestic or household use or consumption. The case therefore turns on the question of how widely or narrowly the genus or kind of goods should be drawn, having regard to the evidence before the Court. 43 In a sense, the applicant's contentions start from the respondent's concession that reflective foil insulation products are goods of a kind ordinarily acquired for personal, domestic or household use or consumption. The applicant's basic contention is that the products are of the same kind as other reflective foil insulation products (including various reflective foil laminates marketed under the Sisalation and Permastop trademarks), and they are all goods of a kind ordinarily acquired for personal, domestic or household use or consumption. In the applicant's submission, all these goods have the same essential character: they are pliable building membranes that serve three key functions, in that they provide thermal insulation, operate as a water barrier, and operate as a vapour barrier. It submits that the evidence, including the product information and product descriptions published by ACI Insulation, support this characterisation. 44 The respondent's written submissions, filed shortly before the hearing, contend that the products are white-faced foil laminates, not reflective foil insulation products, and that white-faced foil laminates are not goods of a kind ordinarily acquired for personal, domestic or household use or consumption. In oral submissions, the respondent broadened this characterisation slightly by speaking of 'decorative foil laminates' rather than white-faced foil laminates. This adjustment was made so as to include other types or colours of polymer coated foil laminates within the class in question. However, the basic approach to characterisation did not change. 45 The respondent's characterisation of the products is essentially based on the contention that, by virtue of the special properties, functions and applications of the white facing, white-faced foil laminates are fundamentally different from other reflective foil laminates. 47 In answer to the respondent's case, the applicant submitted that the narrower genus or kind of goods for which the respondent contends, namely decorative foil laminates, is not based on the essential character of the products but rather on a description of the particular products themselves. It submitted that the respondent's approach, that is, to confine the kind of goods to which the products belong by reference to the particular quality or feature that they have a decorative (usually white) polypropylene facing, is contrary to legal principle and inconsistent with common sense. 48 In view of these contentions, it is necessary to examine the special features of white-faced foil laminates more closely. 50 Mr Mould said that all reflective foil laminates, including those that have a white polymer coating over the reflective foil layer, have three basic properties: thermal insulation, a sarking or moisture barrier, and a vapour barrier. He said that reflective foil laminates are used in domestic and non-domestic construction. In non-domestic constructions, such as factories and warehouses, the reflective foil surface is often left exposed as the construction does not aesthetically require the reflective foil insulation to be concealed behind plasterboard or another wall lining. However, where the reflective foil insulation is exposed internally, there is an option of having the inside face of the material finished with a white coating for aesthetic purposes. This coating also improves the light reflectance, as the silver finish of the ordinary reflective foil laminate creates glare. 51 Dr Eilenberg said that the purpose and operation of reflective foil laminates is the same in domestic and commercial constructions, that is to say it operates as a vapour barrier, a barrier to water and as insulation material by reflecting infra-red heat back from its surface. 52 Dr Eilenberg said that various reflective foil laminates are available in Australia. The products differ in the thickness and/or strength of the materials and in the various treatments applied to the outer surface of the foil. The available variations include single-faced foil laminate, double-faced foil laminate, double-faced foil laminate which has a non-glare finish applied to one side, and laminates with special surfaces, such as white polymer or similar finish on one side. 53 Dr Eilenberg noted that a competitor of the respondent, Insulco, manufactures a reflective foil laminate with one aluminium foil and one black plastic side ('553 Heavy Duty Foil'), as well as other colours. Dr Eilenberg also said that other specialised foil insulation products are available, such as a product which has a fire inhibitor built into the foil. Most types of reflective foil laminates are available in different grades or strengths. Despite the variations available on the market, Dr Eilenberg said that the actual function of the reflective foil laminate products stays basically the same. 54 In Dr Eilenberg's view, white-faced foil laminates are simply one of these variations. Dr Eilenberg described the addition of the white face as an architectural feature. By this he meant that it improved the aesthetic appearance of the material without affecting its insulation or moisture controlling properties. Dr Eilenberg said that white-faced foil laminates are comprised of the same materials as the other reflective foil laminates, the only difference being that one side is coated white to reflect more light. They are primarily advertised for use in factories or warehouses where the white face gives an improved finish and light reflection, but in his view they can also be used in domestic applications, such as garages or carports. Dr Eilenberg concluded that the white-faced foil laminates are of the same nature, and are used to perform the same function, as other reflective foil laminates. 55 The evidence given by the respondent's witnesses concerning the actual properties of reflective foil laminates and white-faced foil laminates did not differ in any significant respect from that given by the witnesses for the applicant. The principal point of distinction between the applicant's evidence and that relied upon by the respondent was that the respondent's witnesses had different views as to the intended use of white-faced foil laminate products. 56 The respondent relied upon the evidence given by Mr Kennedy, Mr D'Arcy and Mr Quigley for the contention that the additional features of a white-faced foil laminate mean that it is a fundamentally different product from other reflective foil laminates without a decorative facing. 57 Mr Kennedy referred to the entire range of reflective foil insulation products as 'sarking'. His evidence was that white-faced sarking has additional features in that the white polymer surface (replacing the foil surface in standard sarking) serves as an internal lining, it is washable, and compared to an exposed foil surface it enhances the internal lighting of an industrial building or shed. In his experience, white-faced sarking is only specified or requested for the lining of commercial and industrial buildings in special circumstances. 58 In Mr D'Arcy's opinion, white-faced foil laminates have a special design and marketing feature in that the white facing material is to remain exposed in the ceiling and walls of a commercial or industrial building in which it is installed. The white facing provides a hygienic surface that can be cleaned or washed down. It is also corrosion resistant, making it suitable for applications such as indoor swimming pools. When exposed in an industrial building such as a poultry breeding shed, the white surface provides an aesthetic appearance and improved light reflectance within the building compared with exposed aluminium foil. It still provides an effective thermal and vapour barrier, but the white facing means that this barrier is combined with a cost effective internal lining material. 59 Mr Quigley gave evidence that various grades of reflective foil laminates are available. The difference in grade usually depends on the layers which make up the laminate. For example, in extra heavy duty Sisalation 484, one layer of aluminium is replaced with a high-density polymer weave fabric. Mr Quigley also said that foil laminate products are available with various surface coatings or layers to suit specific requirements. 61 Mr Quigley said that, in many instances, reflective foil laminates will be covered by wall and ceiling linings. However, in industrial buildings reflective foil laminates are ordinarily exposed to view. Mr Quigley regarded it as commonplace for a reflective foil surface to be exposed on the inside of an industrial building, whereas he said that in his experience, this never occurs in the context of a residential building. In these circumstances the white faced laminate provides an acceptable finish at a much lower cost than would be involved if the walls and the ceilings were lined. The white face also has the effect of diffusing the light from the light fittings or from the roof skylights to create a soft, diffuse light which avoids the bright spots and glare, which can occur when a foil surface is exposed. He said that white-faced foil laminates are well suited for swimming pools, as the white facing is made of polypropylene which is resistant to chemical attack. Like Mr Kennedy, Mr Quigley said that the white-faced products have a specific application in industrial, institutional or commercial buildings. Where it is not exposed to view the use of a foil faced product would be preferred as the reflective foil would offer a superior thermal performance to the less reflective white face. But he added that cost is generally a minor consideration for the architect in specifying such products, as the insulation material is a very small component of the total cost of the building and a failure of the sarking or vapour barrier could have significant implications. He was of the view that architects specify particular foil laminates to serve the purpose for which they are intended. If the foil laminate was to be exposed internally, then the use of a white-faced foil might be considered. However, if the material were being used on its own as thermal insulation, then cost will be a factor in the selection and the additional cost for the white-faced product would be difficult to justify. In his view, which was shared by Mr D'Arcy, a white-faced foil laminate would not be as thermally efficient as a product which has the reflective foil left exposed. 65 For the sake of completeness, I should note that there was a minor disagreement between Dr Eilenberg and Mr Quigley as to whether the application of the white coating to the reflective foil surface reduced the ability of the foil to reflect radiant heat. Dr Eilenberg did not think that the white coating reduced the insulation properties of the foil, or at least did not do so to any significant extent. He did indicate, however, that the highest level of reflectance (95 per cent or better) was achieved by bright aluminium foil. On the other hand, Mr Quigley said that an uncoated reflective foil laminate would give a superior thermal performance to a product with the less reflective white coating. For this reason, he thought that the use of a white-faced foil laminate would only be contemplated where it was to be exposed to view and there was a desire to present a more finished appearance to users of the building. Mr Quigley did not attempt to quantify the difference in thermal efficiency between uncoated reflective foil laminates and white-faced foil laminates. He did not suggest that white-faced foil laminates ceased to provide significant thermal insulation. However, he did say that the use of a reflective foil laminate alone would not achieve the required thermal insulation of a wall or roof, and so an insulation blanket or some other form of bulk insulation was almost always used, in addition to the reflective foil material, to achieve the desired thermal performance. 66 It is far from clear that there is a real difference of opinion between Dr Eilenberg and Mr Quigley about the thermal performance of white-faced foil laminates. Any difference between them is, I think, more one of emphasis than substance. I am prepared to assume that the application of the white facing does have some limiting effect on the efficiency of the foil in reflecting radiant heat. But there was no evidence that this impact was substantial. Nor was there any evidence that the application of the white facing to the reflective foil had the consequence that the product ceased to perform one of its key functions, namely thermal insulation. 68 Section 74A(2)(a) provides that in Div 2A of Part V of the TPA, a reference to goods shall, unless the contrary intention appears, be read as a reference to goods of a kind ordinarily acquired for personal, domestic or household use or consumption. The causes of action relied upon by the applicant in the present case are founded upon ss 74B and 74D , which are found in Div 2A. 69 The same phrase is used in s 4B of the TPA as part of the statutory definition of a 'consumer'. The warranty provisions in Div 2 of Part V of the TPA (ss 69 to 74 ) are limited to dealings with consumers as defined in s 4B. Section 68A , which permits contracts to contain a clause limiting liability for breach of warranty, does not apply to contracts for the supply of goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption. The definition of 'consumer' is also relevant to the offences relating to product safety and product information which are created by Div 3 of Part VC of the TPA. 71 Section 51AB(1) prohibits a corporation in trade or commerce engaging in conduct in connection with the supply or possible supply of goods or services that is in all the circumstances unconscionable. Section 51AB(5) provides that a reference in s 51AB to goods or services is a reference to goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption. In contrast to the limitations which are thereby placed upon s 51AB , s 51AC prohibits a corporation engaging in unconscionable conduct in a business context and applies only where the supply or acquisition of goods or services is, or would be, for the purpose of trade or commerce: see s 51AC(7) and (8). 72 The statutory phrase that must be construed and applied in this case plays a crucial role in various parts of the TPA and, in all likelihood, the legislature intended that it should carry a consistent meaning wherever it is used in the TPA: see Theo Holdings Pty Ltd v Hockey [2000] FCA 665 ; (2000) 99 FCR 232 at 241 [21] . The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos , Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed. The precise boundaries of the territory within which s 52 operates remain undetermined: Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17 ; (1990) 169 CLR 594 at 601. Such legislation should be construed broadly so as "to give the fullest relief which the fair meaning of its language will allow". Division 2A does not apply where there is a contract between the manufacturer and the consumer. It applies where the manufacturer supplies goods to another person, usually a distributor or retailer, who acquires the goods for the purposes of resupply. The Division applies to the supply of goods which are of a kind ordinarily acquired for personal, domestic or household use or consumption that is, consumer goods. Moreover, in my opinion, the statutory phrase should be construed broadly, wherever it appears in the TPA, so as to give the fullest relief which the fair meaning of its language will allow. Many of the relevant authorities, however, concern the meaning and application of similar but not identical expressions found in sales tax legislation or tariff classification legislation, and care must be exercised in translating what was said in those contexts to the present context. 78 The decisions in Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450 (' Diethelm '), Commissioner of Taxation v Chubb Australia Ltd (1995) 56 FCR 557 (' Chubb '), Clean Investments Pty Ltd v Commissioner of Taxation [2001] FCA 80 ; (2001) 105 FCR 248 ( 'Clean Investments ') and Hygienic Lily Ltd v Deputy Commissioner of Taxation (1987) 13 FCR 396 (' Hygienic Lily ') all involved the construction and application of an expression found in Item 1 of the Third Schedule of the Sales Tax (Exemptions and Classifications) Act 1935 (Cth), namely 'goods ... of a kind ordinarily used for household purposes ...'. I will not attempt to discuss every relevant aspect of these cases because they were reviewed at length by Lindgren J in Clean Investments at 260-274 [35]-[103]. 79 Subject to the caveat just mentioned, the sales tax cases contain the most helpful discussion of the principles that should guide the construction of the statutory phrase in s 74A(2)(a). There are some relevant decisions in the trade practices area dealing directly with the construction of the statutory phrase or substantially similar expressions: see Crago v Multiquip Pty Ltd & Dunogan Farm Tech Pty Ltd (1998) ATPR 41-620 (' Crago' ); Minchillo v Ford Motor Company of Australia [1995] 2 VR 594 (' Minchillo') ; Jillawarra Grazing Co v John Shearer Ltd (1984) ATPR 40-441 (' Jillawarra') ; Carpet Call Pty Ltd v Chan (1987) ASC 55-553 (' Carpet Call' ); and Westminster Properties Pty Ltd v Comco Constructions Pty Ltd (1991) 5 WAR 191 (' Westminster') . However, these cases tend to illustrate the application of the statutory phrase, rather than provide any illuminating discussion of the relevant principles of construction. 80 In my opinion, several propositions of relevance to this case can be extracted from the authorities. 81 First, the word 'ordinarily' means 'commonly' or 'regularly', not 'principally', 'exclusively' or 'predominately': see Clean Investments at 273 [97] per Lindgren J; Chubb at 560 per Burchett J, and at 57 per Hill J; Hygienic Lily at 399-400 per Gummow J. Counsel for the respondent invited me to depart from these authorities, and to hold that the word 'ordinarily' as used in s 74A(2)(a) means 'predominately'. In view of the authorities to which I was referred, I doubt that I am free to adopt such a construction. In any event, I am not persuaded that the word 'ordinarily' in s 74A(2)(a) means 'predominately' rather than 'commonly' or 'regularly'. On the contrary, I consider that the meaning which best accords with the policy and the purposes of the TPA is that of 'commonly' or 'regularly'. I am conscious that the Full Court of the Victorian Supreme Court in ICI Australia Operations Pty Ltd v Deputy Commissioner of Taxation (Vic) (1987) 82 ATC 5110 said at 5112 that the concept of 'ordinarily used for' equals 'whose primary but not necessarily exclusive purpose and customary use is'. However, I do not agree that the word 'ordinarily' should be given such a connotation in s 74A(2)(a) or elsewhere in the TPA. 82 Secondly, it is preferable to pose the statutory question (ie the question whether the goods in issue in the particular case are goods of a kind ordinarily acquired for personal, domestic or household use or consumption) as a single composite question: see Clean Investments at 273 [91]-[93] per Lindgren J; Diethelm at 472 per Hill J; and Chubb at 559[F] per Burchett J. This can be contrasted with a two-stage inquiry as to, first, the genus of goods in question, and secondly, whether that kind of goods is ordinarily acquired for personal, domestic or household use or consumption. As Lindgren J pointed out in Clean Investments , posing the genus question separately as a threshold one runs the risk of prejudging the answer to the statutory question. The problem can be indicated by the question "What kind of goods is the Item speaking of? " Answering the genus question separately as a threshold one will assume, without making explicit, an answer to this question. For example, an architect's stool, an office chair and a kitchen stool or chair may be described as "stools" or "chairs" and their purpose as being "to provide seating". Yet it would be wrong to conclude that the architect's stool or the office chair is of a kind ordinarily used for household purposes for no other reason than that, like the kitchen chair, it is ordinarily used for the purpose of providing seating. The mere fact that office chairs and domestic chairs both provide "seating", which in some applications is a household purpose, is not sufficient to establish that office chairs are of a kind ordinarily used for household purposes. I agree that it is preferable to pose the statutory question as a single composite question. On my reading, that was the course adopted by French J in Diethelm and, I think, by both Hill J and Tamberlin J in Chubb. In Diethelm , French J thought that the answer to the statutory inquiry depended critically on the essential character of the goods. Adopting what had been said by Gummow J in Hygienic Lily at 399, Hill J said that the question whether goods are of a particular kind was to be determined objectively, by reference to the nature, quality and adaptation of the goods in the class or genus in question. However, Hill J also expressed reservations about the essential character test, saying that the inquiry may be useful in some cases but in other cases it may suffer from a lack of precision: at 470. In Chubb , Burchett J doubted the usefulness of the essential character test: at 559. Hill J in Chubb looked beyond the essential character of the goods and took into account evidence that explained the attributes, the intended use and the cost of the goods; Tamberlin J adopted much the same approach as Hill J. In Clean Investments , Lindgren J said that the essential character test lacked sufficient precision to assist in answering the question whether the coin-operated washing machines under consideration in that case constituted goods of a kind ordinarily used for household purposes: at 273 [96]. Lindgren J added that there is a danger that the essential character test may serve simply to give an undeserved legitimacy to first impressions. 84 In Air International Pty Ltd v Chief Executive Officer of Customs [2002] FCA 355 ; (2002) 121 FCR 149, the Full Court considered whether imported fan assemblies, condensers and evaporators were goods 'of a kind used as replacement components in passenger vehicles' within the meaning of a particular item of the Customs Tariff Act 1995 (Cth). Tamberlin J adopted Gummow J's approach to the classification of a genus of goods in Hygenic Lily and considered whether the components in their nature, adaptation or quality could properly be characterised as 'replacement' components. Where they are so used, then that points to a conclusion that they are "of a kind" so used. The words "of a kind" add a further level of generality to the expression "used" so that even if (to use the Tribunal's expression) the goods are not so used but are within a range of goods of a type which are used, then they satisfy the required description. O'Loughlin J agreed with Tamberlin J. It can be accepted both from the language of the particular subheading and from the fact that customs duty will be payable on entry and before actual use, that the question how the particular parts are in fact used, will, subject to the comments below, be irrelevant to the question. That does not mean, however, that the purpose for which the goods are imported will be irrelevant. I am of the view that goods cannot, for customs classification, be treated as belonging to more than one "kind". Further, where no distinction exists between articles which are of the kind used as replacement components, and those which are not, (and the present is such a case) the only way in which the relevant kind can be ascertained will be by ascertaining what the exclusive or primary purpose is for which the goods are imported. Subsequent use, may be the best evidence of that purpose. In my view it will generally be the case with goods of the present kind, that they will take their character from the purpose of the importing, rather than anything which is an inherent quality of the goods themselves. 86 In my opinion, in the context of s 74A(2)(a) of the TPA, the essential character test is relevant, but the inquiry does not end there. The statutory question cannot be answered without a broader inquiry into the evidence concerning the design, marketing, pricing and potential uses of the type of goods in question. 87 Fourthly, the question posed by s 74A(2)(a) is ultimately a question of fact and degree. Rather, attention must be focused on the statutory question whether goods of that kind are ordinarily used for household purposes. No error is apparent in her Honour's judgment, although it is possible that minds could differ as to the outcome in a particular case. Both cases ultimately turned on the sufficiency of the evidence to discharge the burden of proof which rested on the applicant for sales tax exemption. In Crago , Lehane J considered whether an ostrich egg incubator and hatcher were goods falling within s 74A(2)(a). Lehane J concluded that they were not. In reaching this conclusion, he said that it was appropriate to ask whether the nature of particular goods is such that they are or are not of a kind ordinarily acquired for personal, domestic or household use or consumption, even in the absence of evidence of actual use: see at 40,798. Lehane J also placed weight on evidence that the goods were used in the ostrich egg 'industry' and that ostriches and their eggs were traded at high prices, and on the lack of evidence that the incubators were in fact acquired for personal, domestic or household use. His Honour drew a distinction between products which might be regarded as of a kind acquired for personal, domestic or household use 'as a matter of common sense' (such as a carpet, a washing machine or a television set) and an ostrich egg incubator. 89 In Jillawarra, Toohey J held that an air seeder purchased by the applicant for use in its farming business fell outside s 74A(2)(a). Toohey J rejected the applicant's contention that goods of a kind acquired for a farmer's personal, domestic and household purposes would encompass everything which is used on or in connexion with his farm: at 45,090. 90 In Minchillo, the Court of Appeal upheld the trial judge's decision that a prime mover was not 'goods' to which Div 2A of Part V of the TPA applied. Although the words "domestic or household" have a similar connotation, "personal" use is clearly intended to cover a wider field, but the primary contrast intended to be drawn is with commercial or business use, whatever other personal activities a vehicle may be used for. In the case of a prime mover it is hard to see that it would, in the ordinary understanding of those words, be "ordinarily acquired for personal ... use. " The causes of action under ss 74B and 74D relied upon by the appellants were therefore rightly dismissed by the trial judge. By force of subs (5), s 52A only applied to goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption. The Full Court held that building services provided by the respondent pursuant to a contract to erect a multi-storey office block were not services of a kind ordinarily acquired for personal, domestic or household use or consumption: at 206-207 per Kennedy J. Kennedy J also said that s 52A is directed essentially at consumer-type transactions, although the wording of the section is not such as to automatically exclude even substantial corporations from the category of consumer in every case: at 207. 92 In Carpet Call, Thomas J considered that carpet installed in a nightclub was within the scope of the statutory phrase. In fact the carpet supplied (as to which the warranty is alleged to apply) was of a domestic rating. The point may deserve discussion at greater length, but for the purpose of noting the submissions and expressing a provisional view, it is not necessary to engage in such discussion here. The first aspect concerns the significance that attaches to the statutory context and small differences in the language of the statutory phrase. The issue is whether the statutory context of s 74A(2)(a), and the slightly different language used in that section, requires an approach to characterisation that differs from that adopted in the sales tax and customs cases. The second and related aspect concerns the proper scope of the evidence that can be taken into account in answering the statutory question posed by s 74A(2)(a). 94 In Diethelm , both French J and Hill J emphasised that their approach to the construction and application of the sales tax exemption was heavily influenced by its statutory context. 95 The issue in Diethelm was whether a manufacturer of office furniture was entitled to a special concessionary rate of sales tax on its office chairs on the ground that they fell within the category of 'goods of a kind ordinarily used for household purposes, namely furniture'. The trial judge found that, while all of the relevant chairs could be bought for use in a home, a high proportion were high quality chairs that were designed and bought for office use. French J dismissed the appeal, holding that the essential character of the chairs in issue was correctly identified as office furniture, reflecting the market in which the chairs were manufactured and sold having regard, inter alia, to their quality, cost, design and intended and actual purchasers: at 465. His Honour thought that the appropriateness of this characterisation was not altered by the fact that the chairs were sometimes used for household purposes, and obviously performed physical functions similar to such chairs, as they were not of a kind ordinarily so used. Hill J was less rigid about the characterisation of the chairs. In the case of some of the chairs, Hill J felt that the characterisation in question should be answered negatively to the manufacturer. For instance, he considered that the high back executive office chair is not a chair of the kind ordinarily used for household purposes; rather it is of a kind ordinarily used for office purposes. The proper characterisation of other chairs was more debatable. In the result, Hill J held that the manufacturer, who had the burden of proof, had not established on the evidence that any particular chair was of a kind ordinarily used for household purposes. In his Honour's view, the evidence did not permit a conclusion on the balance of probabilities that any of the types of chairs sold by the manufacturer was of a kind ordinarily used for household purposes: at 473. Consequently, Hill J dismissed the appeal. Whitlam J agreed with the judgment of Hill J. 96 French J drew attention to the statutory context and the general principles that the classification of goods attracting exemptions or beneficial rates of tax should be liberally construed unless the text or context requires a narrower construction, and that words or phrases should be construed according to their popular meaning unless the evidence establishes that they carry a special commercial or trade meaning in their context: at 457 and 464. His Honour also noted that generalisations about the construction of statutory classifications are to be undertaken with caution, and that subtle changes in language can significantly alter the meaning and operation of a particular provision. French J contrasted the construction given by the authorities to the expression 'ordinarily used for household purposes' with the construction given to the expression 'goods for use' in some specified activity or by some specified person or entity. The former expression has attracted an objective test for characterisation of the goods said to fall within it: see Commissioner of Taxation (Cth) v Newbound & Co Pty Ltd (1952) 10 ATD 59; 26 ALJR 386 at 387 per Dixon CJ; Commissioner of Taxation (Cth) v Sherwood Overseas Pty Ltd (1985) 75 FLR 474 at 477; O R Cormack Pty Ltd v Commissioner of Taxation (Cth) (1992) 92 ATC 4121 at 4123; and Hygienic Lily at 399. That assessment does not involve fine semantic distinctions but a judgment which pays regard to the commercial realities of their manufacture and sale. In Commissioner of Taxation (Cth) v Hamersley Iron Pty Ltd (1981) 59 FLR 415, the Full Court of the Victorian Supreme Court noted that the expression 'for use in' is purposive, and makes relevant facts such as the operations which the machines in question were intended to perform, built to order to perform, and did perform: at 426 per Lush J (Kaye and Brooking JJ agreeing). In Deputy Commissioner of Taxation v Stewart [1984] HCA 11 ; (1984) 154 CLR 385, the High Court was concerned with the expression 'goods for use ... and not for sale, by ... a public benevolent institution'. Gibbs CJ (Dawson J agreeing) said that the words 'for use' indicate the purpose to which the goods are intended to be put, rather than the use for which the goods were designed: at 390. Deane J said at 401 that these words require an objective characterisation of the goods themselves in the light of all the relevant circumstances, including knowledge of the actual use which was subsequently made of the goods. In the context of sales tax and customs legislation, Hill J suggested that the essential character test, rather than a test which took account of the purpose of the purchaser or the proposed destination of the goods in the mind of the manufacturer or importer, assumed prominence for the very practical reason that an assessment of the goods must be made either at the point of last wholesale sale or at the point of importation. If the item, as here, calls for a determination of whether the goods themselves are of a particular kind, that issue must, no doubt, be determined objectively but, with respect to what French J has said, is little assisted by a consideration of the particular "realities of their manufacture and sale". The fact that a high proportion of the chairs in question were bought for office use would tell little as to the use of the kind of goods, the genus, of which the particular goods in question form a part. Similarly, it seems to me that a finding that the goods are of high quality making them too expensive for general sale for use in households will be of little or no significance. This will be particularly so if the class of goods in question is capable of encompassing goods of high quality as well as goods of lesser quality. Nonetheless, in the context of the construction and application of the phrase 'goods of a kind ordinarily used for household purposes' in sales tax legislation, it seems that French J was prepared to allow a greater role for evidence concerning the commercial realities of the manufacture and sale of the goods in question, that is to say evidence concerning the quality, cost, design and the purpose of intended and actual purchasers of the goods in question, than Hill J would allow. 100 In Diethelm , Hill J observed that Gummow J adopted a similarly restricted approach to the characterisation of the goods in question in Hygienic Lily. However, the decision in Hygienic Lily reflects the very narrow basis on which the case was argued. The case concerned paper cups of different sizes that were manufactured for various customers and which were marked by the manufacturer with the various trade marks or designs employed by the relevant customers in their particular businesses. The applicant mounted its case by reference to evidence concerning cups ordered by one particular customer, McDonalds Restaurants. The sole argument advanced by the Commissioner of Taxation was that, as the cups in question were manufactured solely or substantially for the purpose of use in McDonalds Restaurants, they were not goods of a kind ordinarily used for household purposes within the meaning of the sales tax exemption: at 399. Pty Ltd v Federal Commissioner of Taxation (1986) 81 FLR 450; (1986) 86 ATC 4036 at 4042. Further, the setting in which the phrase "goods of a kind" appears suggests it is directed not to the use for which the particular goods in question were designed or manufactured, nor to the purpose to which it is intended those particular goods shall be put, but rather to the nature, quality and adaptation of goods in the class or genus in question. Thus, goods are "of a kind ordinarily used for household purposes" if they are to be recognised as members of a class or genus which commonly or regularly (albeit not necessarily exclusively or principally) is used for household purposes; cf Customs and Excise Commissioners v Mechanical Services (Trailer Engineers) Ltd (1979) 1 WLR 305 at 312-313, 315, 316-317. In my view, a purpose may be a household purpose even if not exclusively or principally pursued in situ a dwelling. The cups have printed upon them "McDonald's" and many stylised representations of the letter "M"; it readily may be conceded that these goods are manufactured to fill orders placed upon the Applicant to supply McDonald's Restaurants for use in filling with beverages sold to customers. However, in my view, that does not deprive them of the character of goods of a kind ordinarily used for household purposes. Item I does not predicate the criteria for classification upon so single-faceted a method of characterisation. In the course of his judgment, Hill J returned to the question of what evidence is relevant in determining the statutory question. The answer in a particular case may well be one on which minds may differ, for ultimately the determination whether a particular safe or cabinet falls within the Item is a matter of impression. A matter of degree is involved. Counsel pointed out that in Chubb, Hill J maintained the same two stage analysis that he adopted in Diethelm . The first stage involves the determination of the genus to which the goods belong, which is to be made in a common sense way and which may involve a consideration of evidence in borderline cases. The second stage requires a determination of whether the relevant kind of goods is ordinarily used for household purposes: see 569[G]-570[A]. Counsel submitted that Hill J's statement in Diethelm concerning the limited role of evidence was directed to the first stage of the inquiry, whereas his Honour's reference in Chubb to a broader range of evidence was directed towards the second stage of the inquiry. 105 I am not persuaded that the two passages can be reconciled in this way. The passage in Chubb is not seeking to distinguish between different steps or stages in the inquiry; rather it is addressing the composite statutory question whether a particular good is of a kind ordinarily used for household purposes. None of these matters is determinative but they are matters against which the classification ought to be made. In particular instances of doubt it will be necessary to give greater weight to one or more of these considerations. It is permissible to consider products of a similar type made by other manufacturers in respect of size, dimensions, cost, capacity and security rating, for example. It will often be helpful to take into account the segment of the safe and security market at which the goods are targeted in advertising and promotional material. Section 74A(2)(a) refers to 'goods of a kind ordinarily acquired for personal, domestic or household use or consumption' (my emphasis). Even more clearly than the words 'ordinarily used for', this language invites attention to design features and purposes, cost quality and pricing considerations, and the range of uses and applications for the goods which have been targeted in advertising and promotional material. I see no reason why the permissible range of evidence should not extend to what French J called 'the commercial realities of [the] manufacture and sale' of the relevant goods and, as Tamberlin J suggested, similar goods made by other manufacturers. Nor do I see any reason why the use of this evidence is to be confined to the 'genus' question (assuming it is to be addressed separately), rather than being used to assist more broadly in determining the composite statutory question. 108 I therefore accept that a broad range of evidence may be relevant and potentially useful in answering the statutory question. At the same time, I recognise the importance of bearing constantly in mind that the statutory question is whether the goods are of a kind ordinarily acquired for personal, domestic or household use or consumption. Care must be taken to ensure that the detail of the evidence does not blur this question, or distract the Court from the appropriate inquiry. It would, for example, be a mistake to become so focused on the properties, attributes and intended and advertised uses of the particular goods that the Court fails to address the statutory question. This risk would materialise if the kind of goods were to be identified so narrowly that it amounted to little more than a description of the particular goods. 110 Both parties submitted that the question which I must answer is, in many respects, a matter of impression and degree. No doubt that is so, but I prefer to see the question as one that calls for an evaluative judgment that is informed by the language and context of s 74A(2)(a), the legal principles I have discussed, and the range of evidence and facts to which I have referred. 111 I have carefully considered all of the facts and evidence concerning the characteristics, use, marketing, pricing and history of the products and of similar products. (2) A wide variety of reflective foil laminates are, and were during the relevant period, available on the market. Their particular attributes vary across a range of factors, including tensile strength and tear resistance, water vapour transmission rate, flammability index, chemical resistance, liquid barrier performance, light reflectivity, and appearance. The variations also include different surfaces, including single-faced foil, double-sided foil, double-sided foil with a non-glare finish applied to one side, and foil laminates that have special surfaces applied to them, such as a white polymer or similar decorative finish. (3) The attributes of white-faced foil laminates comprise washability, corrosion resistance, aesthetic appeal and suitability for use as an internal wall lining in commercial and industrial applications. All reflective foil laminates are and were suitable for bulk use, so this cannot be regarded as a distinguishing feature of white-faced foil laminates. (4) It is common for both uncoated reflective foil laminates and white-faced foil laminates to be left exposed to view in commercial and industrial buildings as the only form of roof or wall lining. However, if there are special needs for washability, corrosion resistance, light reflectivity, or simply a desire to present a more finished appearance, white-faced foil laminates can provide the extra feature or features at an additional cost. (5) While the products were, at all relevant times, marketed as being ideally suited for use in commercial and industrial applications, their use in residential applications was left open. The product data sheets for Sisalation 498 and Permastop 496 emphasised that the products were suitable in each case for use in industrial, commercial and agricultural buildings. But the potential applications of the products were not confined solely to these uses; the product data sheets referred to the use of the products 'wherever strength, hygiene, cleanability, corrosion resistance or aesthetics are important' or 'wherever an aesthetic white appearance and/or corrosion resistance are required'. (6) More generally, white-faced foil laminates were marketed for use in a range of applications that included commercial, industrial and residential. The products were preceded in the market place by Sisalation 430, Sisalation 433 and Sisalation 430WP (the latter having a white polyethylene coating on one face). These products were marketed by a single data sheet which recommended applications in residential houses and in commercial and institutional buildings. The successor products, Sisalation 437 and Sisalation 440, were marketed by a single data sheet which states that they have the same functional properties of insulation, energy efficiency, vapour barrier and fire performance. The current polymer coated product range also includes Sisalation 465, 466 and 484 which are marketed for use in demanding applications, such as under the roofs of residential buildings. None of the white-faced foil laminates produced by rival manufacturers were marketed in a way that suggested that they were unsuitable or inappropriate for use in residential applications. 112 It is correct, as the respondent argues, that white-faced foil laminates have special attributes and applications. They are, and were at all relevant times, significantly more expensive than uncoated reflective foil laminates, and are in fact used almost exclusively in commercial and industrial applications. However, as the applicant's experts said, there is nothing other than price that would make them unsuitable for use in residential applications. The respondent contends that the special attributes, special applications and greater cost of white-faced and other decorative foil laminates render them so distinctive that they must be regarded as goods of a different kind from reflective foil laminates. I do not accept this contention. 113 Having regard to the whole of the evidence, I am satisfied that the products are goods of a kind ordinarily acquired for personal, domestic or household use or consumption within the meaning of s 74A(2)(a). In reaching this conclusion, I have taken into account the differences in marketing, price, attributes and ordinary use of the products by end users upon which the respondent relies. I have also taken into account the common features and applications of reflective foil laminates and white-faced foil laminates. In my opinion, the proper characterisation of the products must give due weight to the three essential properties of the products. They are and were acquired and used in building constructions because they possess those essential properties. To classify the products narrowly on the basis of the particular feature that the foil face is coated with polypropylene would give undue weight to this single facet or characteristic of the particular products, and would misapply the statutory phrase. 114 In my opinion, the special features relied upon by the respondent do not mean that white-faced and other decorative foil laminates are goods of a kind different from reflective foil laminates. Rather, it indicates that white-faced and other decorative foil laminates are a product variant, amongst many different product variants, of standard reflective foil laminates. Nor can it be said that white-faced or decorative foil laminates are the only reflective foil laminates that function as a form of internal roof or wall lining. Both uncoated reflective foil laminates and white-faced foil laminates are and were commonly left exposed to view in commercial and industrial buildings as the only form of roof or wall lining. The relevant difference between the two variations is that if there are special needs for washability, corrosion resistance, light reflectivity, or simply a desire to present a more finished appearance, white-faced foil laminates can provide those extra features at an additional cost. 115 For the foregoing reasons, I have concluded that each of parts (a), (b) and (c) of the separate question posed by the Court's order of 22 April 2005 should be answered 'yes'. | whether goods of a kind ordinarily acquired for personal, domestic or household use or consumption application of div 2a of part v of trade practices act 1974 (cth) where particular products not ordinarily acquired for personal, domestic or household use or consumption whether goods of a kind so acquired goods of a kind ordinarily acquired for personal, domestic or household use or consumption trade practices words & phrases |
On 14 March 2008 he applied to the Department of Immigration and Citizenship for a Protection (Class XA) visa. A statement provided in support of that application claimed persecution by reason of his Muslim beliefs. Persecution was allegedly increased by reason of the now Appellant's position as a journalist with an Indian newspaper, variously described as the " Gujarat Today " and the " Gujarat Daily ". The statement claimed that he had become one of " the leading activists of the Muslim community " and " was their hope and inspiration ". The application was refused by a delegate of the Minister on 10 April 2008. The now Appellant sought review by the Refugee Review Tribunal on 30 April 2008. The Tribunal affirmed the delegate's decision on 13 October 2008. It does not accept that he wrote articles for a Muslim daily newspaper as he has claimed. It does not accept that he was jailed on any occasion because of the articles he wrote, or because he was a Muslim and an activist or because he provided social services to the Muslim community. It does not accept that the applicant was a leading Muslim activist. The Tribunal committed jurisdictional error of law by failing to consider an integer of the applicant's claim. The applicant was not provided the documents to the Applicant which he was relied in making the decision of the application. b. In respect to the enquiries to the Gujrat daily it was admitted that the Applicant was worked there. 2. The Tribunal made irrelevant consideration in deciding the case. 3. The Tribunal founding was based on wrong footings and no basis in making this decision. 4. In term of a false case the Tribunal said that the there is no charges against the applicant. There is no basis of this as such the Tribunal made an error in making this decision. The Application was subsequently amended on 30 January 2009. The Federal Magistrates Court dismissed the Application before it on 25 June 2009: SZMXS v Minister for Immigration and Citizenship [2009] FMCA 537. Before the Federal Magistrates Court the now Appellant was represented by Counsel. A Notice of Appeal was thereafter filed in this Court on 14 July 2009. The Grounds of Appeal provide as follows (without alteration): In term of false case the Respondent said that there is no charges against appellant. There is no basis of this as such the Respondent made an error in making this decision --- The Respondent committed jurisdictional error of LAW by failing to consider an integer of Appellant's claim: (a) that Appellant no provide documents which was relied in making the decision (b) about enquiries to the GUJRAT DAILY employment. The Appellant had requested that a male interpreter be provided, but the interpreter available on the day of the hearing was female. The Appellant sought a male interpreter, he explained, to avoid " confusion ". The hearing of the appeal nevertheless proceeded with the benefit that the female interpreter provided. As events unfolded, no " confusion " emerged. The appeal is to be dismissed. None of the Grounds of Appeal , it is considered, should prevail. None of the Grounds of Appeal , it should be noted, attempt to identify any appellable error said to have been committed by the Federal Magistrate. Nor is the Appellant's position improved even if the Notice of Appeal is to be construed as seeking to contend that the Federal Magistrate erred in not acceding to like contentions. None of the Grounds --- however construed --- have any apparent merit. In the absence of explanation as to why this Ground was initially raised for resolution and thereafter not relied upon, it is not considered that leave should now be given to rely upon this argument for the first time on appeal. Although leave may be granted to rely upon an argument raised for the first time on appeal, leave should not too readily be granted --- especially where it is not evident that the grant of leave is necessary in the interests of the administration of justice: SZNSC v Minister for Immigration and Citizenship [2009] FCA 1436. In refusing leave in the present proceeding to depart from the manner in which the case was advanced before the Federal Magistrate, particular reliance has been placed upon the fact that the now Appellant was previously represented by Counsel and the apparent lack of merit in the argument now sought to be advanced. So construed, it is a Ground without merit. In support of his claim before the Tribunal, the now Appellant sought to rely upon a number of newspaper articles that he said he had written and a press identity card. In some circumstances it may be accepted that a Tribunal should make inquiries into aspects of a claimant's case: Minister for Immigration and Citizenship v SZIAI [2009] HCA 39 at [24] , [2009] HCA 39 ; 259 ALR 429 at 436. Whatever may be the extent of that duty and the circumstances in which it arises, in the present proceeding it may be accepted that inquiries were in fact made. It is run by reputed NGO, Lok-Hit Sarvajanik Trust which was established in 1985 to bridge the "communal divide" caused by widespread religious unrest in that year. The Trust is managed by the Muslim community, and in addition to the newspaper is also involved [sic] charitable work such as free medical treatment camps in slum areas, educational [sic] for the poor, rehabilitation services to those affected by floods, earthquakes, etc. Gujarat Today is known to have raised and highlighted social issues of relevance to Gujarat ( Department of Foreign Affairs and Trade 2008, DFAT Report 875 --- India: RRT Information Request IND33642, 2 September ). Post could not verify the validity of the press identity card provided in reftel [ie research request]. Post could not obtain a photograph of the person whose name appears on the press identity card. Post made enquiries at the office of Gujarat Today . Gujarat Today staff informed us that a Mr [X] worked with Gujarat Today some four to five years ago for around two months. Post did not provide the newspaper with a copy of the press identity card provided in reftel as they informed us that due to inadequate records management they would be unable to verify its authenticity. Post was unable to verify the photograph of Mr [X] through other sources. Most staff at Gujarat Today either knew very little about Mr [X] or were too new to the organisation to provide any information ( Department of Foreign Affairs and Trade 2008, DFAT Report 875 --- India: RRT Information Request IND33642, 2 September ). No jurisdictional error is exposed by the Tribunal not making further inquiries or not causing further inquiries to be made. Nor is an error exposed in the reasons for decision of the Federal Magistrate in rejecting arguments founded upon any alleged failure to make inquiries: [2009] FMCA 537 at [14] to [26]. But it, too, can be construed as a contention that the Federal Magistrate erred in rejecting a comparable argument with respect to the Tribunal's decision. So construed, the Ground was understood to relate to the myriad newspaper articles sought to be relied upon by the now Appellant when appearing before the Tribunal. Although the Ground refers to the Tribunal " refusing to accept the tender of articles ", that may not be an accurate manner in which to describe what happened. The newspaper articles are referred to throughout the reasons for decision of the Tribunal. However, he had produced a number of documents on the day of the hearing which he had not referred to previously. Many of the documents were written in Gujarati. The Tribunal was concerned about why the applicant had done this. The representative told the Tribunal that the applicant had not translated the documents in Gujarati because the cost of a translation would be $500. The Tribunal asked the applicant whether there was anything he particularly wanted to refer it to within the large amount of material submitted shortly before the hearing. However, it took the identification card and the warrant which the applicant had submitted (folios 195-196). But it matters not. The now Appellant sought to rely upon the articles and the Tribunal returned them to him at the conclusion of the hearing. There are two reasons why this final Ground of Appeal should be rejected. First, the Tribunal is under no unqualified duty to obtain a translation of all material that a claimant may seek to rely upon. However, the primary judge was correct when he said, as a general proposition, at [46] that the RRT "is not required to translate material in a foreign language" or "consider large volumes of material whose relevance is not explained". Its failure to do so will not mean that it failed to consider or review an application in accordance with s414(1) of the Act or s54 of the Act, if applicable, when it has otherwise dealt with all material considered by it to be germane to its task of reviewing the decision of the delegate. In the present case the additional material was voluminous (including 19 textbooks in Spanish) and its relevance unexplained. There is no general requirement to secure the translation of " voluminous " material. Indeed, there may be no requirement imposed upon the Tribunal to secure the translation of even a particular document. But, if a document that has not been translated is to be relied upon, there may be a necessity to inform a claimant that the Tribunal will not take that document into account because a translation has not been furnished: X v Minister for Immigration and Multicultural Affairs [2002] FCA 56 , 116 FCR 319. There in issue was a diary obtained from Burma. The Tribunal affirmed the decision under review and concluded that it could not take the diary into account as it had not been translated. The issue in this appeal is slightly different. I do not suggest that the Tribunal was obliged to obtain a translation of the diary itself nor that it was obliged to defer deciding the appellant's application until the appellant had provided a translation. What it did not do was inform the appellant that it would not take into account the contents of the diary because a translation had not been furnished. Generally, an applicant would be likely to know what a document relied on said and its significance. Both matters could be explained by the applicant if comment was invited before the document was effectively rejected. The Tribunal is not bound by any "best evidence" rule and can rely on secondary evidence, as it is described in curial proceedings, of the contents of documents: see s 420(2). Moreover, it is open to the Tribunal to request (as it routinely does) that an applicant provide translations of documents on which he or she relies particularly if the applicant says the document is significant or the Tribunal believes it may be. If a translated document provided by an applicant bears upon the claim of the applicant and the Tribunal is to have regard to it, the Tribunal can either accept the translation or independently seek to verify its accuracy. It is improbable that the statutory scheme would require the Tribunal ordinarily to obtain a translation if none was provided, after invitation, by the applicant: see Cabal v Minister for Immigration and Multicultural Affairs . However, equally, it is unlikely that the statutory scheme authorised the Tribunal to disregard the contents of a document relied on by an applicant simply because it was not in English, when the applicant was not put on notice that the contents would be disregarded without a translation being provided, before the decision was made to reject the application for a protection visa. Gray J further found that the present case was one where a translation should have been obtained. The appellant's diary was the only document tendered. It related only to 1988. Its relevance to the issue of the appellant's involvement in political activities in 1988 was explained (in the sense that the appellant had submitted, and the Tribunal understood, that this was what the diary was relevant to). This was an occasion on which the Tribunal was "under an obligation to obtain a translation of a particular document which is in a foreign language and whose relevance has been explained" to it. To fail to do so was to act without power, because the Migration Act should be construed as not permitting the Tribunal to distinguish against the appellant on the ground of his race, language, or national or social origin, by refusing to take into account a document of his making because it is not in the English language. It is one thing for the Tribunal to request that documents be translated into English. It is quite another to refuse to take into account a document that is asserted to be relevant to a specific issue on the ground that it has not been so translated. In doing so, however, His Honour observed that " [t]here is room for a variety of views --- so much so that I do not think it appropriate for this Court to lay down inflexible guidelines ": [2002] FCA 56 at [44] , 116 FCR at 331. The second reason why this final Ground of Appeal should be rejected is that, in the present proceeding, the now Appellant had been expressly invited by the Tribunal to draw its attention to any particular document that he specifically sought to rely upon. He apparently declined that invitation. The reasons for decision of the Tribunal thus record that it asked the Appellant " whether there was anything he particularly wanted to refer it to within the large amount of material submitted ...". And that arose, it is to be recalled, in a context where the now Appellant had been requested to provide documents to the Tribunal in advance of the hearing and yet only produced many of the documents on the day of the hearing itself. A claimant cannot complain of any inadequacy of an opportunity to be heard, or of any failure to take into account a particular matter, in circumstances where he produces a vast number of documents at a hearing before the Tribunal and fails to avail himself of an opportunity to draw the Tribunal's attention to a particular matter or matters contained within those documents. Even where a document is not translated, there may be no error where the Tribunal in fact takes into account a point sought to be made by a claimant in reliance upon untranslated documents: SZLSW v Minister for Immigration and Citizenship [2008] FCA 1321 at [16] , 103 ALD 580 at 584. Where the " gist " of a document which is otherwise untranslated is understood, there may be no error: S14/2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1153 at [49] per Moore J. Moreover, the reason for the return of the newspaper articles became apparent when the Tribunal published its reasons for decision. The Tribunal formed a very adverse view as to the credit of the now Appellant --- including an adverse view as to whether the articles had indeed been written by the now Appellant as claimed. Reporter identity card, or the warrant which he claimed was issued in regard to the January 2006 FIR. The present appeal is thus not the occasion to give any detailed consideration to those circumstances in which an opportunity to be heard or the requirement to take into account a consideration relevant to a decision to be made may embrace a requirement to have documents relevant to a claimant's case translated from a foreign language into English. Not unexpectedly, there has been no examination in the present proceeding of any more generally expressed requirement for evidence in civil or administrative proceedings to be in English. Nor has there been any real examination of such guidance as may be gleaned from those cases --- such as extradition cases --- where documents supplied in support of an extradition request may need to be translated: e.g. Cabal v United Mexican States (No 3) [2000] FCA 1204 at [154] to [164] [2000] FCA 1204 ; , 186 ALR 188 at 247 to 251 per French J. But considerations which may readily be identified as relevant to any such requirement extend to such matters as: the number of documents in issue; the relevance of those documents to the claims being advanced; the ability of a claimant to otherwise advance his case and any prejudice that may be suffered if documents are not translated; the availability and ability of an interpreter present during the course of a hearing before the Tribunal to translate particular documents or particular parts of documents identified by a claimant as relevant to his claims; and the financial ability of a claimant to himself pay for the translation of documents and the ability of the documents to be translated by any community-funded agency. More needs to be established. In the present appeal, no jurisdictional error is disclosed by the fact that numerous newspaper articles were not translated and were returned to the now Appellant at the conclusion of the hearing. Those were findings of fact, however, entrusted by the legislature to the Tribunal. No jurisdictional error is disclosed in the manner in which the Tribunal proceeded or in its reasons for decision. The appeal is to be dismissed. There is no reason why the Appellant should not be ordered to pay the costs of the First Respondent. The Appellant is to pay the costs of the First Respondent. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | duty to make inquiries adequate inquiries undertaken duty to obtain translation of documents circumstances in which duty may arise duty does not arise attempt to rely upon a ground of appeal abandoned before the federal magistrate leave to raise as ground of appeal refused migration practice and procedure |
The application was accompanied by a clear statement of claim and a five page statement of particulars of infringement. 2 The matter came before me for first directions on 13 December 2005. Counsel appeared for the applicant and the fifth respondent. A Mr Zhang, solicitor, appeared for the first to fourth respondents. Orders were made that all respondents file and serve fully particularised defences and any cross-claims by 24 February 2006. The proceeding was listed for directions on 7 March 2006. 3 On the previous day, 12 December 2005, Mr Michael Soulos of Spanko Soulos & Co caused a notice of appearance to be filed on behalf of the fifth respondent. 4 No notice of appearance was ever filed by Mr Zhang, though he and/or his firm proceeded to act for the other respondents as described below. 5 On 23 February 2006, a defence of the fifth respondent was filed. The defence, in effect, confessed and avoided. The fifth respondent had been supplied (by wholesale sale) with what I will call offending goods by one or more of the first to fourth respondents (for retail sale). The defence expressed a lack of desire to litigate any issue against the applicant, but, inferentially, sought to take advantage of any issue pressed by the other respondents. As to the account of profits, the fifth respondent said that it was not aware, prior to certain dates, of the fact of infringement. Section 123 of the Patents Act 1990 (Cth) was relied upon. 6 On 24 February 2006, the applicant filed a reply to the fifth respondent's defence, raising s 123(2) of the Patents Act . 8 The first to fourth respondents did not file any defence within the time that had been ordered on 13 December 2005. A defence of the first to fourth respondents was filed, however, on 3 March 2006 by Mr Zhang's firm, Zhang Shijing Lawyers of Suite 13, Level 1, 30 Castlereagh Street. The defence was an unilluminating collection of non-admissions and denials. We will file the defence soon. 10 On 7 March 2006, the proceeding came before me for directions. There was a related matter travelling with the proceedings, in which the applicant sued a company called Shun Li De Pty Limited (which I will refer to as "the Shun Li proceeding"). Ms Howard appeared for the applicant, Mr Burley for the first to fourth respondents and Ms Champion for the fifth respondent. By the identity of those appearing and what was said by Mr Burley, it appeared that there would be a contest on infringement and validity issues. Though no cross-claim had been filed rasing invalidity, Mr Burley said that one may be filed. He said: " Some matters need to be explored further than they have been. " He said that his clients required a further two weeks to clarify their position. (b) The fifth respondent who, as Ms Champion stated, " simply played the part of the Australian distributor in the saga" was, as I said to Ms Champion " just going to coat tail Mr Burley" (that is the first to fourth respondents). (c) The position of the respondent in the Shun Li proceedings was stated by Mr Belmer, who appeared for it, as, " My latest instructions last night through the principal solicitor were that our client doesn't wish to expend large sums of money defending this matter and we are investigating the possibility of him being able to settle the matter". 12 I ordered that the proceeding be stood over to 4 April 2006, excusing the fifth respondent from attending. I ordered the first to fourth respondents to pay the applicant's costs of the day since they had been in default. 13 On 4 April 2006, the matter came before me once again for directions. Mr Jamison appeared for the first to fourth respondents and Ms Howard for the applicant. Mr Jamison stated that there was no cross claim to be filed. This news was conveyed on this day to the applicant. It can be inferred from what I have earlier stated that this was a considered decision on advice. There was some intimation from the bar table that the matter might settle. The possibility of mediation was discussed. 14 Meanwhile, on 21 March 2006, the applicant had served notices to admit facts on the first to fourth respondents. At the directions hearing on 4 April 2006 (being the last day to answer them), Ms Howard indicated that the first and fourth respondents had said they needed more time. From discussion at this directions hearing, it appeared that all practitioners understood the need to resolve the matter as quickly as possible and that the possibility of mediation would be explored. To allow the parties to explore issues between them and to resolve the matter, if possible, I adjourned the proceeding to 9 May 2006. The applicant was to inform the fifth respondent and the respondent in the Shun Li proceeding. 15 On 8 May 2006, the applicant filed by e-filing a notice of motion without a return date seeking declarations of infringement and injunctions against the first to fifth respondents, an order for delivering up, discovery on the question of pecuniary relief and, as against the first to fourth respondents, costs. The notice of motion sought these orders under Order 18 rule 4 (judgment on admissions) and Order 20 r 1 (summary judgment) of the Federal Court Rules . On the same day, an affidavit of Mr Christopher Jordan of the applicant's solicitors was filed by facsimile in support of the motion, annexing the notices to admit and stating that the extra two weeks sought by counsel for the respondent on 4 April 2006 to answer them had expired with no answer. 16 The proceeding came before me on 9 May 2006, in conjunction with the Shun Li proceeding. Counsel appeared for all parties in both matters. These two matters were filed in November 2005 and involve claims for the infringement of a mechanical patent of no vast complexity. The respondents were given in the early stage of preparation of the matters an opportunity to attack the validity of the patent by a cross-claim. No respondent has taken that opportunity, therefore the matter will proceed on infringement only. There was some indication early that the matter may resolve itself by recognition of the respondents that the applicant had a case. That has apparently evaporated. The applicant, in an attempt to bring the matter forward promptly served notices to admit on the relevant respondents. No respondent has complied with the rules in answers to the notice to produce. There are some assertions from the bar table that there has been an informal answer. That may or may not under the rules qualify admissions that have been made. The applicant has filed a notice of motion in both proceedings on 8 May 2006, seeking various orders including judgments on admission and summary judgment. The parties should be aware and familiarise themselves with a change in a regime of summary judgment which may be seen to be brought about by s 31A of the Federal Court of Australia Act 1976 (Cth) which removes from the parties the need to demonstrate that part of a proceeding or a defence be hopeless or bound to fail before one can conclude that it has no reasonable prospects of success. The explanations given to the Court by the respondents as to why the rules of court were not followed to deal with the notice to admit are not, with respect, satisfactory. I am told that there will be applications to set aside the admissions. The best course in my view is to simply set this matter down for hearing and adjourn the applicant's motions to that hearing day and adjourn any further application that the respondents might make to set aside the notice to admit or the admissions to that day also. This will enable me to examine the matter in the light of such evidence that the parties wish to bring as to infringement which I understand will not be broad ranging. If I think at the hearing of the matter that summary disposal or judgment on admission is a convenient way to deal with the matter, I will deal with the matter on that basis. I will also deal with the question of costs of what has occurred to date. At least one of the motions seeks orders by way of amended particulars. Any amendment should be taken up inter partes between solicitors. If there is any serious opposition to any amendment the matter can be listed for directions at short notice by contacting my associate through an agreed communication. If the parties can agree on an amendment a consent minute or order should be filed with the registry. Also today, the fifth respondent in matter NSD 2329 of 2005 sought, as indicated that a cross-claim will be filed against the first to fourth respondents. Short minutes of order were handed up in support of this. The first order seeks leave to file and serve a cross-claim on the first to fourth respondents but the form and a cross-claim is not present before the Court. I will make the orders sought by the fifth respondent against the first to fourth respondents. However, if there is any debate about the form of the cross-claim the matter should be relisted and I will deal with the matter on the basis that the fifth respondent needs leave to file the document. Adjourn the matter to a date to be fixed for hearing in August 2006. The applicant file and serve all its evidence on the motions and on the hearing on or before 16 June 2006. Any notice of motion of any respondent to set aside admissions is to be filed and served on or before 14 July 2006. All evidence of any respondent in support of those motions be filed and on the hearing of the appeal be filed and served on or before 14 July 2006. Any evidence of the applicant in reply on either the main hearing or the applications for summary judgment be filed on or before 28 of July 2006. The parties are to consult promptly about any proposed amendments. If the parties cannot agree the matter is to be relisted. If they can agree a minute of order as to the amended pleadings is to be filed and served on or before 26 May 2006. Stand the matter over for directions to Tuesday 25 July 2006. That date may be vacated if it is unnecessary. Liberty to apply on 3 days' notice. 19 On 15 May 2006, the fifth respondent filed a cross-claim against the first to fourth respondents. The cross-claim pleaded contractual, tortious and trade practices claims based on the sale to the fifth respondent (for on-sale by it) of goods that infringed the applicant's patent. 20 On 9 June 2006, the first to fourth respondents, as cross-respondents, filed a document entitled "Defence to Cross-Claim and Cross-Claim of First Cross-Respondent against Cross-Claimant". The defence was unilluminating, stating in a number of places that the cross-respondents would put the cross-claimant "to strict proof". The document included, at paragraph 26, the allegation that the fifth respondent (cross-claimant) had not paid for the goods supplied to the amount of $164,520.72. A claim was made that the fifth respondent had breached its duty under the Sale of Goods Act 1923 (NSW), s 30 to pay the price of the goods, and judgment was sought in this sum. 21 On 27 July 2006, the fifth respondent, as cross-claimant, filed a reply to the defence to cross-claim and a defence to the cross-claim of the first respondent. In answer to the allegations made in paragraph 27 of the Defence, the Cross-Claimant says that the Cross-Respondents are estopped from relying on the breach asserted in this paragraph as a result of the breaches and misrepresentations by the Cross-Respondents and each of them referred to in paragraphs 23, 24, 25, 36, 37 and 38 of the Cross-Claim. The three affidavits were as a director of the first and fourth respondents (two affidavits) and on behalf of himself and the third respondent (one affidavit). Notwithstanding order 9(f) made on 9 May 2006, Ms Howard also appeared for the applicant. Her appearance was necessary because the notices of motion referred to at [22(b)] above had been given 27 June 2006 as a date for directions. Mr Thompson appeared for the first to fourth respondents; Ms Champion appeared for the fifth respondent. On this occasion, security for costs was mentioned and Ms Howard, for the applicant, said some would need to be provided, but that a large, undifferentiated sum had been sought. The Fifth Respondent/Cross-claimant file and serve a Reply, if any, to the defences to the cross-claim and its defence to the cross-respondents' cross-claim on or before 11 July 2006. Discovery proceed informally by way of specific requests for documents on or before 18 July 2006. The Cross-claimant and the cross-respondents produce documents in answer to such requests on or before 28 July 2006. Products said to infringe and also any letters documents referred to on the pleadings, be made available by the applicant in Sydney at a mutually convenient place and time and in any event on or before 5 July 2006. On the motion for withdrawal of admissions by the first to fourth respondents, the first to fourth respondents file and serve on or before 11 August 2006 all evidence upon which they would seek to rely in resisting infringement together with full written submissions of counsel or the person running proceedings as to why there is no infringement. The notice of motion to withdraw admissions and the application for security for costs stand over to 15 August 2006 for directions. The directions hearing on 25 July 2006 be vacated. Liberty to apply on 3 days' notice. On that day, Mr Dimitriadis appeared for the applicant, Mr Zhang for the first to fourth respondents and Ms Champion for the fifth respondent. The matter was adjourned to 29 August 2006. 25 On 15 August 2006, the Shun Li proceeding were also mentioned. The respondent appeared by counsel, Ms Chrysanthou. Consent orders were made in favour of the applicant on liability, and the hearing for pecuniary relief was stood over to 1 December 2006, with interlocutory steps to be undertaken in the meantime. At around this time, the solicitor for the respondent in the Shun Li proceeding ceased to act. 26 The proceeding (and the Shun Li proceeding) came before me on 29 August 2006. Mr Dimitriadis appeared for the applicant, Mr H Wang for the first to fourth respondents, and Ms Champion for the fifth respondent. On this day, leave was granted to the applicant to join the sixth respondent. By this time (29 August 2006), the applicant had filed some, but not all, of its evidence. I then made further directions for service on the sixth respondent, for the filing of evidence, for further directions and for the referral of the matter to mediation. I also set the matter down for hearing on liability on 29 November 2006. 27 On 15 September 2006, the applicant filed a number of affidavits in support of the anticipated hearing. 28 On 29 September 2006, an affidavit of Mr Bill Gremos, the managing director of the fifth respondent, was filed on behalf of the fifth respondent in support of its cross-claim. 29 Meanwhile, pursuant to the orders made on 29 August 2006, a directions hearing was called on on 3 October 2006 for the applicant and the sixth respondent only. This had been scheduled to bring the sixth respondent into the trial preparation. The first to fifth respondents had been excused from attendance. There was no appearance for the sixth respondent. Mr Dimitriadis appeared for the applicant and filed in court and read an affidavit of service upon the sixth respondent of the amended application, amended statement of claim, amended statement of particulars of patent infringement, the short minutes of order of 29 August 2006, and a letter of the applicant's solicitors stating (conformably with the earlier short minutes) that the matter was listed for directions on 3 October 2006. Orders that the 6 th respondent file and serve its defence on or before 16 October 2006. Orders that the 6 th respondent file and serve a verified list of documents on or before 13 November 2006. Confirms the directions hearing on 24 October 2006 and the orders for mediation made in prior orders, both to include the 6 th respondent. Orders that the applicant to inform the 6 th respondent of these orders. Orders that there be liberty to apply on 3 days' notice. It was filed by Zhang Shijing Lawyers, on behalf of the first to fourth respondents. The affidavit set out some settlement negotiations and asserted, in entirely inadmissible form, the lack of validity of the claim. The affidavit annexed an otherwise confidential and privileged report of Shelston IP, dated 21 February 2006. The view was expressed that some of the claims of the patent may have been infringed and the balance were not. 31 A mediation took place on 17 October 2006: legal representatives of all parties attended before a Deputy District Registrar for 7 hours. The mediation was unsuccessful. 32 Shortly prior to the directions hearing on 24 October 2006, it became apparent to the solicitors for the applicant that no one was likely to appear on behalf of the sixth respondent. Also, on 23 October 2006, Zhang Shijing Lawyers wrote to the applicant's solicitors refusing access to certain documents relevant to primary relief and stating that they did not have instructions to appear on the following day, 24 October 2006. 33 On 24 October 2006, the directions hearing was called. Ms Howard appeared for the applicant and Ms Champion for the fifth respondent. There was no appearance for the first to fourth or sixth respondents. Leave be granted to the applicant and the 5 th respondent as cross-claimant to file notices of motion seeking orders in default of appearance or default of orders of the Court and if thought appropriate for summary judgment, returnable before Justice Allsop for hearing at 2.15 pm on Friday, 3 November 2006. Such notices of motion, together with affidavits in support, be filed and served on or before Thursday 26 October 2006. The notice of motion against the 6 th respondent filed in Court on 24 October 2006 be stood over to Friday 3 November 2006 at 2.15 pm for hearing. Matter 2329 of 2005 and matters dealt with today are stood over to 2.15 pm on Friday, 3 November 2006. 35 On 27 October 2006, the applicant filed a notice of motion seeking the same kind of relief as claimed in the notice of motion filed in Court on 24 October 2006 against all respondents, including the fifth respondent, under Order 35A r 3(2) or Order 20 r 1 of the Federal Court Rules or s 31A of the Federal Court of Australia Act 1976 (Cth) . 37 On 25 and 26 October 2006, the fifth respondent filed affidavits in respect of its motion to be heard on 3 November 2006. That evidence included an affidavit of Mr Soulos, proving that orders made by the Court on 29 August 2006 had not been complied with. 38 On 27 October 2006, the applicant filed an affidavit of service proving the service of affidavits sworn on 13 and 15 September 2006 on Zhang Shijing Lawyers, on behalf of the first to fourth respondents, on the fifth respondents' solicitors and on the sixth respondent. It should be noted at this point that there is no evidence that Zhang Shijing Lawyers had ceased to act for the first to fourth respondents. On the same day, 27 October 2006, the applicant filed an affidavit of Mr Ryan, the principal solicitor for the applicant, proving the history of the proceedings and various defaults of the respondent, and attached the Shelston IP report referred to above, annexed to the third respondent's affidavit filed on 3 October 2006. 39 On 3 November 2006, the various motions were heard. The fifth respondent sought to file an amended cross-claim in court. It widened the relief sought but did not amend the substantive allegations. Subject to the matter being listed pursuant to order 2 below, the hearing of the motion brought by the fifth respondent as cross-claimant filed 26 October 2006 against the first to fourth respondents as cross-respondents be adjourned to a date to be fixed for judgment. if they are to contest the notice of motion, a letter to that effect should be sent to the solicitor for the fifth respondent cross-claimant and the associate of Justice Allsop, in which case the matter will be listed. If that does not occur then the matter will not be listed on the 17th. Zhang Shijing Lawyers had at all times, at least until October 2006, acted for the first to fourth respondents. No notice of appearance had been filed. I had overlooked that. There was no evidence, however, that Zhang Shijing had ceased to act, though it was apparent that they were not present to represent the first to fourth respondents. 41 At the hearing on 3 November 2006, affidavits were read on behalf of the applicant and the fifth respondent/cross-claimant proving service of the notice of motion and evidence led on 3 November 2006. 42 On 29 November 2006, I delivered judgment on the notices of motion brought by the applicant against the first to sixth respondents and by the fifth respondent (as cross-claimant) against the first to fourth respondents (as cross-respondents): see [2006] FCA 1634. DECLARES that the fourth respondent has infringed the Patent by selling and offering for sale the floor panels referred to in paragraph 6 of the Amended Particulars of Patent Infringement, an example of which is Exhibit DJR-3 to the affidavit of Desmond James Ryan sworn 16 June 2006. DECLARES that the sixth respondent has infringed the Patent by selling and offering for sale the floor panels referred to in paragraph 10 of the Amended Particulars of Patent Infringement, an example of which is identified as "LONGER FLOORING" in the affidavits of Kendall Waller sworn 13 September 2006 and Anthony Richard Smeeton sworn 13 September 2006. ORDERS that, within 28 days of the date of these orders, each of the first to sixth respondents deliver up on oath to the Applicant or its nominated agent for destruction all floor panels referred to in paragraphs 1, 2, 3, 4 and 5 above in its possession, custody or power. DIRECTS that the matter be listed on 12 December 2006 at 9.30 am for further directions for the further conduct of the proceedings. ORDERS That the cross-respondents and each of them pay the cross-claimant an amount equal to the total of all damages, costs and other sums of money the cross-claimant may be ordered by the Court to pay the applicant in these proceedings. DECLARES that the cross-respondents and each of them have by the making of the first representation referred to in paragraph 15 of the amended cross-claim contravened s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW). DECLARES that the fourth cross-respondent has by the making of the second representation referred to in paragraph 28 of the amended cross-claim contravened s 52 of the Trade Practices Act 1974 and s 42 of the Fair Trading Act 1987 (NSW). DECLARES that in the period January 2004 to September 2005 the third cross-respondent was knowingly concerned in the contravention of s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW) by the first cross-respondent and the fourth cross-respondent. DECLARES that the cross-respondents are jointly and severally liable to indemnify and keep the cross claimant indemnified in respect of any and all damages, costs and other sums of money the cross-claimant may be ordered by the Court to pay the applicant in these proceedings. ORDERS that the cross-respondents pay the costs to date of the cross-claimant on an indemnity basis. DIRECTS that the matter be relisted on 12 December 2006 at 9.30 am for directions as to the further conduct of the cross-claim. (I set them out in full to enable the parties to understand, in one document, all relevant facts. These are my brief reasons for orders made pursuant to notices of motion upon which the applicant and fifth respondent, as cross-claimant, move. There was no appearances by the first to fourth and sixth respondents. I will deal with each motion in turn. The applicant seeks orders pursuant to Order 35A r 3(1) of the Federal Court Rules (orders based on the default of the relevant respondents) and pursuant to s 31A(1) of the Federal Court of Australia Act 1976 (Cth) and Order 20 rule 1 of the Rules (summary judgment). The notice of motion seeks declarations and orders against all respondents. The fifth respondent does not oppose the making of the orders and, in turn, seeks to pass on its liability to the first to fourth respondents. There were a number of affidavits relied on in support of the notice of motion of the applicant. They are set out in the document marked A and which is annexed hereto. The affidavits were read and the exhibits tendered. I have also been helpfully supplied with a table of evidence directing me to the various parts of the evidence and supporting the submissions as to infringement, I have marked that document "Administrative Exhibit 'A1'" and the document will remain with the file. I do not propose to set out the detail of it in these reasons. The proceedings arise out of what the evidence discloses as the clear infringement of Australian Patent no 713628 being an invention relating to floor covering consisting of hard floor panels as well as a method for manufacturing such floor panels. I have carefully examined the written submissions and evidence, I am satisfied that the applicant is entitled to relief claimed based on the outline set out in [8] above. Annexed to the supplementary submission filed pursuant to leave I granted at the hearing the appropriate form of order has been revised and after consideration of that amendment I am prepared to make those orders. Therefore, on the notice of motion of the applicant against the first to sixth respondents by reason of various defaults, admissions and otherwise based on the clear evidence satisfying s 31A(1) and Order 20 rule 1 I will make orders in the form suggested in the supplementary submissions. The applicant seeks indemnity costs against the first to fourth and sixth respondent. I think the clarity of the evidence supports that order. There can have been little doubt that there was an awareness of the patents from an early date, in particular taking into account Mr Gremos' evidence on the cross-claims. The evidence reveals a clear basis, in my view, for indemnity costs against the first to fourth and sixth respondents. There was debate about the position of the fifth respondent. In my view, though the fifth respondent has taken the responsible view it has not provided unequivocal undertakings and in my view the proffered order against it is appropriate. The fifth respondent was involved in the infringements. However, the basis for its claim is that it was an innocent party relying on the assurances of the first to fourth respondents. It has submitted to all the orders against it in so far as they were supported by the evidence. They are so supported. The fifth respondent was a purchaser from all of the cross-respondents at various times of the allegedly infringing products. An amended cross-claim was filed on the day of the hearing before me. I made orders and directions that the amended document be served on the first to fourth and sixth respondents with an indication that the fifth respondent cross-claimant should make clear upon service that if the various respondents wish to come in and defend the cross claim they could. The fifth respondent did so. No attempt to defend the proceedings of the applicant or the cross-claim has been made by the first to fourth respondents on the sixth respondent. I am satisfied that the various respondents to the cross-claim have been served with notice that the cross-claimant will seek orders and declarations against them in support of the cross claim filed against them and in support of the amended cross-claim filed in Court. The notice of motion for the orders was supported by an affidavit of Mr Bill Gremos sworn 26 September 2006 together with the exhibits thereto. Mr Gremos is the managing director of the fifth respondent. The evidence underlying the infringement from the applicant's motion is of course before me in this motion by the cross-claimant. The affidavit of Mr Gremos recounts that he began dealing with the second and third respondents in 2003. He was rung by them in relation to the purchasing of laminated flooring. The second and third respondents indicated that this product could be obtained from China. The substantive conversations in this early period were carried on with the third respondent. During the period March 2004 to February 2005 the fifth respondent purchased quantities of laminated flooring from the second and third respondents. Various invoices were provided in the exhibits to Mr Gremos' affidavit. In February 2005 Mr Gremos became aware that the fifth respondent was now dealing with the fourth respondent as orders placed by the fifth respondent with the second and third respondents were being invoiced by the fourth respondent. Invoices supporting this change were exhibited to Mr Gremos' affidavit. In March 2005 by the same process of invoicing Mr Gremos became aware that he was now dealing with the first respondent. Orders that had been placed with the fourth respondent were now being invoiced by the first respondent. Again invoices were exhibited by Mr Gremos' affidavit to support this change. By letter dated 20 May 2005 from an officer of the applicant, the fifth respondent became aware that the applicant claimed that its patent was being infringed by flooring purchased from the first, second, third and fourth respondents. Mr Gremos then took immediate steps to inform the third respondent of this, to instruct his stores to cease selling the product and to recall all stocks and return all stocks to the fourth respondent. He then had a number of conversations with the third respondent in which he was assured that there would be no infringement in the future. For instance, the third respondent said to Mr Gremos that he had spoken with the manufacturers in China and they had said that there was no problem and that they will address the issue with new product of the same quality as was previously supplied but with a different locking profile. Mr Gremos made it clear that he did not want to buy a product which was in breach of any patent. The third respondent reassured him that this would be all right. From all the evidence before me it can be safely concluded that the assurances were baseless. During the period June to August 2005 the third respondent came to Mr Gremos' office and showed him samples of the new product. Following this reassurance Mr Gremos committed the fifth respondent to further purchases from the other respondents. These further purchases came from the first respondent. In November 2005, upon being served with the applicant's process in these proceedings, Mr Gremos caused all stock to be removed from sale. At no time does it appear that the sixth respondent was involved in selling to Mr Gremos. The amended cross-claim pleads the course of dealing, pleads various misleading representations that the flooring supplied to them would be capable of being offered for sale, pleads a condition implied by s 17(1) of the Sale of Goods Act 1923 (NSW) and a warranty implied by s 17(2) of the Sale of Goods Act . The pleading then seeks an order under s 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) dealing with joint tortfeasors. Relief is sought under the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) both directly for the false and misleading representations by the respondents and under s 75B of the Trade Practices Act . I am satisfied from the evidence put forward by Mr Gremos that the fifth respondent is entitled to such damages as it can prove by reason of the various breaches of contract by the first, second, third and fourth cross respondents arising from the breaches of the condition and warranty implied by s 17(1) and (2) of the Sale of Goods Act and pursuant to the misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW), substantially as pleaded. I am satisfied that the cross-claimant is entitled to the declarations and orders accordingly in substance sought in the amended cross-claim. The clarity of the infringements and the circumstances of the misleading of Mr Gremos entitle the cross-claimant to its costs on an indemnity basis. I was assisted by detailed and careful, integer-by-integer analysis of the patent, and by expert evidence in relation to each integer, and infringement generally. The terms of [9] of my reasons should be read in that context. Proof of service that the judgment has been served will be of assistance to the Court and will be expected when next before the Court on 12 December 2006. Mr Dimitriadis appeared for the applicant. Ms Champion appeared for the fifth respondent. Mr Sun, the second respondent, appeared. There had been filed, on 11 December 2006, an affidavit of service on behalf of the applicant. The affidavit was confused as to what had been served. On 12 December 2006, there was filed in court an affidavit of service proving that the fifth respondent had served Zhang Shijing Lawyers on 6 November (sic: 6 December) 2006 with my orders and reasons made and published on 29 November 2006. 48 On 12 December 2006, I asked Mr Sun what he wanted to do and he said "going on to the next step". I asked him whether he understood what was happening, and he said he did. It was apparent that he had knowledge of the orders and reasons made and published on 29 November 2006. (It was also apparent that he was an intelligent man with a good (though not perfect) grasp of English). When I asked Mr Sun what he wanted to be paid for the product sold to the fifth respondent, he mentioned suing suppliers in China. Mr Sun indicated that he was present representing the first, third, fourth and sixth respondent. Discussion first took place on discovery of documents from the first to fourth respondents' business to the applicants, to permit the applicants to prove the primary claim. After discussion with the parties, I refused to order that the respondents file a verified list of documents. It seemed to me a pointless exercise without a lawyer. Rather, I stood the matter over to 20 December 2006. I suggested that the parties agree upon a day on which they might attend the relevant business and inspect documents. None of this is optional. They are not entitled to anything that they are not entitled to, that is, if they are asking for too much or it is not relevant. But if it is relevant, none of this is optional; but the more co-operation there is between the parties about the documentation, (I appreciate they're not your friends in this litigation) but the more co-operation between opponents in litigation reduces the cost, ultimately reduces the costs for everyone. It may be that it needs more precise articulation as to what the basis of that claim is. Is it simply for products supplied and unpaid for? It may be that there's no debate that that amount hasn't been paid for, but that it should be set off against any liability that the fifth respondent has to the applicant because it was infringing material. No doubt the fifth respondent will say we don't have to pay for them or we have to set them off against what we're liable to the plaintiffs for. So I think - who is your solicitor, Ms Champion? They needed a pay rise first for the ..... then we, you know, by judge's order if any damages we will pay that. I don't think that is the same thing. Anyway, I'm not here to broker a deal for you. What I'm saying is I think - what I propose to do is stand this over to next week. You and Mr Ryan, whether through Mr Wong as well, try and reach an agreement about when they come to the head office to look at the documents in January and you need to consider what you want to do in relation to the fifth respondent. It might depend and Ms Champion, nothing I've said expresses a view at the moment. The matter was stood over to 20 December 2006. On 12 December 2006, I gave Mr Sun leave to represent the first and fourth defendants on that day and on the following week, 20 December 2006. 52 The matter came back before me on 20 December 2006. Agreement had been reached between the applicant and the fifth respondent as to production of documents in relation to the claims for pecuniary relief. No such agreement had been reached between the applicant and Mr Sun, on behalf of the first to fourth and, possibly, the sixth respondents. In the light of what was put to me, it appeared that a co-operative arrangement was not possible. I therefore made orders for discovery against all respondents by reference to identified categories of documents that had been already shown to the respondents, and which were annexed to the form of the order. The fifth respondent consented to this course. I did not think it useful to make any orders other than for discovery. A further directions hearing was set for 13 March 2007, which date was later rescheduled to 22 March 2007, by reason of my court commitments. The letter (so informing him of that change) was sent to Mr Sun, at the address on the Court documents filed by the applicant (including the original application), about which no complaint had ever been made as to accuracy. 53 On 20 March 2007, the applicant filed an affidavit of Mr Ryan setting out the failure of the first to fourth and sixth respondents to comply with the orders of the Court on 20 December 2006. The affidavit also revealed that some correspondence was returned, the balance ignored. In the affidavit, Mr Ryan then attempted to assess the profits of the respondents, based on such documents as had been previously provided by the first to fourth respondents. 54 On 22 March 2007, when the directions hearing was originally called on, Mr Dimitriadis appeared for the applicant, Ms Champion for fifth respondent and no one appeared for the first to fourth and sixth respondents. Mr Dimitriadis and Ms Champion announced a settlement between their respective clients. There be judgment for the Applicant against the Fifth Respondent in an amount equal to US$77,500.00, representing an agreed amount in respect of an account of profits made by the Fifth Respondent from sales of panels falling within the scope of the Patent. The Fifth Respondent pay to the Applicant an amount equal to US$25,000.00 representing an agreed amount in respect of costs pursuant to order 9(b) made on 29 November 2006. There be no further order as to costs as between the Applicant and the Fifth Respondent. I took the view, though I did not express it at the time, that I should permit these parties to resolve their differences. If any challenge was to be made to the legitimacy or reasonableness of the sums in the settlement, that challenge could take place in the context of an application, if ever made, under Order 35 r 7(2)(a) in respect of Order 11 made on 29 November 2006 (it having been made in the absence of the first to fourth respondents). 56 Later in the morning, Mr Sun appeared. A directions hearing then took place between the applicants and him and the respondents for whom he appeared. The discussion that occurred concerned his (and the first, third, fourth and sixth respondents') failure to comply with the order for discovery made on 20 December 2006. Orders of the Court are not made to be ignored. If there is good reason and a good explanation as to why orders of the Court have not been followed, then of course, the Court will hear that explanation and if it's a proper explanation, we'll excuse parties from failing to comply with the orders of the Court. If there is no good explanation as to why orders of the Court have not been complied with, the Court has ample power to ensure that that does not happen again, to punish people for failing to comply with orders of the Court and to ensure that any party in the exercise of Federal jurisdiction is not prejudiced by another party's refusal to comply with orders of the Court. Now, I don't want to cause the costs of this case to increase unnecessarily if parties can, sensibly, with due regard to their obligations, sort out their differences, but the parties should understand that the Court's orders are not made to be ignored and the Court has an interest in ensuring that that does not occur. On or before Friday 30 March 2007 the first to fourth and sixth respondents explain, by affidavit sworn by the second respondent, why they have failed to comply with the order 1 made by the Court on 20 December 2006, that affidavit is to be filed in Court and served on the solicitor for the applicant on or before close of business Friday, 30 March 2007. The matter be stood over for directions to 9:30 am on Thursday 5 April 2007 on which day the applicant, if it desires the Court to make any orders, is to bring to Court a notice of motion which can be filed in Court and directions for which motion will be dealt with on that day. It addressed the calculations of gross profit of Mr Ryan in his affidavit of 20 March 2007. It annexed various documents, including accounts. It addressed what the deponents said was the debt owing by the fifth respondent. Early profits made from sale of infringing floor panels and other sales, i.e. in 2004-2005, have been completely overwritten by the expenses outlined in (a) and (b) above. This was because we have terminated our imports from Huili Shanghai Group. As a result we were forced to resort to unstable sources to inventory with differences in quality of floor panels. This ahs caused many problems in inventory flow and incurs invaluable loss of consumer confidence and trust in the delivery and quality of inventory. Although we acknowledge our accountability in relation to the infringement, the fault also lies with our supplier Huili Shanghai Group which did not disclose any information of patent infringement to us. We too are victims of deceit and manipulation and are pursuing a very difficult campaign against Huili Shanghai Group in Shanghai to recover our own financial damages incurred by this lawsuit. As small business retailers, we had forfeited our lawsuit because we had exhausted all our assets, in legal costs and have no alternative means of any income with business operations terminated indefinitely. We did not have the ideal legal representation to present our case in the most complete manner as befits the technical aspect of this lawsuit simply because we cannot finance it. This is particularly the case with Shelston IP which had valuable evidence and arguments in support of our case, as evidenced in Exhibit -7. Shelston IP had stated reasonable doubt of infringement in all claims by the Applicant. But upon further costs in undertaking technical investigations as stated in Exhibit-7 we were forced to terminate our legal representation due to inability to pay their fees. In particular, Mr Ryan said that some of the documents annexed to the joint affidavit were new and had not been provided in September 2006, when some documentation had been provided. He reviewed his gross profit calculation accordingly. 60 The matter then came before me again on 5 April 2007. Mr Dimitriadis and Mr Sun appeared. Once again, Mr Sun sought to appear for the other respondents (except, of course, the fifth respondent). 61 On 5 April 2007, it was evident from the joint affidavit and what was said that there was a degree of preparedness in the respondents to bring the pecuniary relief hearing on to finalisation. Discussion took place about the most efficient way of doing this. The applicant had now retained an accountant. The applicant elected on this day for an account of profits. The matter be set down for a hearing on quantum as between the Applicant and the First to Fourth and Sixth Respondents on 4 July 2007, at 10.15 am noting the applicant's election for an account of profits. The applicant keep confidential all such documents and information obtained from the respondents and use such documents and information only for the purposes of these proceedings. In respect of any expert accounting evidence to be relied on by the applicant, prior to filing and serving any such finalised evidence, the applicant must serve a draft of such evidence on the respondents inviting them to provide further documentation or comment at a meeting or otherwise on the accuracy and reliability of the evidence. The First to Fourth and Sixth Respondents not be permitted to rely at the hearing on any documents in their possession, custody or control which are not provided to or made available for inspection by the Applicant on or before 27 April 2007 pursuant to order 2, or not made available during any consultation provided for by order 4, without the prior leave of the Court. The Applicant file and serve its affidavit evidence in chief on or before 30 May 2007, with the intention that consultation of the kind referred to in 4 take place in May 2007. By the same time the applicant file and serve a list of the evidence upon which it will seek to rely, including filing and serving a paginated, indexed bundle of documents. The First to Fourth and Sixth Respondents file and serve any affidavit evidence in answer on or before 15 June 2007. The Applicant file and serve any affidavit evidence in reply on or before 29 June 2007. The parties have liberty to apply on 2 days' notice. Other affidavits, including from an accountant, were filed by the applicant and the matter came on for hearing on 4 July 2007. 63 Before coming to that hearing and the resolution of the matters debated, something further needs to be said about the conduct of this matter. The respondents have, as can be seen, failed to adequately address their responsibilities of co-operation in this litigation. None appeared at the hearing on 29 November 2006. There has never been the slightest suggestion that they did not know about that date. They had lawyers acting for them up to a time not long before the hearing. They have had advice from patent attorneys and at least one skilled member of the Sydney intellectual property bar, Mr Burley. The respondents have accepted the judgment on liability and have not sought to appeal from it, or to have it set aside as made in their absence. Indeed, a contested hearing on pecuniary relief at considerable expense has occurred since then. It would be a most unlikely and extraordinary step, given all that has occurred, for any application to be made about the orders of 29 November 2006 obtained by the applicant. 64 In the joint affidavit and at the hearing on 4 July 2007, Mr Sun stated a desire to agitate the cross-claim of the first respondent against the fifth respondent. That cross-claim has not yet been heard. The ability to propound it may be affected by the orders obtained by the fifth respondent on its cross-claim on 29 November 2006. They were obtained in the absence of the first to fourth respondents as cross-respondents. 65 If the first to fourth respondents wish to agitate any aspect of the position against the fifth respondent, whether in relation to the orders made on 29 November 2006 or 22 March 2007 (as between the applicant and the fifth respondent), or in relation to the first respondents' cross claim, this should be done promptly. 66 Any such application would need to be properly brought by motion and with evidence. It should not be thought that, in the light of the conduct of this mater to date by the respondents, I would necessarily permit any company to appear otherwise than by a solicitor. Mr Sun said that he appeared not only for himself but also for the first, fourth and sixth respondents. He was given leave to appear for these corporate respondents. On this occasion (being the first time he had done so) he eschewed any capacity as appearing for the third respondent. 68 The applicant elected for an account of profits by those who infringed. In my judgment of 29 November 2006 ([2006] FCA 1634), I found that the first, second, third, fourth and sixth respondents had infringed the patent in suit. The infringement of the second and third respondents involved conduct in their own right as well as participation in inducing, directing and procuring the infringements of the first, fourth and sixth respondents. 69 The interlocutory directions that I made were intended to procure full co-operation from the respondents in the production of all relevant documents. It is clear from the evidence of the accountant called by the applicant, Mr Dunstan, and from the evidence of Mr Ryan (the applicant's solicitor) that the applicant has not been supplied with documents of all sales and with documents revealing all relevant activity of the respondents. This is a factor to be considered when making choices about approaches to assessment of the profits and the assessment of any contingencies in respect thereof. For instance, though I accept that an attempt has been made to do so, it has not been easy for Mr Dunstan or the applicant to distinguish between the various entities. Mr Dunstan's report indicated that there was no apparent consistency in the recognition of income and the incurring of costs between the various respondents. This led to one approach being adopted by Mr Dunstan as treating all the "Huili respondents" as one entity. For the reasons which I set out later, I do not propose to follow this approach, but the reasons for Mr Dunstan expressing it reveal the lack of completeness of the information, which can only come from the respondents themselves. Its purpose is not to compensate the patentee, nor to punish the infringer, but rather to prevent the unjust enrichment of the infringer at the expense of the patentee: Dart Industries Inc v Décor Corporation Pty Ltd [1993] HCA 54 ; (1993) 179 CLR 101 at 110-111. By reference to the judgment in Dart v Décor [1993] HCA 54 ; 179 CLR 101 and the cases there cited, I have approached the calculation of the account of profits in this case on the following basis. The infringers should account for the actual profit that they have gained from the infringement. In calculating those profits, it is appropriate to deduct costs directly attributable to selling and delivering infringing articles from the revenue made from such sales and deliveries. It may be appropriate to deduct a proportion of general overhead costs such as plant, equipment and managerial costs. The deduction of such costs depends upon their being shown to have been attributable to the sales, the onus for which demonstration is upon the infringers. The account of profits is a discretionary remedy and the Court may decline to grant the remedy in respect of profits made by the infringer during the period in which it was unaware of the applicant's rights. He said that the total amount of profits made by the first, second, third, fourth and sixth respondents (to whom I will refer as the "Huili respondents") by reason of the infringements was $254,114. This figure was based on total infringing sales revenue of $852,531 and total costs of $598,417. The costs were made up of $476,686 for purchases, $106,587 for customs duty and $15,144 for direct costs comprising freight and advertising. 72 Mr Dunstan made no allowance for general overheads. He had no documentation and information which would be necessary to enable such a calculation to be made. In this respect, it is to be noted that the directions made in April required a draft of Mr Dunstan's report to be given to the Huili respondents. This was done. No attempt was made by any of the Huili respondents to identify and quantify a relevant general overhead. Such a straightforward business concept can be taken to have been well understood by them. In the absence of any attempt whatsoever by the Huili respondents to attribute a general overhead to this product, I do not propose to take any general overhead into account. In this respect, there was evidence that the sale of the infringing floor panels appeared to represent only part of the business conducted by the Huili respondents, which extended to the sale of several types of flooring as well as an electrical business. 73 Also relevant to a decision not to attribute anything to overheads is the state of documentation provided by the Huili respondents. I accept from the evidence that it is, on its face, incomplete. The documents that have been produced reveal inconsistencies and anomalies. In the circumstances, I accept the submission of the applicant that there is no cause for confidence that the infringements revealed in the documents represent all the infringements which have in fact occurred. There has been no accounting for cash sales, though there was some evidence of a trap sale for cash. There has been no delivery up of infringing products in accordance with the orders that I made on 29 November 2006. The figures regarding sales and imports were not able to be reconciled by Mr Dunstan. There was also evidence to suggest that other sales of infringing panels may have been made by entities associated with the Huili respondents. In all the circumstances, and taking all these matters into account, and weighing them in relation to the calculation of profit, I am not prepared to make a calculation and a discount for general overheads in these circumstances and where the onus lies upon the respondents to identify and quantify such overheads. The question then becomes one of apportionment of the profits between the other companies. As I indicated earlier, Mr Dunstan's opinion was that the Huili respondents were best treated as a single entity from an accounting perspective. I am not prepared to approach the matter on that basis. I do not see it as a question for accounting policy. Each company should be liable for such profits as can be reasonably attributable to it. 75 One starts with the evidence of timing. The evidence discloses that the second and third respondents were responsible for sales invoices from September 2003 to February 2005; that from February 2005 to March 2005 the fourth respondent was responsible for the sales; that thereafter the first respondent was responsible from April 2005 to November 2005; and that the sixth respondent was responsible for sales in June 2006. Mr Dunstan was asked to attempt to apportion the profits as between the Huili respondents. His calculations were included in a schedule to his supplementary report and produced what were, in effect, anomalous results. In particular, two of the corporate respondents (the fourth and sixth) were recorded as having made a net loss and the other (the first) had made a very great profit. These calculations can be seen to be due to the inconsistency of recognition of income and incurring of costs that was referred to by Mr Dunstan and/or the lack of documentation provided as to transactions. I am not prepared to accept these conclusions as the most appropriate attribution of profit to the relevant companies. 76 Given the lack of proper documentation, I propose to adopt a method whereby the profit is attributed to the respective corporate respondents by reference to the sales each made, and then to apportion costs proportionally according to those sales. This would make the fourth, first and sixth respondents responsible for attributed sales of $125,221, $278,757 and $182, respectively and for apportioned profits of $37,325, $83,089 and $54, respectively. In addition to this, the second and third respondents individually were liable for attributed sales of $448,371 and apportioned profits of $133,646 (although the second and third respondents were liable for the total as I have earlier identified). 77 Thus, subject to any further possible basis for of reduction, the second and third respondents would be jointly and severally liable for the sum of $254,114, the fourth respondent would be liable for the sum of $37,325, the first respondent would be liable for the sum of $83,089 and the sixth respondent would be liable for $54. Each would be liable for interest. 78 There are two possible reasons why these money sums should be varied. The first is one recognised by Colbeam v Palmer [1968] HCA 50 ; 122 CLR 25 and the Patents Act , s 123. The applicant's solicitors first wrote to the respondents on 23 February 2005, informing them of the patent and requiring undertakings. If one took 23 February 2005 as the date from which to calculate the profits, there would be no claim against the second and third respondents, the claim against the fourth respondent would be $25,051, the claim against the first respondent would be the same $83,089 and the claim against the sixth respondent would be the same $54. 79 It is important to note that in Colbeam v Palmer [1968] HCA 50 ; 122 CLR 25 , it was stated that it was for the moving party to prove the unconscionability of the profits, and therefore for the moving party that the defendant knew of the moving party's rights. The Patents Act 1990 , s 123 clearly involves discretion as to the question of refusing or discounting the award for the matters there identified. Also, s 123(2) makes plain that the defendant is to be taken to have been aware of the existence of the patent unless the contrary is shown, if patented products marked so as to indicate they are patented in Australia were sold or used in the patent area to a substantial extent before the date of the infringement. 80 The evidence discloses that the applicant's floor materials embodying the invention the subject of the patent had been distributed in Australia since late 1997. The evidence discloses that the introduction of those panels revolutionised the trade in laminated flooring and greatly expanded the market for such flooring. The evidence discloses that by 2003, when the relevant infringements commenced, the applicant's floor panels, or imitations of them, commanded over 75% of the Australian market for laminated panels. The evidence discloses that in 2003, the applicant's Australian agent and distributor sold about 312,000 packs of the floor panels, amounting to over 560,000 square metres of flooring. The evidence discloses that the panels were described as the "industry standard" in the October 2004 issue of a publication called " Flooring Australia and New Zealand ". The evidence discloses that the packs of the applicant's panels were, and have been since prior to 2003, clearly marked with the words "patented technology", with the individual panels bearing the number of the applicant's European and United States patents. The evidence discloses that since the grant of the Australian patent on 23 November 2003, the relevant promotional material has also carried the number of the Australian patent. The evidence discloses that the fact that the applicant's floor panels are patented has always been a prominent and important feature of promotions of the panels through sales representatives, exhibitions and distribution of catalogues and brochures. The evidence discloses that the website of the applicant's Australian agent and distributor has promoted the applicant's relevant patent rights since at least early 2003. 81 The Huili respondents have not adduced any evidence in respect of the above matters. They have not established that they were not aware of the applicant's rights prior to the receipt of the letter of demand of 23 February 2005. A general assertion was made in a letter in March 2005, sent in response to the letter of demand, but that statement has not been supported in these proceedings by any direct evidence. Further, the first to fourth respondents did not plead any such lack of knowledge in their defence, which was prepared when they were represented in the proceeding by solicitors and, for a time, by experienced patent counsel. This was to be contrasted with the defence of the fifth respondent, which was prepared earlier and which was available to the first to fourth respondents and which did raise the issue. 82 In all the above circumstances, I am satisfied that under s 123 I should not make any discount by reason of innocent infringement. Indeed, if the matter were to be judged by Colbeam v Palmer [1968] HCA 50 ; 122 CLR 25, I would be prepared to conclude, based on inferences from all the above matters, that the first to fourth and sixth respondents were aware of the patent of the applicant during the course of infringement. My willingness to draw these inferences is in part based on the lack of any evidence brought forward on behalf of any of the first to fourth and sixth respondents of their ignorance prior to February 2005. 83 Also, given the state of the documentation provided by the respondents to which I have earlier referred, to the extent that there is a discretion within s 123 to deal with innocent infringement and to reduce the account of profits by the reason thereby, I am not able to be confident that the respondents have so approached the conduct of this case that they should be entitled to any discount under s 123. This last consideration is a separate consideration from the matters of proof and evidence to which I have earlier referred. 84 The second possible basis for reduction of the profits is the claim made by Mr Sun that the fifth respondent owes him or the first respondent sums of money as reflected in the cross-claim. During the course of the hearing, Mr Sun made no attempt to contest any aspect of the report of Mr Dunstan. He concentrated his submissions on what he said was the injustice of being held liable for an account of profits in circumstances where he has not been paid for a significant amount of the supplies which he or his associated entities gave to the fifth respondent. In this respect, Mr Sun made reference to the detailed material and identified a series of invoices totalling $138,901. 86 The Huili respondents are liable to account for the profits made at the wholesale level of sales. The fifth respondent was liable to account for its profit at the next level of sale, retail sale. The fifth respondent has accounted for those profits in the order which it submitted to by consent on 22 March 2007. There is no reason in principle why the applicant should not be entitled to both the wholesale profit and the retail profit if attributable, as they are, to the infringement. 87 Mr Sun argued that the unpaid invoices should be attributed to a reduction in profit to which the applicant is entitled. I do not agree. If that were the case, the applicant would pay for the liability of the fifth respondent. That would leave the fifth respondent having accounted for a profit (based on a cost not in fact paid), and not paying the wholesaler and thereby reducing the wholesaler's profit. By not paying its debt, the fifth respondent would reduce the entitlement of the applicant. That cannot be right. 88 Mr Sun, or the relevant respondent (in fact it is the first respondent who claims under the cross-claim), should seek, as he or it does, to recover moneys lawfully due to it. The fifth respondent in its defence seeks to set off the sums that it has paid to the applicant. Indeed it presently has an order to that effect in the orders made on 29 November 2006. As the chronology makes clear, this order was made in the absence of the Huili respondents. 89 As a matter of principle, the fifth respondent cannot necessarily expect the Huili respondents to give up their purchase price of the goods. The fifth respondent has had to account for its profits. That does not mean that it should not account to the Huili respondents for its costs of sales, so that the Huili respondents can properly fund the account of profits to the applicant at the wholesale level. However, if the Huili respondents in all the circumstances have, as I have found, engaged in misleading or deceptive conduct and led the fifth respondent to believe that it was free to sell these products, it may be that the fifth respondent has suffered damage in that it has lost an opportunity to sell product which it would otherwise have sold in which it would have been legally entitled to trade. In these circumstances, the sums, including legal costs, that the fifth respondent has had to pay the applicant may be seen as damages caused by the misleading or deceptive conduct of the Huili respondents. As I have said, the conclusions that I have already reached about this were made in the absence of the first to fourth respondents. 90 It may well be that these issues have to be resolved between the Huili respondents and the fifth respondent in any residual hearing on the cross-claim. I will put the matter in the list for directions to ascertain whether the parties still wish to agitate these matters. 91 As to the rights of the applicant, in my view, the applicant is entitled to judgment for the sums that I have identified, together with interest. That interest should be calculated at the rate of 10.5%, being the prescribed rate in relation to judgment debts pursuant to Order 35 r 8 of the Federal Court Rules . Subject to the applicant providing me with alternative calculations on a more sophisticated basis, I propose to make a calculation for interest attributable to the full amount for which I have found each respondent liable from the last date of that liability. Hence, I have concluded that interest on the second and third respondents' liability should be for $133,646 from 28 February 2005, $37,325 from 30 March 2005, $83,089 from 30 November 2005 and $54 from 30 June 2006; for the fourth respondent $37,325 from 30 March 2005; for the first respondent $83,089 from 30 November 2005; and for the sixth respondent, $54 from 30 June 2006. I include the sixth respondent in this, notwithstanding the small amount involved. It has not paid money into Court. It is not assisted with the conduct of the litigation as it should have in relation to discovery. It has equally put the applicant to proof and should pay for that. 95 I have set the matter down for directions on 2 November 2007. On that day, any of the Huili respondents or the fifth respondent who have an application in relation to the further conduct of this matter may raise what steps they wish to take. I certify that the preceding ninety-five (95) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. | account of profits apportionment between respondents approach to be followed where evidence unclear as to the financial dealings of the respondents right to set off between respondents. patent infringement |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Citizenship to refuse to grant of protection visas to the appellants. Only the first named appellant made specific claims under the Refugees Convention. His de facto wife, who is the other appellant, relied on her membership of his family, and thus had no separate claims of her own. Accordingly I will, in these reasons, refer to the first-named appellant as the appellant. 3 On 11 March 2005 the appellant lodged an application for a protection visa with the then Minister for Immigration and Multicultural and Indigenous Affairs. A delegate of the first respondent refused the application for a protection visa on 21 June 2005. On 25 July 2005 the appellant applied to the Tribunal for a review of that decision. 4 The appellant attended a hearing before the Tribunal on 13 December 2005, and on that day the Tribunal affirmed the delegate's decision. That decision was reviewed by the Federal Magistrates Court which on 22 May 2006 set aside the decision by consent and remitted the matter to the Tribunal to be determined according to law. The grounds upon which the matter was remitted concerned the failure to comply with the requirements of s 424A of the Act. It is the second decision of the Tribunal that gives rise to this appeal. His claims are set out in a seven page statement attached to his protection visa application and were elaborated on at hearings before both Tribunals. The appellant's claims differ in some detail between the written and oral evidence but the substance of the claims is briefly summarised as follows. 6 As the Federal Magistrate noted, the grounds upon which the appellant claimed to be a person to whom Australia owed protection obligations, were essentially that he was a Falun Gong practitioner who had 'fallen foul' of the authorities and had been detained on two occasions. The appellant claimed that he was first detained in August 1999 for one month, and detained again in October 2003 for three months. The appellant claimed that his treatment had been more severe on the second occasion and he had to expend a considerable sum of money bribing authorities to release him. 7 On 8 August, a differently constituted Tribunal held a hearing which the appellant attended. The Tribunal then wrote a letter to the appellant dated 8 August 2006 ("the s 424A letter") which provided him with particulars of information that would, subject to any comments he may make, be the reason or part of the reason for deciding that he was not entitled to a protection visa. 8 Following the provision of each piece of information, the Tribunal set out in bold the reason why it had considered that information to be relevant. Although the appellant was requested to respond to the letter by 22 August, he did not respond. The Tribunal then determined to affirm the decision under review on 6 September 2006. The Tribunal had regard to several inconsistencies in the appellant's evidence. 10 The Tribunal noted that the appellant had stated in his protection visa that he was introduced to Falun Gong when he received a brochure in the mail. The appellant claimed that he had telephoned a number that was listed in the brochure, and that the woman who had answered the phone led him to the process of Falun Dafa and had invited him to a meeting. However, before the previously constituted Tribunal, he stated that he was introduced to Falun Gong through a woman he did not know, but whom he saw practising Falun Gong in a park in the company of other practitioners. Although this information was put to the appellant by the s 424A letter, he did not respond. 11 In his protection visa, the appellant stated that in October 2003, he was detained for a second time for printing and distributing Falun Gong materials at his school and was accused of trying to indoctrinate an entire school. Before the previously constituted Tribunal, the appellant claimed that he was arrested because he was practicing Falun Gong in secret, and that someone in the neighbourhood must have reported him. Although this information was put to the appellant by the s 424A letter, he again did not respond. Furthermore, before the second Tribunal, he claimed he had been detained at Tiananmen Square, Beijing. However, the appellant did not mention to either the first Tribunal or to the Department that he was detained or arrested in Tiananmen Square. Again, this information was put to the appellant in the s 424A letter, but he did not respond. 12 Although the appellant claimed that he was detained in 1999 for practising Falun Gong, he was thereafter nonetheless able to depart China for trips abroad. The appellant told the second Tribunal that he went to Thailand and Hong Kong in 2001. He also stated that he had been to Taiwan once a year to see his mother and elder sister, and that in 2002 he went to Taiwan. When the Tribunal put to the appellant that he claimed that he was arrested and detained in 1999 yet he returned to China after trips abroad, the appellant stated that the danger was in 2003. The Tribunal rejected the appellant's explanation, due to the inconsistent information that he gave concerning his second detention. The Tribunal was satisfied that his return from abroad after the claimed 1999 detention indicated a lack of a subjective fear of persecution. Further, the appellant had told the first Tribunal that he could not leave China immediately after he was released from detention, because in China, before a person is allowed to travel, that person must submit to a 'political assessment' by the authorities. The appellant claimed that he was able to secure a passport and political clearance with the assistance of a friend who had bribed the authorities. The appellant's passport had a stamp indicating that it was issued in replacement of an earlier passport. When the Tribunal informed the appellant, by the s 424A letter, that this indicated that he was in possession of a valid passport and that he did not need to submit to political assessment or to bribe the authorities to leave China, the appellant did not respond. 13 The second Tribunal also noted that the appellant's evidence in regard to his occupation in China was also inconsistent. The appellant claimed that he was employed as a teacher and later a Deputy Principal in his protection visa application, but before the second Tribunal he claimed that he was employed as a teacher for three years and then commenced his own trading business until 1998. The appellant also did not respond to this inconsistency when it was put to him in the s 424A letter. 14 The Tribunal was not satisfied that the appellant was a witness of truth and concluded that he had created the claims in order to obtain the visa sought. The Tribunal was satisfied the appellant was not a teacher in China, that he did not own a school in China and that he was not a Falun Gong practitioner in China. The Tribunal did not accept the appellant had been arrested or detained in China for practising Falun Gong. Accordingly, the Tribunal did not accept there was a real chance the appellant would suffer harm then or in the foreseeable future if he were returned to China and was not satisfied he had a well-founded fear of persecution for a Convention related reason. The Tribunal had bias against me, and refused my application based on assumption, not evidence and materials. The Tribunal failed to consider my application according to S 91R of the Migration Act 1958 . The Tribunal started to have bias against me when the officer knew that I had not departed china soon after I had problems with the government. The officer also refused to accept my explanation that I had not been able to arrange a visa to leave china on time. The Tribunal failed to consider my claims. The Tribunal failed to assess the chance of my persecution on my return to china because of membership with Falungong. The Tribunal failed to refer to relevant independent information for the consideration of my application and the Tribunal made such mistake because of the bias against me. His Honour found that without particulars to support the grounds of bias, there was no basis to make such a serious finding against the Tribunal. 19 As to the appellant's claim that the Tribunal failed to consider his application, according to s 91R of the Act, his Honour held that the Tribunal did in fact consider the allegation of persecution suffered by the appellant, but that it did not assess that form of persecution against the criteria in s 91R because it did not believe that it took place. There was thus no necessity to do so. 20 The Federal Magistrate also reviewed the claim that the Tribunal failed to assess the appellant's chance of persecution upon his return to China, due to his membership of Falun Gong, noting that the Tribunal had found that the appellant was not a member of Falun Gong. His Honour found that the Tribunal had complied with its statutory mandate in relation to the consideration of the appellant's claims. His Honour further found that the Tribunal was obliged to disregard evidence of the appellant's connection with Falun Gong formed during his stay in Australia, because of the view that it formed that he did not engage in that conduct, other than for the purpose of strengthening his claim to be a refugee. 21 The Federal Magistrate was of the view that the s 424A letter accurately set out the Tribunal's concerns and explained why those concerns were relevant to the decision that the Tribunal was likely to make. The Federal Magistrate noted that the Tribunal made the findings that the information pointed to and consequently his Honour was unable to discern that the Tribunal had failed to exercise its duties under s 424A of the Act, in relation to the manner in which the letter was written or in the way that the decision was made. 22 Before the Federal Magistrate, the appellant stated that he thought that the Tribunal had failed to consider his case according to the facts, and that the Tribunal did not understand the situation in China and further stated that if a person was persecuted, he would still have an opportunity to go overseas. The appellant then stated that even important people managed to leave China, and that as he was not so important, it was easier for him to depart the country. The appellant further stated before the Federal Magistrate that the Tribunal had made a big mistake in its factual findings. However, the Federal Magistrate found that even if the Tribunal was mistaken, such mistakes would have been mistakes of fact, which do not go to jurisdictional error, and thus are not the subject of review in the Federal Magistrates Court. 23 In relation to the appellant's claim that he practised Falun Gong every day, the Federal Magistrate held this to be an impermissible merits review. The appellant then claimed that due to the damage that he had suffered during his persecution in China, he had given inconsistent evidence, which made him nervous about appearing in Court or before a Tribunal. The Federal Magistrate noted that the opportunity which the appellant had to convince the Tribunal of the genuineness of his claims had passed. Consequently, the application was dismissed. The Tribunal had bias against me and refused my application based on assumption, not evidence and materials. The Tribunal failed to consider my claims for my application for a protection visa in accordance with S 91R of the Migration Act 1958 . The Tribunal failed to assess the chance of my persecution on my return to China because of my involvement with Falun Gong. The Tribunal failed to refer to relevant independent information for the consideration. Federal Magistrates Court did not find the above mentioned error. 26 At the hearing of the appeal before me the appellant informed the Court through an interpreter that he did not wish to make any oral submissions and simply relied upon the grounds in his notice of appeal. Several distinct allegations may be discerned from the two grounds enumerated. I have considered the first respondent's submissions which I have drawn upon in these reasons. 28 Section 474 validly operates to prevent the judicial review of all decisions under the Act except those vitiated by jurisdictional error: Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2 ; (2003) 211 CLR 476. In the present case, I am unable to find any jurisdictional error for the reasons set out below. No particulars are provided. 30 It is well established that bias, an aspect of bad faith, is a serious allegation involving personal fault on the part of the decision maker. It must be clearly articulated and proved by admissible evidence. It is rare for a Court to find that an administrative decision maker acted in bad faith, especially where the only thing said to be in support of this is the decision record: SBBS v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 194 ALR 749 at [43]-[48]; and VFAB v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 131 FCR 102; [2003] FCA 872. 31 It is evident upon reading the Tribunal's decision that it embarked upon its task in an entirely appropriate and reasonable manner. There was no suggestion in any of the material before the Federal Magistrate that was sufficient to sustain an allegation of bias against the Tribunal. 33 In order to establish that there was no evidence for a finding made by the Tribunal, the appellant must show that there was no evidence at all upon which the finding could have been based: Australian Broadcasting Tribunal v Bond (Bond Media Case) [1990] HCA 33 ; (1990) 170 CLR 321 at 356; Minister for Immigration and Multicultural Affairs v Al-Miahi (2001) 65 ALD 141 at [34]-[35]; Minister for Immigration and Multicultural Affairs v Rajamanikkam [2002] HCA 32 ; (2002) 210 CLR 222 at 232-233, 236, 240 and 259; VAAW of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 202 at [33] - [35] . 34 The Tribunal's findings consisted of a rejection of the appellant's claims, where the appellant himself, in his oral and written submissions, provided the evidence that supported the rejection. In these circumstances, the appellant is unable to rely upon a ground of review that there was 'no evidence' to support the Tribunal's findings: WAJS v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 139 at [11] - [13] . The Federal Magistrate was correct to reject this ground for the reasons as follows. 36 The Tribunal was satisfied that the appellant had fabricated his claims. As such, there was no occasion for the Tribunal to proceed to consider whether his claims met the definition of 'persecution' in s 91R. 37 To the extent that this ground may be interpreted as a challenge to the Tribunal's application of s 91R(3) , I find that the Tribunal was satisfied that the appellant engaged in Falun Gong activities in Australia solely for the purpose of strengthening his refugee claims, and appropriately disregarded this conduct pursuant to s 91R(3). 39 The Tribunal was not satisfied that the appellant was a Falun Gong practitioner in China, and accordingly did not accept that there was a real chance the appellant would suffer harm on return to China. In making this assessment, the Tribunal disregarded his conduct in Australia, as it was required to do, pursuant to s 91R(3) of the Act. It was for the appellant to provide the Tribunal with any independent information he wished it to consider. 41 In any event, whilst the Tribunal referred, in an introductory way, to independent information, this did not form part of the Tribunal's reasons for decision, which were essentially based upon its adverse credibility finding in relation to the appellant. 42 Had the Tribunal believed that the appellant had been a Falun Gong practitioner in China then this information would have assisted the appellant's application. However, because the appellant's claims in this respect were rejected the independent information was not relevant. No jurisdictional error has been established. Accordingly, the appeals should be dismissed with costs. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | application for protection visa appeals from decision of federal magistrate whether bias whether failure to properly consider s 91r migration act 1958 (cth) whether failure to properly consider evidence including independent country information appeal dismissed no point of principle. migration |
I do not propose to repeat matters there discussed. Phrases and terms used in these reasons (if otherwise undefined or unexplained) are to be understood by reference to those earlier reasons. 2 This is an application under section 475 of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (the "EPBC Act") for injunctive relief and accompanying declarations in relation to whaling activities undertaken by the respondent in the Australian Whale Sanctuary, in contravention of ss 229-230 of the EPBC Act. References to section numbers are to provisions of the EPBC Act unless otherwise stated. 3 The respondent is a company incorporated in Japan, which the evidence reveals is the owner of a number of ships from which it has engaged, and is likely in the future to engage, in the killing of various species of whales in the Australian Whale Sanctuary. The respondent has engaged in such activity pursuant to the Japanese Whaling Research Program under Special Permit in the Antarctic (JARPA), issued under Article VIII of the International Convention for the Regulation of Whaling (opened for signature 2 December 1946) 1948 ATS 18 (entered into force 10 November 1948) (the "Whaling Convention") and monitored by the International Whaling Commission ("IWC"). From 2005, a second, more extensive, whaling programme has been undertaken by the respondent under a special permit, known as JARPA II. 4 The applicant is a public interest organisation incorporated in New South Wales, whose stated objectives include promotion of the "enhancement and conservation of all wild plants and animals". The applicant qualifies as an "interested person" pursuant to s 475(7) of the EPBC Act, and is therefore entitled to bring an action claiming the relief sought: see Humane Society International Inc v Kyodo Senpaku Kaisha Ltd (2004) 212 ALR 551 at [15]. The objects stated in s 3 of the EPBC Act include, amongst other things, the protection of the environment, particularly for matters of national environmental significance, conservation of biodiversity and heritage and promotion of ecologically sustainable development. 6 The EPBC Act is drafted in wide terms. It applies throughout Australia, including its external territories (s 5(1)), and to adjacent waters claimed as Australia's Exclusive Economic Zone. It applies to all persons and all vessels within territorial Australia and the exclusive economic zone, including persons who are not Australian citizens and vessels that are not registered Australian vessels: s 5(4). 7 One of the stated means by which the Parliament has expressed its intention to achieve the objects of the Act is by the establishment of the Australian Whale Sanctuary "to ensure the conservation of whales and other cetaceans": s 3(2)(e)(ii). Relevantly, Antarctic minke whales, fin whales and humpback whales are cetaceans as defined by the EPBC Act. 10 The Commonwealth Director of Prosecutions is responsible for prosecuting any offences under the EPBC Act, a decision which is made independently of the Executive Government. To date, the DPP has not sought to prosecute the respondent or others for undertaking the activity complained of by the applicant. In the absence of, or in addition to, criminal prosecution, section 475 of the Act gives the Minister, or an "interested person", standing to seek in a civil action an injunction to restrain conduct that would amount to an offence. This is what has been sought in this case. The section plainly gives locus standi to the applicant to seek the orders in this proceeding, without seeking the fiat of the Attorney-General and without any attendant complexities that might otherwise arise in the civil enforcement or prevention of conduct that is provided for by the criminal law (here by the same Commonwealth statute). Article 57 of UNCLOS defines the exclusive economic zone of a coastal state as not exceeding 200 nautical miles from the baseline from which the territorial sea is measured. 12 Australia's claimed exclusive economic zone extends to the waters adjacent to the baseline of Australia's external territories, including, importantly for this matter, the Australian Antarctic Territory. By virtue of the statutory definition in s 225 of the EPBC Act, the waters within 200 nautical miles from the Australian Antarctic Territory land mass are within the Australian Whale Sanctuary. 13 Australia's claim to sovereignty over the Australian Antarctic Territory is recognised only by four nations (New Zealand, France, Norway and the United Kingdom), themselves with asserted (and otherwise disputed) claims over various parts of the Antarctic land mass. Japan rejects Australia's purported exercise of jurisdiction over waters that are considered by Japan to be the high seas. This is not a ground for invalidity of the EPBC Act: the sovereign claim by Australia to the Australian Antarctic Territory is not a matter capable of being questioned in this Court in this proceeding: cf Mabo v Queensland (No 2) [1992] HCA 23 ; (1992) 175 CLR 1. These matters of sovereignty and international recognition (and lack of extensiveness thereof) can be taken to have been before, and well recognised by, Parliament when it enacted the EPBC Act. 14 A claim to an exclusive economic zone does not amount to sovereignty for all purposes. See Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2005] FCA 664 at [11] --- [13] for a discussion of the rights flowing from a claim to the exclusive economic zone. On the same day, the applicant also filed a notice of motion, together with supporting affidavits, seeking leave to serve the respondent out of the jurisdiction in Japan, in accordance with Order 8 rule 2 of the Federal Court Rules . On 23 November 2004, I ordered the applicant to serve copies of documents in the proceeding on the Attorney-General for the Commonwealth, on the basis that it was appropriate that he be informed of the nature of the matter. 16 In due course, the Attorney-General filed submissions as amicus curiae . The substance of those submissions was that the subject matter of the proceedings was a matter best dealt with by the Executive Government, and it was not appropriate for the Court to exercise its discretion to grant relief, either to serve the respondent out of the jurisdiction, or final relief of the nature of the declarations and injunctions sought. After considering submissions both from the Attorney-General and the applicant, I gave judgment on 27 May 2005, dismissing the motion: see Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2005] FCA 664. I do not propose to set out my reasons enunciated therein; it is sufficient to say that, in light of the international position, including the view of Japan that the assertion of jurisdiction in this matter would be a breach of international law, including, but not limited to, the Whaling Convention, of the place of an international body, the IWC, to deal with the issue of the killing of whales for scientific or other purposes, of the expression of the Executive Government of its (non-justiciable) view of Australia's long-term national interest, of the placing of the Court at the centre of an international dispute (indeed, helping to promote such a dispute) between Australia and a friendly foreign power, and of the likelihood that any attempt to enforce an injunction against the respondent would be futile (a matter that was never seriously contested by the applicant on the application for leave to serve out of Australia), I was not persuaded that the Court's exercise of discretion to grant leave to serve the respondent outside the jurisdiction was appropriate. 17 On that day, senior counsel for the applicant made an application for leave to appeal under the Federal Court Rules , as he was entitled to do. I granted that leave. 18 The applicant was successful on appeal to the Full Court: see Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2006] FCAFC 116 ; (2006) 154 FCR 425. The Full Court unanimously held that the considerations to which I referred (which were broadly characterised by the Full Court as "political") should not affect the exercise of judicial discretion where, as here, the action is otherwise justiciable. It is appropriately non-justiciable because the Court lacks competence to resolve disputes and issues of an exclusively political type, the resolution of which will involve the application of non-judicial norms: compare Japan Whaling Association v American Cetacean Society (1986) 487 US 221 at 230. First, while it may be accepted that an injunction is by its nature a discretionary remedy which may be refused if it cannot be enforced, the question whether an injunction should be granted is to be dealt with either in an application (if there be one) to set aside service ( Agar v Hyde at 574-575) or, more appropriately, when the application itself is heard and not when the court is deciding whether there should be leave to serve out of the jurisdiction (see, by analogy, Helicopter Utilities Pty Ltd v Australian National Airlines Commission ( 1963) 80 WN NSW 48 at 51). In fact the reverse is true. It is the defendant who has the onus of showing that it has no assets within the jurisdiction which could be sequestrated in punishment for contempt: Hospital for Sick Children (Board of Governors) v Walt Disney Productions Inc [1968] Ch 52 at 71. There are many cases where parties out of the jurisdiction have been subjected to an injunction regarding their conduct abroad. The cases to which we have referred show that if a person is properly served in accordance with the court's exorbitant jurisdiction, that person (so far as the jurisdiction of the court is concerned) is in the same position as a person who is within its territorial jurisdiction. Nevertheless, in an appropriate case the judge may refuse to grant an injunction because the defendant is outside the jurisdiction and is likely to ignore the order. It will all depend upon the circumstances and, at the present stage of these proceedings, they are not yet known. The Japanese Ministry of Foreign Affairs, in a note verbale dated 26 October 2006, refused to allow the documents to be accepted for service on the grounds that "this issue relates to waters and a matter over which Japan does not recognise Australia's jurisdiction". The applicant then filed a notice of motion on 31 January 2007, seeking substituted service upon the respondent in accordance with Order 7 rule 9 of the Federal Court Rules . Ms Besser deposed that on 27 February 2007, copies of the relevant documents were sent to the respondent by registered post in accordance with order (1)(b)(i) of the orders of 2 February 2007. Exhibit ELB-2 to that affidavit is the registered post receipt, identifying the respondent's address. Exhibit ELB-3 is a copy of the envelope sent to the respondent, which was returned on 12 March 2007. The envelope was unopened and was marked with Japanese characters, the translation of which reads "refuse to receive". 23 The applicant also relied upon an affidavit of Diana Beaton, affirmed 31 August 2007. Ms Beaton is an administrative assistant at the firm representing the applicant. Ms Beaton deposed that on 27 July 2007, she sent by registered post a further copy of the relevant documents to the respondent's registered address in Tokyo. That package was also returned, unopened, marked "RETOUR/REFUSE". 24 In relation to the personal service upon the respondent at its offices in Tokyo, the applicant read the affidavit of Mikio Hisamatsu, affirmed 24 March 2007. Mr Hisamatsu, a lawyer, attended the respondent's office in Tokyo on 21 February 2007. Mr Hisamatsu attended upon the respondent's General Affairs Department, and handed the package of service documents to a woman there, identifying the package as legal documents to be served upon the company. Mr Hisamatsu deposed that the woman took the envelope, but indicated that she was not authorised to accept service. Mr Hisamatsu was then confronted by a man who identified himself as the "sub-department leader" of the respondent. That person was holding the package, but also stated he would not accept service. Mr Hisamatsu then deposed that the sub-department leader returned with an apparently more senior person, who again refused to accept service on the grounds that "you have not identified yourself, this envelope is not sealed and there is no name on it". The senior person attempted to return the package to Mr Hisamatsu. However, Mr Hisamatsu refused to accept it and left the building, leaving the package with the employees of the respondent. 25 Based on the above, I am satisfied that the applicant has served the relevant documents on the respondent in accordance with the orders of 2 February 2007 and that the respondent was aware of the proceeding against it in this Court. 26 After reserving judgment on this matter, I directed the applicant to write to the Attorney-General for the Commonwealth to ascertain whether he remained of the same view as expressed in his submissions relating to leave to serve out of the jurisdiction. In a letter dated 12 October 2007, the Attorney-General's advisors expressed the opinion that the service by the applicant was defective and that "Japan would view neither the proceedings nor any judgment arising from them as legitimate". However, in circumstances such as these, where the Full Court of this Court has ordered that the respondent be served out of the jurisdiction, and where the Japanese Government has declined to assist in that service (as outlined above), I am of the opinion that the orders of 2 February 2007 are in accordance with the Rules. In so saying, I refer to my reasons given for granting substituted service (given on 16 February 2007): see Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2007] FCA 124. 27 Following substituted service, the matter was called on for hearing on 18 September 2007. The respondent did not file a notice of appearance prior to that time and did not appear on the morning of the hearing. The respondent was called outside the Court, but failed to appear. The matter then proceeded without the respondent being present. The applicant did not seek orders on a default basis, but proceeded to prove the matters required to establish the claim. Leave was not given to serve a pleading containing that allegation, as the allegation was not particularised. There was no appeal from that part of the original decision to refuse leave to serve out of Australia. In the circumstances, this proceeding has been conducted on the premise that JARPA (and later JARPA II) are not challenged as lawful permits under the Whaling Convention and thus it was not asserted that the impugned activity of the respondent was and is not scientific research. The MV Toshi Maru No 25 was retired prior to the 2002/2003 season and was replaced with the MV Yushin Maru No 2 . The MV Kaikoh Maru , a second sighting and survey vessel, also participated in the 2005/2006 and 2006/2007 whaling seasons. 31 The evidence of the registration of each of the vessels Kyoshin Maru No 2, Yushin Maru, Yushin Maru No 2, Kyo Maru No 1, Kaikoh Maru, Toshi Maru No 25 and Nisshin Maru discloses that the respondent is the owner of the vessels. That is sufficient prima facie evidence of ownership: Tisand Pty Ltd v The Owners of the Ship MV Cape Moreton (Ex Freya) [2005] FCAFC 68 ; (2005) 143 FCR 43 at 85 [171] . There was no suggestion in the evidence that the registration was, or was likely to be, in any way inaccurate. Although the respondent's purposes, as stated in its company registration certificate, include "conducting shipping and lease of vessels", there is no evidence to suggest that that the vessels were either demise or time chartered when they were engaged in the whaling activity. 32 Under JARPA, the whaling activity was conducted in two groups of areas, alternating on a biennial basis. In the 2001/2002 and 2003/2004 seasons, whaling was conducted south of latitude 60deg. S to the ice edge of the Antarctic land mass between longitude 35deg. E and longitude 130deg. E (referred to as Area IV and Area IIIE). In the 2000/2001, 2002/2003 and 2004/2005 seasons, whaling was conducted south of latitude 60deg. S to the ice edge of the Antarctic land mass between longitude 130deg. E and longitude 145deg. W (referred to as Area V and Area VIW). After the introduction of JARPA II, the internal boundaries were shifted such that in the 2005/2006 season, whaling occurred between 35deg. E and 175deg. E and in 2006/2007, between 175deg. E and 145deg. The reports identify that whale pods were located and pursued by the sighting and survey vessels in a manner that falls within the statutory definition of "interfering" with a cetacean within the scope of 229B(1) and (4). However, the 2006/2007 report stated that the "full-scale JARPA II will start from the 2007/08 season", during which time the respondent expected to take 50 humpback whales, 50 fin whales and 850 Antarctic minke whales each season. I therefore conclude that it is likely that the respondent will kill humpback whales in future seasons. 36 The 2005/2006 and 2006/2007 reports stated that "biopsy samples" were taken from humpback whales, as well as other whale species, by use of a compound crossbow. I am satisfied that this non-lethal method of sampling amounted to injuring, interfering with and treating a cetacean within the definition of the EPBC Act. 37 The applicant tendered photographs annexed to an affidavit of Kieran Paul Mulvaney, a Greenpeace whaling protester, which identify that after slaughter, the whales were taken aboard the MV Nisshin Maru and dissected. This is consistent with the respondent's cruise reports and is on its face a breach of s 230 of the EPBC Act. 38 The cruise reports filed with the IWC acknowledge the assistance of employees of the respondent in the preparation of the report. It is reasonably open to infer (and I do) that the authors of the report include employees of the company, and that the representations made in the reports go to a matter within the scope of the employees' employment and authority: the Evidence Act 1995 (Cth), ss 87 and 88 . 39 The area in which the fleet conducted its whaling activities extends beyond the boundaries of the Australian Whale Sanctuary. Nevertheless, by overlaying a map of the Australian Whale Sanctuary over the maps in the cruise reports identifying the locations at which whales were taken, I conclude that a significant number of the whales were taken inside the Australian Whale Sanctuary. 40 The Australian Government has not issued a permit under s 238 of the EPBC Act authorising these acts. On the basis of the above, the applicant has established on the balance of probabilities that the fleet has engaged in conduct that contravenes ss 229, 229A, 229B, 229C, 229D and 230 of the EPBC Act, and intends to continue doing so in the future under the JARPA II regime. No direct evidence has been adduced to establish that the crews of the vessel were employees of the respondent. I infer, however, that the crews of the various vessels in the fleet were acting in accordance with the respondent's authority, under JARPA and JARPA II. 43 Based on the facts outlined above, I am satisfied that the respondent is responsible for the actions of the whaling fleet for the purposes of the EPBC Act. 44 For the reasons already given in earlier reasons, I am satisfied that the EPBC Act applies to the Australian Whale Sanctuary and that there is no recognised foreign authority for the purposes of s 7(1) of the Antarctic Treaty (Environment Protection) Act 1980 (Cth). In reaching this latter conclusion, I have acted on the submissions and material put on by the applicant and the concession of the Attorney-General, both referred to at [40] of my reasons published on 27 May 2005 ([2005] FCA 664). Thus, I am satisfied that the respondent has contravened the EPBC Act, as alleged. Once leave has been granted, and the matter is before the Court to be resolved in the exercise of federal jurisdiction, it follows a fortiori from the Full Court's views as to the irrelevance of those matters at the point of decision whether to grant leave to serve process outside Australia that they are irrelevant at the point of final relief. Though it does not matter for the resolution of this proceeding, it may well be that the breadth or range of discretionary matters is wider at the point of deciding upon leave to serve out of Australia than at the point of decision about final relief. In any event, in accordance with the reasons of the Full Court, I can give no weight or relevance to the considerations that, when combined with futility, influenced my earlier decision. I therefore turn to futility, as a separate issue. 46 The respondent has, on the evidence, no presence or assets within the jurisdiction. Unless the respondent's vessels enter Australia, thus exposing themselves to possible arrest or seizure, the applicant acknowledges that there is no practical mechanism by which orders of this Court can be enforced (supplementary submissions, paragraph 36). The injunctive relief that the appellant seeks is relief by way of statutory injunction under s 475 of the EPBC Act. That section authorises the grant of what has been called a public interest injunction: see ICI Australia Operations Pty Ltd v TPC (1992) 38 FCR 248 at 256. Section 475 and the related provisions in Div 14 of Pt 17 of the EPBC Act have their counterpart in s 80 of the Trade Practices Act 1974 (Cth) ('the TP Act') upon which they appear to have been largely modelled. Section 475 of the EPBC Act and its related provisions form part of a much larger enforcement scheme contained in the 21 divisions of Pt 17. The provisions include the conferral of powers of seizure and forfeiture, powers to board and detain vessels and authority to continue a pursuit on the high seas. Thus, there being a 'matter' (see [28] below), the grant of a statutory public interest injunction to mark the disapproval of the Court of conduct which the Parliament has proscribed, or to discourage others from acting in a similar way, can be seen as also having an educative element. For that reason alone the grant of such an injunction may be seen, here, as potentially advancing the regulatory objects of the EPBC Act. Indeed, some of those objects are expressed directly in the language of 'promotion', including the object provided for by s 3(1)(c), namely to promote the conservation of biodiversity, which is an object that the legislation links to the establishment of an Australian Whale Sanctuary 'to ensure the conservation of whales and other cetaceans': s 3(2)(e)(ii). 49 Moore J did not agree with the majority on the question of futility of enforcement. His Honour was of the opinion that both long-standing common law authorities and recent High Court dicta support the proposition that relief should not be granted unless it would be effectual (or unless it there are reasonable grounds to believe an injunction will be effacious in the future). A "matter" cannot exist in the abstract. If there is no legal remedy for a "wrong", there can be no "matter". A legally enforceable remedy is as essential to the existence of a "matter" as the right, duty or liability which gives rise to the remedy. Without the right to bring a curial proceeding, there can be no "matter". If a person breaches a legal duty which is unenforceable in a court of justice, there can be no "matter". Such duties are not unknown to the law. For example, in Australian Broadcasting Corp v Redmore Pty Ltd , this court had to consider the effect on a contract of a statutory provision which prohibited the making of the contract without the approval of a minister. The prohibition arose in a context where s 8(1) of the relevant Act imposed a duty on the board of the appellant to ensure that it did not contravene any provision of the Act but s 8(3) provided that "[n]othing in this section shall be taken to impose on the Board a duty that is enforceable by proceedings in a court". Although the point did not arise for decision, it is plain that breach of the prohibition was incapable of giving rise to a "matter". Similarly, if there is no available remedy, there is no administration of the relevant law. Thus, as Gleeson CJ and McHugh J pointed out in Abebe v Commonwealth , "[i]f there is no legal remedy for a `wrong', there can be no `matter' ". The jurisdiction with respect to declaratory relief has developed with an awareness of that traditional attitude. The jurisdiction includes the power to declare that conduct which has not yet taken place will not be in breach of a contract or a law and such a declaration will not be hypothetical in the relevant sense. Barwick CJ pointed this out in Commonwealth v Sterling Nicholas Duty Free Pty Ltd. However, that is not the present case. In this regard, the applicant cited the case of Simonton v Australian Prudential Regulation Authority [2006] FCAFC 118 ; (2006) 152 FCR 129, in particular [70] --- [74]. 51 The question of futility can, however, also be seen from a perspective of disobedience. To do so requires the setting to one side of the refusal by Japan to recognise Australia's claim to Antarctica. It is not for this Court to question Australia's claim or Parliament's mandate in the EPBC Act, which is based on Australia's claim. Thus, this perspective can be seen to be relevant for this Court to take into account (even if from another perspective, for instance that of Japan, the perspective is flawed). 53 In the light of the reasons of the majority of the Full Court, I cannot conclude that the practical difficulty (if not impossibility) of enforcement is a reason to withhold relief. 54 On the material placed before the Court, I am satisfied that the respondent has contravened ss 229, 229A, 229B, 229C, 229D and 230 of the EPBC Act in relation to Antarctic minke whales and fin whales by killing, injuring, taking and interfering with them and the treating and possessing of them and by injuring, interfering with and treating and possessing humpback whales and that, unless restrained, it will continue to kill, injure, take and interfere with them, and treat and possess them. The Court declares that the respondent has killed, injured, taken and interfered with Antarctic minke whales ( Balaenoptera bonaerensis ) and fin whales ( Balaenoptera physalus ) and injured, taken and interfered with humpback whales ( Megaptera novaeangliae ) in the Australian Whale Sanctuary in contravention of sections 229 , 229A , 229B and 229C of the Environment Protection and Biodiversity Conservation Act 1999 (Cth), (the "Act"), and has treated and possessed such whales killed or taken in the Australian Whale Sanctuary in contravention of sections 229D and 230 of the Act, without permission or authorisation under sections 231 , 232 or 238 of the Act. 2. The Court orders that the respondent be restrained from killing, injuring, taking or interfering with any Antarctic minke whale ( Balaenoptera bonaerensis ), fin whale ( Balaenoptera physalus ) or humpback whale ( Megaptera novaeangliae ) in the Australian Whale Sanctuary, or treating or possessing any such whale killed or taken in the Australian Whale Sanctuary, unless permitted or authorised under sections 231 , 232 or 238 of the Environment Protection and Biodiversity Conservation Act 1999 (Cth). I thus make no such order. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. | contravention by respondent of environment protection and biodiversity conservation act 1999 (cth) public interest injunction discretion whether to grant relief futility environment practice and procedure |
The Amended Application filed 16 February 2006 be dismissed. 2. 3 Neither party requested a hearing on the issue of costs to be listed, and on the basis of the written submissions received I did not require their attendance at Court. The applicants in their written submissions conceded the general principle that costs follow the event, and that subject to consideration of a number of issues the applicants are not in a position to argue against an order that they pay the respondents' costs in these proceedings, including reserved costs. 2. On 4 August 2006 I made orders determining two notices of motion, one brought by each party, concerning further disclosure ( Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 2) [2006] FCA 1001). Each party had success on its motion. I reserved the costs of both notices of motion, and the applicants submit that no costs order should be made on either notice of motion. This approach is not contested by the respondents, and I propose to adopt it. 3. • On 9 November 2006 I dismissed the application for security for costs brought by the respondents, and ordered that costs be reserved: Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 3) [2006] FCA 1498. • The applicants submitted that the security for costs application was a discrete application lost by the respondents and that they should have the costs of the directions hearing on 6 November and the costs of the application for security for costs having regard to the order of 9 November 2006. This submission is not contested by the respondents in their written submissions. I accept the submissions of the applicants and order that the costs of the applicants of the hearings of 6 November 2006 and 9 November 2006 be paid by the first and second respondents on a party to party basis. 4. In their written submissions the applicants also conceded that they were not in a position to resist an order that they pay the respondents' costs for the remaining interlocutory hearings, with the exception of costs associated with orders made on 18 July 2006 and 21 July 2006. I will deal with these costs later in the judgment. 5. Indeed I note that both applicants and respondents retained senior counsel, and engaged experts to provide expert evidence including forensic and valuation evidence. However, whether these costs were incurred for the proper attainment of justice and enforcing the respondents' rights is, in default of agreement, a matter for the taxing officer under O 62 r 19 Federal Court Rules rather than this Court: Fubilan Catering Services Ltd v Compass Group (Australia) Pty Ltd [2007] FCA 1497 at [2] . The basis upon which the respondents' costs, payable by the applicants, should be assessed. The respondents have submitted that the applicants should be ordered to pay the costs of the respondents in the proceedings, including the cross-claim which was defended on the basis of the misrepresentation case, and including any reserved costs, on an indemnity basis. The applicants have submitted that these costs should be paid on the standard basis, namely party to party. 2. Liability for costs related to the orders of 18 July 2006 ( Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd [2006] FCA 920) and the directions hearing of 21 July 2006. 3. Release of the cheque of $150,000 and bank guarantee of $75,000 provided by the first and third applicants as security for the respondents' costs. 6 I shall consider each of these issues in turn. This was not the case here because the allegations advanced by the applicants were not simply allegations of oral conversations, but were mixed allegations relying upon documents, conduct and oral representations. ...... (2) Except as provided by any other Act , the award of costs is in the discretion of the Court or Judge. 10 Principles applicable to the award of indemnity costs have been considered on numerous occasions in this Court, including by the Full Court. The usual rule is that costs should be on a party-party basis, but that the Court has a wide and unfettered discretion to award costs on an indemnity basis in appropriate cases in particular circumstances: see Colgate-Palmolive v Cussons (1993) 46 FCR 225 at 231-234. [7] In deciding whether to award indemnity costs each exercise of discretion depends on the particular facts. 13 The categories of cases I have listed are not exhaustive. The Court may exercise its discretion to award indemnity costs in circumstances falling outside these categories where there are some special or unusual features in a case so as to justify the Court exercising its discretion in this way ( InterTAN Inc [2005] FCAFC 54 at [11] ). 14 Turning now to the case before me, I do not accept the submission of the applicants that in all matters in which a failure to disclose relevant information is alleged under s 52 of the Act there will be elements of impropriety and deceit. It is well settled that, unlike in relation to a claim of fraud ( Derry v Peek (1889) 14 App Cas 337), the intent of a representor is not relevant in the context of a s 52 claim (Stephen J in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228, Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 197). Although as observed by Miller the courts have been more ready to find a breach of s 52 where an intention to mislead can be inferred (see cases cited in Miller RV, Miller's Annotated Trade Practices Act (28th ed, Thomson, 2007) at [1.52.35]), proof of an intent to deceive is not required under s 52. 15 Notwithstanding this point however, I am not persuaded that the circumstances of this case are such as to warrant a departure from the usual practice of the Court in awarding costs so far as the costs of the first respondent are concerned. I do not consider that this case exhibited special or unusual features so as to justify the court exercising its discretion in this way. 2. I accept the submission of the applicants that the case turned on factual findings, which in this case were against the applicants. To that extent I do not consider that the applicants' case against the first respondent was "hopeless" or had no chance of success. 3. I accept the submission of the applicants that their case was based on evidentiary or factual foundations, although as my judgment in the substantive case demonstrates, I was not persuaded by the applicants' submissions. 4. I consider that, as against the first respondent, the applicants, in particular the second applicant, had an honest belief in the soundness of their case (cf Ian David Morwood v Chemdata Pty Ltd [1998] FCA 194). 16 In relation to the claims of the applicants against the second respondent, Mr Strahley, I also consider that, on balance, the case did not exhibit special or unusual features warranting the Court exercising its discretion to award indemnity costs. As a general proposition it is not uncommon in a claim for misleading or deceptive conduct against a corporation that a claim for accessorial liability against the managing director of that corporation will be commenced, as occurred in this case. 2. The applicants' case against Mr Strahley was intertwined with their case against the first respondent --- an inevitable approach in my view given Mr Strahley's position as managing director of the first respondent. 3. Although throughout the proceedings the applicants (in particular the second applicant) made what I consider to be unnecessarily dramatic and inaccurate declarations of impropriety on the part of the second respondent with respect to the alleged attempts of the second respondent to destroy records, these assertions were, although serious, not pleaded as part of the case the respondents had to meet. This point was also made by Counsel for the applicants during the proceedings (TS 17 July 2006 p 11 ll 8-13). 4. I do not consider that the applicants, in making assertions of impropriety against the second respondent, did so with an ulterior motive or in the knowledge that the assertions were false. 5. This is not a case where the applicants, although alleging accessorial liability, did not press their claims against the second respondent so as to warrant indemnity costs for failure to properly abandon the claims (cf Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602). 17 Accordingly, I am not persuaded that the circumstances warrant the costs of the second respondent being paid on an indemnity basis. 19 The applicants submitted that, as the proximate cause of the adjournment of the trial was the late delivery by the respondents of multiple additional witness statements, that the applicants should have their costs thrown away by the necessity to adjourn the trial against the respondents on a standard basis, as well as the costs of the appearance on 21 July 2006. 20 The respondents submitted that the application for the adjournment of the trial was occasioned by the inability of the applicants to prove their case, and that the fundamental reason why the applicants sought to adjourn the trial was because the applicants did not have an expert valuation report to establish the loss or damage alleged to have been suffered by the first applicant. The respondents point, in particular, to the fact that the valuations of Mr Robertson, the expert valuer whose evidence was tendered by the applicants at trial, were not undertaken until 20 October 2006. Accordingly, the respondents submit that applicants' contention that the adjournment was occasioned by the late delivery of the respondents' material did not address the fact that the applicants were not in a position to prove their case as at 18 July 2006. 21 The proximate reason for the adjournment of the trial on 18 July 2006 was, as I explained in Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd [2006] FCA 920 , the inability of the applicants to properly consider additional witness statements totalling some 3785 pages in length, delivered over 10 days in the lead up to the scheduled commencement of the trial. While I note the late completion of Mr Robertson's expert reports, there is, in the absence of evidence, no basis for the respondents' claim (in considerable hindsight) that the absence of those reports meant that the applicants were not in a position to prove their case had the hearing proceeded as scheduled on 17 July 2006. The practical effect of the vacation of the trial dates was that both applicants and respondents were able to file, at later dates, supplementary evidence including further expert reports as permitted by my orders of 9 August 2006. Indeed I also note that, in accordance with my orders of 9 August 2006, the respondents filed considerable additional evidence upon which they relied at trial, including an affidavit of Mr Burns (filed 28 July 2006), affidavits of Mr Strahley (filed 11 August 2006 and 18 August 2006), and affidavits of Mr Harrison, Mr Breed and Mr Bailey (filed 18 August 2006). 22 In my view the appropriate order is that the applicants should have their costs thrown away by the adjournment of the trial on 18 July 2006 on a party to party basis, as well as the costs of the hearing of 21 July 2006. The applicants have submitted that the moneys paid into Court as security for costs should not be released without the ascertainment of the actual costs payable by the applicants to the respondents. 24 Throughout this matter, which has included multiple interlocutory hearings, thousands of pages of evidence, and a substantive trial of four weeks spread over several months, the respondents retained a firm of solicitors and junior counsel, as well as senior counsel during the trial. I consider it very likely that the costs of the respondents exceed $225,000 and it is not in dispute that, with the exception of reserved costs relating to a number of interlocutory hearings, the respondents are entitled to their costs. However in the absence of quantification of the actual costs payable by the applicants to the respondents, there is a risk, however negligible, that the total sum paid into Court by way of security for costs exceeds the amount actually payable by the applicants to the respondents. Accordingly I consider that once the parties have either agreed as to the total costs to be paid to the respondents by the applicants, or in default of agreement, following taxation of costs in accordance with O 62 Federal Court Rules , the respondents may apply to the Court for an order that the cheque for $150,000 and the bank guarantee for $75,000 provided by the first and third applicants as security for the respondents' costs be released to the respondents. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. | application by first and second respondents for costs on indemnity basis principles guiding discretion of court to award indemnity costs whether case exhibited special or unusual features warranting exercise of discretion application by first and second respondents for release of monies paid into court as security for costs costs |
Mr Russell also professes to be a "naturist" - "A person who practises or advocates a natural way of life, esp. as characterized by the practice of communal nudity": Oxford University Press 2009, Oxford English Dictionary (Oxford University Press, Oxford, 2009) http://dictionary.oed.com viewed 20 June 2009. According to his evidence, Mr Russell's ambitions for his premises, which are situated in the hinterland near Sarina in Central Queensland, extend to affording those of like mind to him in relation to naturism the use of those premises. It is not intended that that use be gratuitous. In furtherance, he says, of that ambition, a variety of trees have been planted at the premises. Their purpose, according to him, is not only ambience and the provision of a privacy screen but also, through selective harvesting, the derivation of income from forestry operations. Mr Russell's work as an accountant and his ambitions for his premises have given rise both to income tax and to goods and services tax controversies. These have come to manifest themselves in appeals under Part IVC of the Taxation Administration Act 1953 (Cth) (TAA). In an interlocutory judgement delivered last year I concluded that it was both lawfully possible for him to join his appeals in the one application and that the overlap in the underlying facts was such that it was in the interests of justice that his income tax and goods and services tax (GST) appeals be heard together: Russell v Commissioner of Taxation [2008] FCA 343 ; (2008) 168 FCR 330. Mr Russell appeared on his own behalf on the hearing of the appeals whereas the respondent Commissioner of Taxation (the Commissioner) was represented by senior and junior counsel. It is no reflection on counsel, who provided valuable assistance, to observe that both in oral and written submissions Mr Russell argued his case with marked and memorable skill. This included the ability, not always found in litigants in person, for the most part to distinguish between his distinct roles as advocate and as witness. While I respect his skill and ability, it does not, as will be seen, follow that I accept all of his evidence. The taxation assessments, including the related assessments of penalty, each of which was affirmed upon objection by the Commissioner and which underpin the respective income tax and GST appeals are as follows. He adhered to that view in disallowing Mr Russell's objection and upon the hearing of the appeal against the objection decision. For the purposes of s 284-90(1) of Schedule 1 to the TAA, the Commissioner worked out the base penalty on the basis that the tax shortfall had resulted from intentional disregard by Mr Russell of the ITAA 1997. In each instance and in reliance on s 284- 220 (1) of Schedule 1 to the TAA, the Commissioner also assessed penalty on the basis that the base penalty should be increased by 20%. On the hearing of the appeals he did not press that the base penalty of 20% should be increased. (b) Whether the income paid to Ancath by Tradecorp constituted the personal services income of Mr Russell? (c) More particularly: (i) whether Ancath satisfied conditions of conducting a personal service business for the purposes of s 86-15 of the ITAA 1997? (ii) whether, having regard to s 87-15 of the ITAA 1997, 80% of Mr Russell's personal services income was from the same entity? (iii) whether Mr Russell met the results test under s 87-18 of the ITAA 1997? (d) Whether an overseas registered company can be a personal services entity in relation to the assessment of personal services income of an individual? (e) Whether it is contrary to the Double Taxation Agreement between Australia and New Zealand to attribute the income paid to Ancath by Tradecorp as the personal services income of Mr Russell? (f) Whether the penalties for having tax shortfall amounts were correctly assessed at 75% as resulting from intentional disregard of a taxation law under item 1 of s 284-90 of Schedule 1 to the TAA? (g) Whether the Commissioner's related penalty remission decision was attended with error such that the Court should reach its own conclusion on that subject? Whether the partnership has been dissolved (and, if so, when it was dissolved and what impact such dissolution has on the partnership's entitlement to claim the ITC amount) is an issue. In his assessment of the GST net amount the Commissioner: (a) included an amount of $43,898 in respect of GST collected by the partnership purportedly as agent for Ancath pursuant to s 57-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the GST Act) less $3,909 reported by the partnership by its business activity statements (resulting in a net amount of $39,989) (the resident agent amount); and (b) disallowed various input tax credits totalling $31,545 (the ITC amount) that had been claimed by the partnership in the Business Activity Statements lodged in respect of the periods. The sum of $31,545 comprised the following amounts of input tax credits in respect of three enterprises purportedly carried on by the partnership: (i) $27,284 in respect of an accountancy practice; (ii) $1,522 in respect of a forestry activity; and (iii) $2,739 in respect of a naturist retreat. The Commissioner has further conceded that the appeal in respect of penalty should be allowed insofar as it challenges the 20% increase in base penalty. As to GST related penalty, the issues are: (a) whether the statutory pre-conditions to the assessment of the base penalty (set out in s 284-90 of Schedule 1 to the TAA) were satisfied; (b) whether the Commissioner properly exercised his discretion (pursuant to s 298-20 of Schedule 1 to the TAA) not to remit the base penalty; and (c) whether, in respect of the period prior to 1 July 2002, it was necessary for the Commissioner to form an opinion that there was an avoidance of tax due to fraud or evasion pursuant to s 105-50 of Schedule 1 to the TAA in order to assess and, if so, whether that opinion is vitiated by relevant error of law? They took up residence here. Before leaving New Zealand and by an agreement evidenced in writing dated 1 January 2000 (the Partnership Agreement) they formed a partnership which was to commence trading after 1 April 2000 under the name of "A W Russell & Co" (the partnership). The original members of the partnership comprised Mr Russell and his then wife alone. Though the Partnership Agreement made provision for the admission of additional partners, in the result Mr and Mrs Russell were the only members of the partnership during its existence. That such a partnership was formed was not controversial on the hearing of the appeals. There was though some controversy between the parties as to when the partnership came to an end. The controversy was one of law rather than fact. Mr Russell gave evidence by affidavit that he and his wife separated on 23 February 2004 and "effective from that date she verbally resigned from the partnership". Mrs Russell did not give evidence. It emerged that she was now residing abroad. In his oral evidence Mr Russell referred to his former wife having "effectively resigned" from the partnership on the date of their separation. I did not take this to be a departure from the position earlier described by him in his affidavit. Consistent with his wife's earlier resignation, I note that, later in 2004, Mr Russell caused the Queensland Business Names Register to be altered so as to delete his wife from co-proprietorship of the business name "A W Russell & Co" and to record him as the sole proprietor of that name. I find that Mrs Russell resigned from the partnership on 23 February 2004 by notice given orally to Mr Russell that day. Mr Russell also deposed: "Since 23 February 2004 Catherine Russell has continued to receive a share of the net profit of the partnership. For the year ending 30 June 2004 she received a full 50% of that year's net income in accordance with a verbal agreement between us and for each year thereafter she has received 10% of each year's profit in line with clause 5 of the Partnership Agreement". Clauses 2 and 5 of the Partnership Agreement are in these terms: The partnership shall not dissolve for reason of the bankruptcy, death, or resignation of one of the partners, nor shall the partnership dissolve for reasons of a new partner being admitted to the partnership. Save insofar as that agreement provided to the contrary, the Partnership Agreement expressly provided that it was governed by the Partnership Act 1908 (NZ) (Partnership Act (NZ)). Mr Russell's submission was that: "Mrs Russell may well have resigned from an active role in the partnership at the time of the marriage separation but she has continued to receive a share of the net profit of A W Russell & Co up until she received her final payout of capital which occurred in June 2008". He alleged that there was a practice within the Commissioner's office "to allow a retired partner to remain on a partnership income tax return and receive a share of profit until such time as he/she is completely gone from the business relationship". The Commissioner's position was that the partnership had ceased to exist upon Mrs Russell's resignation with payments to her thereafter being nothing more than a settlement of accounts. He developed this submission firstly by reference to one of the inherent elements of a partnership for the purposes of legislation modelled on the Partnership Act 1891 (UK) (Partnership Act (UK)), which is that the partnership business must be carried on by two or more persons in common: see, materially, the definition of partnership in s 5(1) Partnership Act 1891 (Qld) (Partnership Act (Qld)) and s 4(1) Partnership Act (NZ). As there is no presently material difference between the New Zealand and Queensland Partnership Acts it is unnecessary to consider the extent to which the Queensland Act came to apply to Mr and Mrs Russell's New Zealand-formed partnership upon their commencing to carry on business in Queensland. So as to highlight the absence of any material difference I shall refer, where necessary, to both the New Zealand provision and its Queensland equivalent. Secondly, because of its particular significance for the GST appeal, the Commissioner drew attention to the definition of "partnership" for the purposes of the GST Act. Section 195-1 of the GST Act incorporates by reference for the purposes of the GST Act the definition of "partnership" found in s 995-1 of the ITAA 1997. The latter definition changed (on and from 2 December 2003) over the course of the tax periods. It is not necessary to reproduce either its former or present terms in full. Common to each version is either that there be an association of persons carrying on business as partners or that persons be in receipt of income jointly. Each version of the definition thus both includes a partnership as understood under the general law of partnership as well as expands its embrace so as to include those in receipt of income jointly, even if they are not carrying on business in common with a view to profit. Given the finding of fact I have made as to Mrs Russell's resignation, the partnership was dissolved on 23 February 2004. It was on that date that Mr Russell received notice from the only other partner then carrying on business under the name A W Russell & Co. The Partnership Agreement did not specify any fixed term for the duration of the partnership. It was thus a partnership at will. Nor did the Partnership Agreement specify any particular manner and form for the giving of notice of the dissolution of the partnership. It was able to be dissolved by Mrs Russell's giving to Mr Russell notice of her intention to dissolve the partnership; s 35(1)(c) Partnership Act (NZ); s 35(1)(c) Partnership Act (Qld). It was permissible for the notice of dissolution to be given orally. Mrs Russell did not specify any prospective date as the date upon which dissolution of the partnership was to take effect. In those circumstances, dissolution occurred on the day upon which Mr Russell was given notice of dissolution by his wife: s 35(2) Partnership Act (NZ); s 35(2) Partnership Act (Qld). That was 23 February 2004. The giving of notice by Mrs Russell necessarily brought the then existing partnership to an end. No fresh partnership constituted by continuing partners replaced it. It is the very essence of partnership under the general law that two or more persons carry on business in common. Clause 2 of the Partnership Agreement cannot and does not alter that position. After 23 February 2004, though Mr Russell carried on the business of A W Russell & Co, he did so as a sole trader. He and his now former wife thereafter no longer carried on business in common. Provision is made in partnership legislation in respect of the entitlements of an outgoing partner where a surviving partner continues to carry on the business of the firm before any final settlement of accounts: s 45 Partnership Act (NZ); s 45 Partnership Act (Qld). That legislative provision is subject to any provision in a partnership agreement to the contrary. In this instance, and as Mr Russell deposed, he and his wife did come to an agreement to the contrary. Their agreement was that, for the year ended 30 June 2004, she would receive 50% of the profits of the business and thereafter, as cl 5 of the Partnership Agreement provided, in lieu of interest on capital, 10% of those profits would be paid to her for a period of not more than 5 years. The payment of these sums occurred in the course of the winding up of a partnership which had been dissolved. They were payments by Mr Russell in his own right to a former partner. That they were paid did not mean that the partnership was continuing. Nor did it mean that he and his former wife were in receipt of income jointly. The sums were paid from the profits of a new business carried on by Mr Russell in his own right under the name A W Russell & Co. It follows from the conclusions just reached that, after 23 February 2004, not only was there no partnership under the general law but also there was none under the expanded notion of "partnership" resulting from the definition applicable to the GST Act. After 23 February 2004 Mr and Mrs Russell could not even be classified as persons in receipt of income jointly. Administrative practices adopted by the Commissioner in relation to partnerships are irrelevant to the operation of the general law of partnership and to the effect of the expansion of the general law by the definition of "partnership" for the purposes of the ITAA 1997. It may be that these practices are referable to circumstances where, after notice of dissolution is given, a partnership business is carried on for a limited time solely for the purpose of collecting fees which were outstanding prior to the giving of that notice. That is not this case. It is unnecessary to consider the extent, if at all, to which any such practice of the Commissioner conforms to the general law of partnership or the expanded statutory definition. I accept though that adherence, however mistaken in law, by a taxpayer to an administrative practice condoned by the Commissioner may be relevant to whether any penalty tax is exigible. Under the general law, a partnership is not a legal entity separate from its members. Incongruently with the general law, a "partnership" as defined is classed as an "entity" for the purposes of the GST Act: s 184-1. It also follows from the conclusions which I have reached that, after 23 February 2004, the partnership carrying on business under the name A W Russell & Co ceased to be an "entity" for the purposes of the GST Act. Thereafter, a new GST "entity", Mr Russell as an individual, came to carry on business under that name. I have no doubt that Ancath was an existing legal entity at all times material to the appeals. It is not necessary just to rely upon Mr Russell's own evidence for that conclusion. Its certificate of incorporation upon its change of name to Juan International on 5 September 2005 is in evidence. That certificate also discloses that Ancath was originally incorporated under the Companies Act 1955 (NZ) on 23 November 1992. Other official corroboration of Ancath's existence comes from the records of New Zealand's Inland Revenue Commissioner and its Registrar of Companies. Ancath has lodged annual returns with each of these officials. It will be necessary later to make reference to some of the information disclosed on the New Zealand income tax returns. Ancath also holds a registered mortgage over Mr Russell's Sarina hinterland property. It secures a loan to him by Ancath in the sum of $250,000. Read in conjunction with a New Zealand Companies Office search, Ancath's annual company returns disclose that its sole shareholder is and has been Mr Russell's now former wife. Her shareholding is recorded under her maiden name, Catherine Orange. A director of Ancath since 1998 has been a Mr Theunis Miedema. Mr Miedema is a resident of New Zealand. Mr Russell had secured and filed affidavits from him. The Commissioner sought to cross-examine Mr Miedema on the affidavits. He gave notice of that intention well before the dates fixed for trial. Where a notice that a deponent attend for cross-examination is given and that deponent does not attend, his or her affidavit may only be used with the leave of the Court: Federal Court Rules O 14, r 9. Mr Russell sought to explain his failure to have Mr Miedema available in person for cross examination on the additional basis of a recollection on his part that he had been informed early in 2008 by a lawyer in the Australian Government Solicitor's (AGS) office that he could lodge an affidavit given by Mr Miedema and that, "it certainly was the impression I got that she [the AGS lawyer] wouldn't be interested in cross-examining him. And I had transmitted that information to Theunis [Mr Miedema], and because it meant he did not have to come back to Australia, he was quite happy to give me that affidavit". An affidavit from Mr Miedema was filed in March 2008 and another in May 2008. Whatever might be the accuracy of that recollection, and it must be said that it is inconsistent with the Commissioner's subsequent forensic disposition, the evidence also disclosed that, by May 2008, it had been made pellucidly clear to Mr Russell by the AGS lawyer then responsible for the case that Mr Miedema was required for cross-examination. Later that month, Mr Russell wrote to the AGS office advising: "I have at last been able to make contact with the witness from New Zealand, Theunis Miedema, and he has confirmed his availability during the period 14 July to 1 August 2008. " Thereafter, it was confirmed to Mr Russell that each of the persons whose affidavits had been filed in his case was required by the Commissioner to attend for cross examination. Mr Russell sought to make something of the failure on the part of the Commissioner to call the original AGS lawyer he had named. However, against the background that I have just recited, the accuracy of Mr Russell's recollection of early dealings with the Commissioner's solicitor is something of a distraction. It would not at all surprise me if there had been some early acknowledgement on the part of those acting for the Commissioner of the expense of bringing a prospective witness from New Zealand and an associated reservation about whether that was necessary prior to the filing, service and consideration of an affidavit from that proposed witness. It is not impossible to see how that might have created an initial impression in Mr Russell's mind that Mr Miedema was not definitely required for cross-examination. However, it is quite apparent that, by the end of May 2008, he not only was aware of the requirement to produce Mr Miedema for cross examination but had also confirmed that gentleman's availability over the period during which the hearing of the appeals had been programmed to occur. Mr Russell's further response in relation to his failure to secure Mr Miedema's attendance was that he could not afford to secure his attendance. Upon noting that Mr Russell had qualified for court fee relief on the basis of his financial position and given that he was not legally represented, I drew Mr Russell's attention to the Evidence and Procedure (New Zealand) Act 1994 (Cth). That Act provides for the service of Australian subpoenas in New Zealand and for the receiving in Australia of evidence by telephone or video link from New Zealand where facilities are available. Inquiries were made which disclosed that it was possible to arrange a video link to a District Court in New Zealand in reasonable proximity to the place in New Zealand where Mr Miedema resided. The availability of this facility was made known in open court to Mr Russell and to the Commissioner. The Commissioner was disposed to utilise such a facility rather than insist upon Mr Miedema's physical attendance in Australia. I indicated to Mr Russell that I was prepared to adjourn the proceedings to a time when Mr Miedema was able to attend at the District Court. In the course of his oral evidence Mr Russell mentioned on several occasions his need to report his actions to Mr Miedema and to consult with him because it was Mr Miedema who was the director of Ancath. I ruled that I would not grant leave to permit the use of an affidavit from Mr Miedema without his attendance for cross examination. I gave brief reasons for this at the time. In essence, my reasons for refusing to grant leave under O 14 r 9 were these. Whether to permit Mr Russell to rely upon an affidavit without producing Mr Miedema for cross-examination required the exercise of a discretion. Mr Russell's relative impecuniosity was relevant to the exercise of that discretion, particularly where the witness concerned resided overseas. That Mr Miedema did reside overseas was itself a relevant consideration. These considerations were tempered by the ability, buttressed by legislation, to secure Mr Miedema's testimony in cross examination by video link at a locale in reasonable proximity to his place of residence in New Zealand. The nature and extent of Ancath's business operations in the years in question was of particular significance in both the income tax and GST appeals. One might apprehend that, prima facie, as its sole director, Mr Miedema could give first hand evidence on those subjects. Certainly, the role consigned to Mr Miedema by Mr Russell in the course of his evidence in this Court was such that it was understandable that the Commissioner would wish to cross examine Mr Miedema. The role then consigned to Mr Miedema echoed that evident in Mr Russell's letter of objection dated 10 April 2007. It was evident from the conduct of the Commissioner's case that Mr Russell's credibility was a controversial subject. If their use were permitted Mr Miedema's affidavit evidence had the potential, if accepted, to corroborate some of the evidence that Mr Russell gave concerning Ancath. To permit the adducing of that evidence without the Commissioner's having the ability to cross examine Mr Miedema did not, on balance, strike me as in the interests of justice in the circumstances. After this ruling I granted an adjournment for the purpose of the parties bringing forward a proposal for the reception of Mr Miedema's evidence by video link. Upon resuming, Mr Russell decided not to pursue that option. He did so even after being advised that I was prepared to dispense with his paying for the cost of the video link on the basis of his confirmation that his financial position had not materially changed since he obtained fee waiver. Mr Russell's decision not to make Mr Miedema available for cross examination, even in these circumstances, was, to my then observation and as I distinctly recall, a very deliberate decision. Marital estrangement as well as foreign residence might well and, I accept does, sufficiently explain the absence of evidence from Mrs Russell. Mr Miedema was though disposed to give affidavits but not to be cross-examined upon them. It was lawfully and, in my opinion, reasonably possible for his cross examination to occur without his leaving New Zealand. The absence of evidence from Mr Miedema is not unexplained but it is an absence nonetheless. It is the result of a deliberate forensic choice. I regard the absence of evidence from Mr Miedema as a significant absence in terms of Mr Russell's discharging his obligation to prove the assessments concerned to be excessive. In turn, Mr Russell's appeal is against what one might term that "omnibus" taxation objection decision. I have already summarised the issues pertinent to the income tax appeal. In terms of proximity to the relevant events, the earliest account from Mr Russell which I have before me is that offered in statements made by him for the purposes of proceedings in the Queensland Industrial Relations Commission and in related written submissions prepared by him for the purposes of those proceedings. Mr Russell acknowledged his authorship of these documents in the course of his cross examination. It appears that Mr Russell instituted proceedings against Tradecorp in the Industrial Commission in the "unfair contracts" jurisdiction conferred upon it by s 276 of the Industrial Relations Act 1999 (Qld). It further appears that Tradecorp sought to have those proceedings dismissed. The outcome of those proceedings and especially any conclusions reached by the Industrial Commission as to Mr Russell's credibility, his status vis-à-vis Tradecorp, whether Ancath had a contract for service with Tradecorp or whether Mr Russell ought properly to be regarded an employee of Tradecorp are not relevant in either the income tax or GST appeals: s 91(1) Evidence Act 1995 (Cth) (Commonwealth Evidence Act ); National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Qld) [2001] FCA 237 ; (2001) 183 ALR 700 at 715, [46] . Mr Russell's prior statements and submissions are though in a different category. That Mr Russell performed accounting and managerial work for Tradecorp at its Mackay business premises for about four years between August 2000 and August 2004 is clear. His title when performing that work was that of Tradecorp's "financial controller". He was appointed to undertake that work by Tradecorp's managing director, Mr Tony Zarb. That followed an interview with Mr Zarb and Tradecorp's outgoing financial controller, Ms Gillian Sandhoff. It is also clear that Mr Russell ceased undertaking this work following a breakdown in relations between him and Mr Zarb. It is not necessary in these proceedings to explore the rights, wrongs and responsibilities for that breakdown in relations. Relations between Tradecorp and Ancath were at least purportedly regulated by a written agreement made between those companies made on 4 August 2000 (the Tradecorp Agreement). Mr Russell, I note, has signed the agreement on behalf of Ancath underneath the common seal of that company. Mr Zarb has apparently signed on behalf of Tradecorp. The Commissioner did not submit that the Tradecorp Agreement was a sham. The expressed date of commencement for the Tradecorp Agreement was 30 August 2000. In his affidavit evidence filed in these proceedings Mr Russell made reference to the existence of the Tradecorp Agreement. He did not in that evidence state that, from his perspective as a signatory to it on behalf of Ancath, it was a sham. Rather, he stated that there was such an agreement in existence between 30 August 2000 and 30 June 2004. I understood his reference to 30 June 2004 not to be a statement that the Tradecorp Agreement had been terminated on that date but rather that the agreement had been operative for the whole of the 2004 income year, which is the last of the income years covered by the assessments. Neither Mr Zarb nor any other officer of Tradecorp gave evidence, much less gave evidence that Tradecorp regarded the agreement as a sham. I approach the determination of the income tax appeal on the basis that, as it came to be varied, the Tradecorp Agreement did indeed regulate relations between Tradecorp and Ancath according to its tenor until terminated by Tradecorp in August 2004. It transpired that, on 24 September 2001, Ancath and Tradecorp varied their original agreement, effective inter se from 1 September 2001, so as to increase the initial contract sum from $A45,000 per annum to $A65,000 per annum. Again, there was no suggestion that this variation agreement was a sham. What Mr Russell did state in his affidavit evidence in this Court was that he was never an employee of Tradecorp but rather an employee of Ancath in relation to the performance of work at Tradecorp. Obviously enough, his status is a mixed question of law and fact. Insofar as it is factual, his position before me was that he was a mere employee who deferred in terms of decision-making to those who controlled Ancath. This was in marked contrast to the position which Mr Russell adopted in evidence before the Industrial Commission as to his position vis-à-vis Ancath and Tradecorp. The tenor of the statement which Mr Russell gave to the Industrial Commission as to his relationship with Ancath was quite different. His position on that subject before the Industrial Commission was, if anything, even more starkly put in an outline of submissions which he signed and then filed on 31 January 2005 with the Industrial Commission when acting for himself in that forum. Changes in the terms of my employment were discussed only with myself, and Tradecorp never at any time attempted to communicate with Ancath. My wife was the sole shareholder and because of my relationship with her I could run Ancath. I have signing authority on the company's bank account and possess a debit card for use at any ATM any where in the world. He submitted that these had been prepared on legal advice. The written submission which from which I have just quoted was signed not by a lawyer but by Mr Russell personally. Mr Russell did mention that he had initially consulted lawyers in relation to the Industrial Commission proceeding but was unable to afford to continue to be legally represented. Assuming in his favour (as I do) that he was initially given particular legal advice as to how his position as Tradecorp's financial controller ought to be regarded for the purposes of Queensland industrial legislation, that advice must necessarily have been given against an account of facts pertinent to the relationship between Ancath and Tradecorp and of the work performed by Mr Russell. It was Mr Russell who had the intimate knowledge of these facts. It is his account of the facts in his submission to the Industrial Commission which is of interest. That either he or his onetime legal advisers may have been in error as to the characterisation of his position in law on those facts for the purposes of Queensland industrial legislation is nothing to the point. I regard the factual content of the submission which he made to the Industrial Commission as relevant and revealing. It is not difficult to see how Mr Zarb on behalf of Tradecorp may well have perceived advantage for his company in terms of a supposed saving in labour oncosts such as pay-roll tax by securing the services of Mr Russell by means of a contract for service with another body corporate which would in turn deploy Mr Russell to perform work for Tradecorp. Nor is it difficult to see how Mr Russell was able readily to accommodate Mr Zarb's preference if indeed, as Mr Russell also stated, Ancath was a dormant company immediately available to him. It matters not for the purposes of this appeal whether Mr Zarb's perception as to the efficacy for pay-roll tax or other labour on cost purposes of such an arrangement was misconceived in law. What does matter is the striking variance in Mr Russell's accounts as to the nature of his relationship with Ancath as between the Industrial Commission and the present proceeding. I regard it as inherently more likely that his account to the Commission as to his ability to control Ancath was factually correct, ie that he was able, initially in a de facto way and later more formally, to control Ancath's affairs. That may well also explain his reluctance, even in the face of an offer of considerable facilitation, to see Mr Miedema exposed to cross-examination. The income tax returns which Ancath lodged with New Zealand's Inland Revenue Commissioner cover taxation years which end on 31 March. They thus do not align with the usual Australian taxation year, which ends on 30 June. Allowing for this, it nonetheless appears that Ancath has returned in New Zealand as ordinary income, described as "fees received", the amounts paid to it by Tradecorp net of Australian GST. There is no other apparent source of income for Ancath evident in its New Zealand income tax returns for the years ended 31 March 2001 to 31 March 2005 (inclusive). According to Mr Russell, Ancath did though have sources of income which were not referable to his performance of work for Tradecorp. He referred to work performed for clients who were based in Vanuatu. In support of this claim Mr Russell exhibited to an affidavit which he swore a bundle of what purported to be copies of invoices directed by Ancath to such clients (JAT Investments, Cobra Holdings, Barbara Farms) for that work. On the copies he produced, the addresses of the clients had been obliterated. The reason for this, so Mr Russell said, was that, "Vanuatu is a tax haven and income earned and retained there is not subject to income tax and accordingly that proportion of [Ancath's] income was not returned by the company in its New Zealand tax returns". As to the obliteration of client addresses, Mr Russell stated in cross-examination that: "My employer made those available to me on the condition the addresses be blacked out to protect the privacy of the clients". The "employer" concerned, Mr Russell agreed, was Ancath. In light of that reference, the absence, in the result, of evidence from Mr Miedema is eloquent. I have a very particular recollection of Mr Russell's giving this evidence concerning what "his employer" would make available to him. His demeanour was obstinate. His reference to "his employer" had a surreal quality about it when given in oral evidence in light of the earlier exposure of the dogmatic statement as to his control of Ancath which he had made in the Industrial Commission proceedings. Mr Russell admitted in cross-examination that he had never been to Vanuatu. He said that the work concerned had been done by him for Ancath's clients either from his premises near Sarina or when he was in New Zealand. He also admitted that there was no-one other than himself and his former wife who was involved in the preparation of Ancath's New Zealand income tax returns. It transpired that the amounts of these purported invoices to Vanuatu based clients were, in each income tax year, just sufficient to bring Ancath below the 80% threshold which features in the legislation in relation to personal services income. Mr Russell claimed that Ancath had undertaken other such work but that, as it was only necessary for him to show an amount less than 80% all that he had done was to produce copies of sufficient of its invoices to do this. I did not find Mr Russell's explanation as to the reason why no income was returned by Ancath in New Zealand in respect of services performed in Vanuatu either compelling or even persuasive. Quite what relevance Vanuatu's status as a so-called "tax haven" had with respect to such responsibility as Ancath had under New Zealand's revenue laws to return that income in New Zealand escapes me. As viewed from New Zealand, the income that Ancath derived from the performance of services in Australia for Tradecorp via Mr Russell was also foreign sourced income. Yet Ancath's New Zealand income tax returns disclosed this particular foreign sourced income. Mr Russell did not adduce any admissible evidence before me as to the revenue laws of New Zealand or of the revenue laws and other laws of Vanuatu which might in this way serve to explain the omission in the New Zealand returns of the Vanuatu sourced income. Given the control he stated he had over Ancath in the proceedings before the Industrial Commission, I formed the view that Mr Russell had not been at all candid in his evidence before me concerning Ancath, its activities and the degree of control he was able to exercise in respect of that company. His failure to call Mr Miedema did nothing to dissuade me from that view. It is possible, I suppose, that work as purportedly invoiced was indeed undertaken and that the omission of Vanuatu client income might be referable to an innocent mistake as to a requirement to declare the same in New Zealand. In the absence of corroboration, I am not though prepared to find these facts proved. In so concluding I accept that Mr Russell is not at all obliged to prove to demonstration that Ancath undertook such work, only on the balance of probabilities that it did so. Nor is it the law that an appellant taxpayer can only discharge the onus of proof, even on the balance of probabilities, by the tendering of corroborated evidence: Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1. It is just that, recalling on whom the onus lies and applying that standard of proof, I did not regard Mr Russell's uncorroborated evidence on the subject as sufficiently reliable to admit of a conclusion that these facts were proved. I have reached these conclusions without taking into account Mr Russell's New Zealand criminal history, an official copy of which was tendered by the Commissioner in the course of Mr Russell's cross examination. Mr Russell has been convicted in that country of numerous offences of dishonesty including using a document with intent to defraud and forgery. He was, I thought, reluctant to acknowledge his criminal past in cross examination although his statement that it concerned an era in his life that he had sought to put behind him and forget was understandable enough. He also voiced disagreement with his having been truly guilty of some at least of the offences in respect of which convictions were recorded. Mr Russell's criminal history in its own right does give pause for thought about his credibility. However, the divergence in accounts as between evidence in the Industrial Commission and this Court with regard to his control over Ancath engendered in any event my disposition not to act on his uncorroborated testimony as to Ancath's undertaking work for Vanuatu based clients. For completeness, I should record that Mr Russell exhibited to one of his affidavits a letter dated 11 January 2008 addressed to Ancath (by its new name, Juan International) marked for Mr Miedema's attention from the National Bank of New Zealand which stated that a debit card issued on 24 November 2004 for use by Mr Russell had never been used. The letter says nothing as to the position in relation to the use of such a debit card during the period of interest in the appeals. Further, the letter is addressed not to any New Zealand address associated with Ancath or Mr Miedema but rather to the company in Australia at a post office box at Sarina. I did not therefore regard the letter as offering any corroboration with respect to the account Mr Russell gave concerning Ancath's affairs and the role he played. The usual pattern of payment as between Tradecorp and Ancath was by periodic funds transfer in response to an invoice issued by Ancath, initially fortnightly and, on and from 20 March 2001, monthly. The funds transfer to Ancath was net of Australian GST with the amount of the latter being added and separately remitted, again on and from 20 March 2001, by Tradecorp to A W Russell & Co. In this usual pattern, the invoice concerned was expressed to be for "professional services" for a particular month or fortnight. Its amount was calculated by dividing the prevailing agreed annual payment plus an allowance of 8% (presumably in recognition by analogy of superannuation) by either 26 or, as the case may be, by 12. Mr Russell also stated that two amounts received by Ancath from Tradecorp were not derived as a result of work performed by him. The amounts are: As to the sum of $3,350 (Invoice 29), Mr Russell's evidence was that this income was derived by Ancath as a result of stock checks conducted by others in New Zealand. The invoice concerned, like all of those rendered by Ancath to Tradecorp, is in Mr Russell's handwriting. It refers to stock checks conducted in New Zealand with some related work apparently performed in Australia as well as in New Zealand. It gives no detail as to when the stock checks were performed or by whom. It is also annotated with a reference to an agreement of some sort but it is not possible to decipher all of the detail of that annotation. I do note though that the invoice is apparently annotated in Mr Zarb's writing with the words "OK to pay" and with a question mark after the annotation "GST". In the absence of corroboration, I am not, for reasons already given, prepared to accept that, on the balance of probabilities, these "stock checks" in New Zealand were other than the result of services work undertaken by Mr Russell. I am persuaded by the annotated "OK" that services of the kind described were performed. There is some corroboration in respect of the account which Mr Russell gave in relation to the sum of $16,667.65. Invoice 39 at least purports to be referable to commission in respect of "container lease deals to South Pacific Islands" (the description used in the invoice). A typed schedule is annotated to invoice 39. It giver particulars of, it seems, clients and related commission amounts. That schedule bears the annotation "OK to Pay", a signature and the handwritten date, "5/12/02", each seemingly in the same handwriting. The signature on my inspection corresponds with that of Mr Zarb on a Tradecorp letter dated 8 September 2000 detailing Mr Russell's then monthly income. That same signature, on my inspection, appears to have been placed on behalf of Tradecorp on the Tradecorp Agreement. Both the invoice and its schedule were tendered in Mr Russell's case. It was never part of the Commissioner's case that either of these documents was a forgery. Were the authorship of the schedule to be disputed, it would be open to me, pursuant to s 59(2) of the Evidence Act 1977 (Qld) (Queensland Evidence Act ), as applied by s 79 of the Judiciary Act 1903 (Cth) and insofar as the Queensland provision is not inconsistent with the Commonwealth Evidence Act to reach my own conclusion as to its authorship by comparison with a genuine signature. The schedule not being a disputed document, I consider that it is open in any event as a matter of inference and comparison to reach the conclusion that it is Mr Zarb who made the annotation. This conclusion corresponds with Mr Russell's unchallenged statement under cross examination that it was Mr Zarb who had signed the payment approval on the schedule. In these circumstances, I accept Mr Russell's evidence that an arrangement of some sort existed between Tradecorp and Ancath in 2000, 2001 and 2002 whereby Tradecorp would pay Ancath a commission in respect of "container lease deals to South Pacific Islands". End of year annual accounts and tax returns will continue, at least initially, to be completed by an outside firm of Public Accountants. Mr Russell's evidence also was that the transactional work in relation to container leases was undertaken by others in Tradecorp's office and occasionally by Mr Zarb but not him personally. His evidence was further that others in Tradecorp's office also received a modest bonus by way of a percentage in respect of commissions derived by Tradecorp from the leasing off-shore of containers. There were other staff, say some of the typists, the clerks, for example, who had nothing to do with the company earning commissions on lease deals. They were given a portion of the commission income as bonuses. I accept Mr Russell's evidence on this subject. Though the evidence on the topic is compressed, what emerges is that the derivation of income by way of commission from the leasing of containers throughout the South Pacific was part of Tradecorp's business. A practice existed within that company of allocating a percentage of that commission income by way of a bonus above their usual remuneration to persons working at Tradecorp even though they might not have personally undertaken work in relation to the container leasing aspect of that company's business. That practice was not formally documented, but its existence and adaptation to the Tradecorp Agreement is evidenced by invoice 39 and its schedule if, as I do, one accepts Mr Russell's evidence in this regard. It does not follow from this that the payment of this percentage of commission income should be characterised as anything other than an additional reward for Mr Russell's services or skills as provided to Tradecorp by Ancath under the Tradecorp Agreement. The position would be different if Ancath, via Mr Russell or otherwise, had separately put to Tradecorp a business opportunity involving the leasing of containers throughout the South Pacific, an agreement as to profit sharing by way of a percentage of commission in relation to that business opportunity had been reached and then the work in respect of such leases performed by other Tradecorp staff. In those circumstances, the commission income could not, in my opinion, be characterised as mainly a reward for Mr Russell's skills or services. That is not this case. Rather, as with other persons working at Tradecorp, the payment of a percentage of commissions seems to have been by way of a bonus in respect of the services they were rendering whether or not those services related in any way to the leases. There was nothing about such evidence as Mr Russell gave in the taxation appeals or in that which he put before the Industrial Commission concerning the tasks he performed at Tradecorp which suggested to me that, via Ancath's obligations under the Tradecorp Agreement, he was engaged so as to produce a particular result. Rather, the description in cl 5 of the Tradecorp Agreement seemed a fair summary of the tasks which he performed. He seems to have been based at Tradecorp's premises and engaged, albeit in a position of some seniority and responsibility, in the day to day routine of financial and managerial tasks encountered in the course of Tradecorp's business. He brought to the performance of those tasks the personal skills, qualifications and experience which he had accumulated in New Zealand, nothing more and nothing less. By "nothing more and nothing less" I mean that he did not, on the evidence, additionally bring to the performance of those tasks any plant or equipment of any significance. The Tradecorp Agreement did not require that Ancath do so. Further, there was no suggestion by Mr Russell that Ancath deployed anyone other than him to perform tasks at Tradecorp's Mackay premises. What then are the consequences of these findings having regard to the issues identified in respect of the income tax appeals? It is convenient first to answer that question upon the assumption that, contrary to Mr Russell's submissions, an overseas registered company can be a "personal services entity" for the purposes of Part 2 - 42 of the ITAA 1997 and, further, that there is nothing in the Double Taxation Agreement with New Zealand which would prevent the attribution of the amounts paid to Ancath by Tradecorp to Mr Russell as part of his assessable income. A necessary consequence of the findings which I have made in the evidence is that the amounts received by Ancath from Tradecorp were each in one way or another a reward to it for its provision of Mr Russell's personal efforts or skills. Insofar as Mr Russell sought to prove otherwise I have either not accepted that evidence (the stock checks) or my acceptance of it (the percentage of container lease commissions) does not affect that consequence. It follows from this that the amounts paid by Tradecorp to Ancath (which are Ancath's "ordinary income") constitute Mr Russell's "personal services income" as that term is defined in s 84 - 5 (1) of the ITAA 1997. Mr Russell's assessable income will include an amount of ordinary or statutory income of a "personal services entity" that is his "personal services income": s 86 - 15 of the ITAA 1997. Subject to any application of the "personal services business" exception for which s 86 - 15 (3) provides, Ancath was in each of the income years in question a "personal services entity" because its ordinary income included Mr Russell's "personal services income": s 86 - 15 (2) of the ITAA 1997. Whether the "personal services business" exception applies requires regard to Division 87 of the ITAA97. There was no evidence adduced of the making of any applicable "personal services business determination". That being so, the "results test" then falls to be answered. That test is found in s 87 - 18 of the ITAA 1997. In IRG Technical Services Pty Ltd v Commissioner of Taxation [2007] FCA 1867 ; (2007) 165 FCR 57 at 70, [36] , Allsop J (as his Honour then was) observed of that section that its elements "were to be understood against the background of the jurisprudence concerning independent contractors". In so doing, his Honour referred with approval to an earlier observation made by Lindgren J in Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248 at 254, [28] , that, "Broadly speaking, an individual or entity, who or which is an 'independent contractor' under traditional concepts should meet the results test.". Their Honours were not in these cases promoting the use of the common law as a substitute for the language of the statute, for that would clearly be erroneous. It is just that, for example, the phrase "the income is for producing a result" in s 87 - 1 (a) and s 87 - 18 (3)(a) of the ITAA 1997 obviously draws upon one of the traditional touchstones for distinguishing between a contract for service and a contract of service. Thus guidance offered by cases decided at common law as to whether a payment is or is not for the production of a result is relevant. That this is what Parliament intended is confirmed by recourse to secondary materials, as Allsop and Lindgren JJ note in their respective judgements. Approaching the matter this way, I respectfully agree with their Honours observations in relation to s 87 - 18 . Neither the Tradecorp Agreement itself nor the descriptions in the consequential invoices nor Mr Russell's evidence as to his tasks at Tradecorp suggest that the amounts being paid by Tradecorp were for the production of any result. The services supplied by Ancath and provided by him were just accounting and managerial services generally. Mr Russell has not proved that the "results test" in s 87 - 18 (3)(a) is satisfied in any of the income years in question. To the contrary, the evidence shows that it has not been satisfied. That conclusion itself dictates a need next to have regard to the "80% rule" found in s 87 - 15 (3). In short, that poses a question as to whether 80% or more of Mr Russell's "personal services income" came from the one source. That need is reinforced by an inability of Mr Russell, on the evidence, not even on the face of the Tradecorp Agreement, to show that Ancath was required to supply any plant or equipment: as one element of s 87 - 18 (3)(b) requires. In the former case (less than 80% from the same entity), if any one or more of the four personal services business tests is satisfied, the personal services income is taken to be from a personal services business, and it is not necessary to apply for a personal services business determination. In the latter case (80% or more from the same entity), if the results test is satisfied, the personal services income is taken to be from a personal services business, and it is not necessary to apply for a personal services business determination. But otherwise, it is necessary for there to be a personal services business determination in force, if the personal services income is to be taken to be from a personal services business. During those income years Tradecorp was the source of Ancath's income and that income in turn was a reflection of Mr Russell's efforts or skills. For completeness, I should record that Mr Russell did not lead any evidence which would admit of a conclusion that either the unrelated clients test found in s 87 - 20 , the employment test found in s 87 - 25 or the business premises test found in s 87 - 30 of the ITAA 1997 were satisfied. What follows from these conclusions is that the personal services income is not income from conducting a personal services business. That means that the exemption is not engaged. Before turning to the subject of whether any deductions are open I should address Mr Russell's two technical submissions as to the inapplicability of the personal services income regime found in Part 2 - 42 of the ITAA 1997. The first of these may be disposed of shortly. Mr Russell's submission that the personal services income regime found in this Part can have no application because a foreign registered company cannot be a personal services entity requires that the word "company" in s 86 - 15 (2) be read in this limited way even though neither there nor elsewhere in Part 2 - 42 is it so limited. Materially, s 995- 1 of the ITAA 1997 defines "company" to be a "body corporate' (paragraph (a) of the definition). "Body corporate" is not separately defined for the purposes of the ITAA 1997 by s 995- 1 . There is nothing in the Acts Interpretation Act 1901 (Cth) which requires that, in any Commonwealth Act and in the absence of an intention to the contrary, "body corporate" should be construed as referring only to a corporation formed within the limits of the Commonwealth. To construe "company" in the narrow way submitted by Mr Russell would be incongruous with other employments of the word in the ITAA 1997. For example, it is inherently unlikely that the word "company" as used in Division 975, "Concepts about Companies" of the ITAA 1997 was intended to be limited to Australian registered companies. Further, the term "CFC" is used repeatedly throughout the ITAA 1997. That term bears the same meaning in the ITAA 1997 as it does in Part X of the ITAA 1936: s 995-1 of the ITAA 1997. Regard to s 340 of the ITAA 1936, which defines "CFC" for the purposes of Part X of that Act, materially discloses that "CFC" is an abbreviation for "controlled foreign company". Given this, neither as used in Part X of the ITAA 1936 itself nor as the term "CFC" is used in the ITAA 1997 would it make any sense at all to regard the word "company" as referring to an Australian registered company. Rather, the word is used generically with adjectival qualification employed as required to designate a particular kind of "company". Nor does context or purpose suggest that the word "company" as used in Part 2-42 of the ITAA 1997 should, exceptionally, nonetheless be construed in the limited way submitted, even in the absence of adjectival qualification. Certainly not expressly, nor even impliedly, is there anything in the language of that Part which would support such a construction of the word "company". I reject the submission. At a general level of abstraction and from an economic point of view, it is not difficult to have sympathy with Mr Russell's double taxation submission. Its essential premises were these: More particularly, Mr Russell made the following submission by reference to the Double Taxation Agreement: He then submitted that the effect of the requirement flowing from s 4 of the International Tax Agreements Act 1953 (Cth) (International Tax Agreements Act) to read that Act with the ITAA 1997 meant that Part 2-42 could have no application so as to deem what was Ancath's income to be his when that income formed part of Ancath's assessable income in New Zealand because that would amount to taxing the profits of Ancath, which was an enterprise of New Zealand, in Australia rather than, as art 7 of the Double Taxation Agreement required, in New Zealand only. The Double Taxation Agreement between Australia and New Zealand made in Melbourne on 27 January 1995 (hereafter the NZ Double Taxation Agreement) is reproduced as Schedule 4 to the International Tax Agreements Act . That agreement is given force of law in Australia and affects Australian tax by s 6B(1A) of that Act. Section 4 of the International Tax Agreements Act does indeed, as Mr Russell submitted, require that the ITAA 1997 be incorporated and read as one with that Act. Further, the effect of s 4(2) of the International Tax Agreements Act is that, in so doing and subject to an exception not presently material, the provisions of the International Tax Agreements Act (and hence a double taxation agreement given the force of domestic law by that Act) have effect notwithstanding anything inconsistent in those provisions in, materially, the ITAA 1997. In other words, a provision in the International Tax Agreements Act or a double taxation agreement given effect by it prevails over a provision in the ITAA 1997 to the extent of any inconsistency. The NZ Double Taxation Agreement generally follows the OECD Model Double Taxation Agreement (OECD Model). It is settled that, in construing such an agreement, a court may have regard to, inter alia, the OECD Commentary on its model agreement: Thiel v Commissioner of Taxation [1990] HCA 37 ; (1990) 171 CLR 338 at 344, 356-357. The interpretative use of that type of extrinsic material is a manifestation of the recognition that a double taxation agreement is but a particular example of an international treaty. The Full Court has sounded a cautionary note in relation to the use for the purpose of interpretation of commentary published after the ratification of a double taxation agreement: McDermott Industries (Aust) Pty Ltd v Commissioner of Taxation [2005] FCAFC 67 ; (2005) 142 FCR 134 at 144, [42] . On the basis of the evidentiary findings I have made, Part 2 - 42 of the ITAA 1997 will apply so as to subject Mr Russell, not Ancath, to taxation in Australia. It is true that art 7, cl 1 uses the language, "the profits of the enterprise". Read in isolation, and affording primacy to the NZ Double Taxation Agreement as incorporated by the International Taxation Agreements Act, that might be thought to support the notion that any measure which would subject those profits to taxation, even if the means of so doing was to deem the same to form part of the assessable income of an individual, rather than the enterprise which derived them, was inconsistent with the NZ Double Taxation Agreement. The foundation for such an approach to interpretation would be "juridical" in the sense that it would be textual. The difficulty with that approach is that, read in the context not only of the balance of art 7 but the NZ Double Taxation Agreement as a whole, the focus of the clause is on the prevention of the double taxation of an "enterprise", not of profits as an abstract, economic concept. There is no prior Australian authority directly touching upon the intersection between Part 2-42 of the ITAA 1997 and either the NZ Double Taxation Agreement or any other of the OECD Models to which Australia is a party. The industry of counsel for the Commissioner did result in my being taken in supplementary written submissions to a number of foreign authorities in which national courts have had to grapple with the conundrums presented by the reconciliation of an attribution regime in their national revenue law with their country's adoption of a double taxation agreement on the OECD Model which would, under their national law, prevail to the extent of any inconsistency with the attribution regime. Of these, the case from which I have derived particular assistance is a decision of Finland's Supreme Administrative Court in relation to whether an inconsistency existed between the attribution rules in that country's controlled foreign company (CFC) regime in its domestic revenue law and art 7 of its double taxation agreement with Belgium, which was in conformity with the OECD Model: Re A Oyi Abp (2002) 4 ITLR 1009 (Re A Oyi Apb). Tax treaties do not generally concern economic double taxation, that is, where the same income is taxed in the hands of several taxable persons. Unless otherwise provided in a tax treaty, the removal of economic double taxation is a task which remains the responsibility of the national legislation. The tax treaty between Finland and Belgium does not contain provisions on the removal of economic double taxation. It follows that the court below did not make any error in deciding that there is an identity in nature between the business profits (bénéfices) of the Paramer company, the taxation of which is attributed to Switzerland by art 7(1) of the Franco-Swiss tax treaty, and the profitable results (résultats beneficiaries) of the Paramer company which are taxed in France in the name of the Schneider company on the basis of the [CFC regime in the French General Tax Code]. However, on closer analysis, the tax treaty concerned contained, apart from an OECD Model art 7 provision, another provision (art 25(A)(1)), which expressly exempted from the relevant French tax "income ... where such income is liable to taxation in Switzerland". Against that background, where the treaty itself authorised a focus on income per se, rather than enterprise, the seeming incongruence of result with that in Re A Oyi Abp is explicable. There is no equivalent of art 25(A)(1) of the Franco-Swiss Double Taxation Agreement in the NZ Double Taxation Agreement. Assistance in the resolution of any doubt about the focus of art 7, cl 1 is gained by having regard to the commentary concerning the OECD Model. I refer to the commentary as published in OECD Model Tax Convention on Income and Capital, Condensed Version - 2008 and Key Tax Features of Member countries 2008 published by IBFD (Copyright as to the Convention, OECD and as to the Key Features, IBFD --- "OECD Commentary"). Article 7, cl 1 of the NZ Double Taxation Agreement replicates art 7, cl 1 of the OECD Model Convention. First, it restates the generally accepted principle of double taxation conventions that an enterprise of one State shall not be taxed in the other State unless it carries on business in that other State through a permanent establishment situated therein. ... These quoted statements and expressions of opinion in the OECD Commentary predate the NZ Double Taxation Agreement. They are not, as sometimes occurs with explanatory memoranda for statutes, in conflict with the language of either the OECD Model or the latter's replication of present interest, the NZ Double Taxation Agreement. The understanding of the meaning of art 7 reflected in the commentary is that the intended approach to the construction of art 7 of the OECD Model is juridical , not economic. Hence the reference in the commentary to "enterprise". Accepting this, Part 2-42 violates neither the letter nor the spirit of the intent of the Double Taxation Agreement in that it does not effect juridical double taxation. Regard to academic literature in relation to double taxation does not support a construction of art 7(1) of the NZ Double Taxation Agreement based on a conception that its design is to eliminate economic, as opposed to juridical taxation. In his seminal work, Klaus Vogel on Double Taxation Conventions (3 rd ed, Kluwer Law International, 1997), the late Professor Dr Klaus Vogel of the University of Munich, a leading academic commentator on international double taxation, deliberately contrasts (at pp 9-10) international juridical taxation with economic double taxation. He uses (at p 10) attribution rules which differ as between domestic taxation laws of different nations to exemplify one way in which economic double taxation can occur. He further notes (ibid) that, though "the concept of 'double taxation', its prerequisites and its limitations, have been subject to much academic controversy ... Application of tax treaties, however, is merely a matter of interpretation of the respective treaty. What conceptually is --- and what is not --- 'double taxation' is therefore of no importance for the treaty's application". [As to academic controversy and nuances concerning what constitutes "double taxation", regard might usefully be had to the comprehensive summary offered by Professor M Pires in his work International Juridical Double Taxation of Income , (1989, Kluver Law and Taxation Publishers) at Chapter 1. I note that, in this chapter, at pp 15-16, para 2.2.2.2.2.1, Professor Pires states that the requirement for the taxable person to be the same is an "often used criteria for differentiating [economic] double taxation from the juridical". Article 7 of the OECD Model forms part of what Professor Vogel describes (at p 357) as "distribution rules" (' Metatatbestand '), to be contrasted with that particular item under domestic tax law the taxation of which the distribution rule is designed to restrict (' Objekattatbestan d'). Article 7's role in the OECD Model is to lay down what Professor Vogel describes (at p 400) as the "residence and permanent establishment principle". He classifies arts 7-9 of the OECD Model as rules concerning the profits of an enterprise. He notes (at pp 403-404) of art 7 that, while it affords the primary right of taxation to the State of the permanent establishment, being the State of source, it "leaves open the question of the taxation of such profits by the State of residence". The question of whether the profits of the enterprise should be exempted in the State of residence or whether credit should be allowed there for State of source tax paid is, he notes, governed by one or the other versions of Article 23, i.e. the "exemption" or the "credit" version of that article in the OECD Model. In his explanatory notes in respect of the "exemption" and "credit" versions of art 23 of the OECD Model (p 1129 et seq) Professor Vogel does not seek to controvert the OECD Commentary on those model articles (which he also reproduces, at p 1124 et seq). That commentary (Vogel at p 1124) asserts that those model articles are concerned with juridical, as distinguished from, economic double taxation. Professor Vogel's explanatory notes are directed to the relative advantages and disadvantages and underlying philosophies of the "exemption" and "credit" model article versions and to highlighting that neither is exhaustive of the ways in which a contracting State may seek to reduce or avoid double taxation. Article 24 of the NZ Double Taxation Agreement exemplifies the "credit" version of those offered in art 23 of the OECD Model. Though Mr Russell also sought to rely on art 24 of the NZ Double Taxation Agreement so as to support his submission that art 7 of the NZ Double Taxation Agreement overrode Part 2-42 of the ITAA 1997, once it is appreciated, as the OECD Commentary underscores, that its provision for the affording of foreign tax credits to an enterprise is concerned with the reduction or elimination of juridical, not economic, double taxation of a particular enterprise by contracting States, not of profits per se, that reliance can be seen to be misconceived. It would be inconsistent with Professor Vogel's conception of the role of art 7 in the OECD Model to construe art 7 of the NZ Double Taxation Agreement as being directed to the subject of the elimination of the double taxation of profits irrespective of identity of enterprise in the contracting States or of the location of that enterprise's "permanent establishment". Mr Russell also relied on art 23 of the NZ Double Taxation Agreement. Neither has any relevance or application in the circumstances of this case. Article 23 is directed to the subject of source of income. Its lack of present utility for Mr Russell may be demonstrated by inserting the names of pertinent countries and entities into a material part of the text of cl 1 of that article, "Income, profits or gains derived by Ancath (assuming it to be a "resident" of New Zealand) which, under ... art 7, may be taxed in Australia shall, for the purposes of the law of Australia relating to Australian tax, be deemed to be income from sources in Australia". Ancath does not fall for taxation in Australia in respect of such of its income derived in Australia as is Mr Russell's personal services income and deemed to form part of his assessable income. Insofar as Part 2-42 may effect economic double taxation, given the subjection of Ancath to New Zealand income taxation on the income it derived under the Tradecorp Agreement, the rectification of any resultant hardship or injustice would require either renegotiation of the NZ Double Taxation Agreement or unilateral Australian or New Zealand legislative action. In principle therefore, the NZ Double Taxation Agreement does not prevent a conclusion that Mr Russell is in fact and law liable to assessment in respect of his personal services income by virtue of the operation of Part 2-42 of the ITAA 1997. The question then becomes whether the actual amounts so assessed are correct? On the evidence it is apparent that the Commissioner has made some errors of omission and inclusion in his calculation of the amount of Mr Russell's personal services income and, as a consequence, in his assessment of Mr Russell's taxable income. In respect of the 2001 income year, an amount of $1869.23 has been omitted from Mr Russell's personal services income. That amount is referable to a payment made by Tradecorp to Ancath on or about 21 September 2000. That means that the correct amount of Mr Russell's personal services income for the 2001 income year is $45,055.00. As to the 2002 income year, the Commissioner concedes that the calculation of Mr Russell's personal services income which was made for the purposes of the assessment overstates the amount of that income by $416.00. The question then becomes as to whether any deductions ought to be made from the personal services income included as part of Mr Russell's assessable income? This is the province of Division 86 of the ITAA 1997. Section 86-20 of the ITAA 1997 contemplates that a person's personal services income may be reduced by such deductions to which the personal services entity, here Ancath, is entitled. Mr Russell submits that his personal services income should be reduced by the deduction of amounts paid by Ancath to the partnership A W Russell & Co in each of the 2001 to 2004 income years. Obviously enough, for reasons already given, insofar as any of the amounts put forward as deductions were paid in the 2004 income year after 23 February 2004 they could not be a payment to the partnership but rather were in law nothing more than a payment to Mr Russell personally. I shall assume for the present in Mr Russell's favour that the partnership did perform services for Ancath in relation to Tradecorp. It will be necessary to return to that subject in relation to the GST appeal. The partnership was, in each income year, an "associate" as that term is defined for the purposes of s 86-35 of the ITAA 1997 by s 995-1 of that Act. That definition incorporates by reference the provision made in s 318 of the ITAA 1936 in respect of who or what is an "associate". On the findings that I have made and viewing Ancath as the "primary entity", Mr Russell, either alone or in conjunction with his former wife, constitutes a "controlling entity" for the purposes of s 318(2)(d) of the ITAA 1936 because Ancath's actions are sufficiently influenced by either Mr Russell alone or in conjunction with his former wife. On the evidence, Tradecorp was Ancath's sole source of income in each of the income years in question. And that income constitutes Mr Russell's personal services income. In these circumstances, any payments to the partnership must, for the purposes of s 86-35(1)(b), necessarily be "attributable" to that income. In these circumstances, the amount of those payments to the partnership is not an amount which Ancath can deduct, for that is expressly foreclosed in respect of such payments by s 86-35(1)(d) of the ITAA 1997. I note in passing that domestic double taxation in these circumstances is precluded by s 86-35(1)(c), which excludes such payments from the assessable income of the partnership. Approaching matters from the perspective of whether, having regard to s 86-60 of the ITAA 1997, Ancath, as a personal services entity, might deduct an amount to the extent that it relates to the gaining or producing of Mr Russell's personal services income. Neither of the conditions there specified could be met --- Ancath was not conducting a personal services business and, had the circumstances giving rise to the postulated deduction applied to Mr Russell personally he could not claim a deduction for he would be trying to claim a payment to himself as a deduction (s 86-60(b) and (a) respectively). Yet another of Mr Russell's submissions in relation to the quantum of personal services income assessed to him was that it overstated that because Ancath had made two refunds to Tradecorp. He identified these refunds as follows in a schedule exhibited to one of his affidavits (Exhibit G to his affidavit filed on 18 March 2008): I have already above referred to each of these invoices in the context of other submissions made and evidence given by Mr Russell. I did not have the benefit of a detailed explanation from Mr Russell in his affidavit evidence as to how the asserted refunds came about. In the relevant affidavit (para 10) Mr Russell just states: "My time and effort gave rise to the invoices that were rendered by [Ancath] to Australian resident Tradecorp. A schedule of those invoices is attached ..." The subject was explored in Mr Russell's cross examination. In the course of that Mr Russell stated that the refunds were made in cash. His explanation as to how this came about was aptly described in the Commissioner's submissions as "convoluted", referring to the payment by Tradecorp of a sum in United States dollars to Ancath and to the equivalents of that sum in New Zealand and Australian dollars. His former wife was said to have brought some of the cash back with her to Australia from New Zealand. I did not have the benefit of corroborative testimony from the former Mrs Russell. Nor did I have any evidence before me from Mr Russell of Ancath's bank account statements or from Mr Zarb which might have assisted in evidencing a money trail in respect of Ancath's receipt of payments in respect of invoices 29 and 33 and of withdrawals so as to effect the asserted refunds. Each of invoices 29 and 33 is apparently annotated by Mr Zarb with the words "OK to pay". Given that and the convoluted nature of Mr Russell's explanation, I am not disposed to accept his evidence that refunds were made in the absence of corroboration. As already mentioned, the onus lies on Mr Russell to prove the assessments concerned to be excessive. Insofar as the asserted refunds might serve to reduce the amount of personal services income which has been included in Mr Russell's assessable income, it thus lies upon him to prove on the balance of probabilities that these refunds were made. This he has not done. That is not to say that it is not possible that the asserted refunds were made, only that on the evidence to hand I am not satisfied that it is more probable than not that they were made. For completeness, I should also record that Mr Russell asserted in his affidavit evidence (para 7) that, in each of the 2001 to 2004 income years, the partnership A W Russell & Co had included in error monthly payments which had been made into its bank account by Tradecorp. He further asserted that the partnership should not have returned these payments as income as they had been taken into account by Ancath "as part of partnership 'drawings' in calculating annual increases in my loan account". This, in turn, he asserted had led to his overstating his share of the partnership income in his personal returns. This particular basis for a conclusion that each of his income tax assessments was excessive did not feature in his objection. No leave to amend the grounds of objection was sought. Absent a grant of leave to amend, an applicant is confined to the grounds specified in the notice of objection: s 14ZZO(a) of the TAA. In any event, as the Commissioner's submissions also made apparent, each of the assessments which issued was predicated upon the inclusion as assessable income only of the amount of Mr Russell's assessed personal services income in each income year. These amounts were included to the exclusion of amounts received from the partnership. There was no double counting. In these circumstances, even had these assertions been manifested in a ground of objection, they would have been but a distraction. Mr Russell also alleged that the Commissioner's staff had not given him notice that an income tax audit in respect of his personal, as opposed to the partnership's taxation affairs was being conducted, that this was a breach of the "Taxpayer's Charter" and that, accordingly, the Commissioner was "estopped" from issuing amended assessments. It is not necessary to explore the merits of the factual substratum of this allegation. Even if true, no conduct on the part of the Commissioner can affect the operation of a taxing statute in respect of facts the occurrence of which gives rise to a taxation liability: Commissioner of Taxation v Wade [1951] HCA 66 ; (1951) 84 CLR 105 at 117 per Kitto J. Mr Russell further advanced in his written submissions that there was no lawful ability to "reopen", ie issue amended assessments in respect of the 2001 and 2002 income years. This was not raised as a ground of objection in respect of the assessments. He is confined to those grounds in the absence of a grant of leave to amend. I decline to grant any such leave. So to do after the close of evidence would not be fair to the Commissioner who did not as the objection stood choose or need to lead evidence in respect of the formation of an opinion that in these income years there had been an avoidance of tax due to fraud or evasion. The Court's powers on the hearing of a taxation appeal are set out in s 14ZZP of the TAA. It is there provided that: "the Court may make such order in relation to the decision as it thinks fit, including an order confirming or varying the decision". The "decision" referred to in this section is the Commissioner's objection decision. The outcome in respect of so much of the appeal as relates to the objection decision as concerns Mr Russell's assessment to income tax in respect of the 2002, 2003 and 2004 income years is clear. In respect of the 2003 and 2004 years, Mr Russell has failed to prove that the income tax assessment concerned is "excessive". Thus, insofar as the objection decision relates to Mr Russell's objection against the 2003 and 2004 income tax assessments, those assessments should be confirmed. Solely as a result of the conceded error of calculation to which I have referred, the income tax assessment in respect of the 2002 income year is excessive. The decision to disallow the objection was, in this regard, incorrect. It is necessary therefore to extinguish the effect of the objection decision and to make provision for the correct result in respect of Mr Russell's taxable income for that income year. Insofar as the objection decision in respect of this income year constitutes a disallowance decision and a confirmation of the income tax assessment, the necessary correction to me, requires more than a "variation" of the disallowance. Rather, so much of the objection decision as disallows the objection to the 2002 income tax assessment should be set aside and, in lieu thereof, it should be ordered that the objection to that assessment be allowed and Mr Russell's taxable income for that income year varied by reducing it by $416.00. Section 14ZZQ of the TAA makes provision for how the Commissioner is to implement such an order. The matter should be remitted to him for that purpose. In respect of the 2001 income year, not only has Mr Russell failed to prove that his income tax assessment is excessive but, as noted, an amount of $1869.23 has been shown to have been omitted from his taxable income. That omission certainly supplies an additional reason why the 2001 assessment has not been shown to be excessive but does it also mean that the objection decision confirming that assessment should nonetheless be set aside as in error and a declaration made as to Mr Russell's taxable income for that income year with it then falling to the Commissioner, pursuant to s 14ZZQ, to issue an amended assessment for that income year so as to give effect to these orders once they become final? The Commissioner's submissions rather assumed that it did, but did not elaborate on the foundation for that assumption. Mr Russell did not expressly challenge the Court's power to make an order which would authorise the amendment of his 2001 assessment so as to increase the amount of his taxable income and the tax payable thereon for that income year. Uninstructed by authority, legislative or judicial, that an appellant dissatisfied with an objection decision that has confirmed an assessment of his taxable income to be X and who has failed to prove that X is an excessive amount might be the recipient of an order which not only dismissed his appeal but also set aside the objection decision and directed, in lieu, that the assessed taxable income be amended to X plus Y gives pause for thought about the nature and extent of the power presently exercisable by the Court on the hearing of a taxation appeal. Upon the institution of an appeal against an objection decision by the Commissioner, the Court is "seized of the decision in its entirety": Commissioner of Taxation v ANZ Savings Bank Ltd [1994] HCA 58 ; (1994) 181 CLR 466 at 476 (ANZ Savings Bank Case). An appeal relates to the objection decision made by the Commissioner albeit a taxpayer is dissatisfied with only part of that decision. A power to make such order as the Court thinks fit is clearly not unconstrained but there is nothing in s 199 to suggest that the Federal Court may not make such order in relation to the objection decision as is appropriate in all the circumstances once the subject matter of the taxpayer's dissatisfaction with the assessment has been resolved. Section 199 came to be in that form following amendments made to that section by s 88 of the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986 (Cth). ... Since the Court is concerned to determine whether the amounts assessed as taxable income are excessive , the Commissioner must be able to raise for the Court's determination the deductions properly to be allowed in the light of the Court's decision as to assessable income. Here, I have resolved, adversely to him as it transpires, the subject matter of Mr Russell's dissatisfaction with the 2001 year income tax assessment and I have determined that that assessment is not excessive. What then becomes the appropriate order to make in all of the circumstances bearing in mind that the power, though expressed in the widest terms, is not unconstrained? In its pre-1986 amendment form, s 199(1) of the ITAA 1936 provided that the court in which the Federal original jurisdiction to hear a taxation appeal was then vested (a State or Territory Supreme Court) might, on the hearing of the appeal, "make such order as it thinks fit, and may by such order confirm, reduce, increase or vary the assessment " (emphasis added). The 1986 amendment changed the focus of the issue for determination on the appeal from the assessment to the objection decision, consigning to the Commissioner the derivative administrative function of making such amendment to the assessment as was necessary to give effect to the Court's decision once that decision had become final. While that amendment meant that, in the absence of a stay, the requirement to make a refund pursuant to an assessment reduced by a court order which was under appeal was removed, so, too, was removed the express recognition that it was possible for a court hearing a taxation appeal, in which a taxpayer bore the onus of proving the assessment in question to be excessive, to increase that assessment. In Cornell v Deputy Commissioner of Taxation [1920] HCA 65 ; (1920) 29 CLR 39 and at a time when s 38(1) of the Income Tax Assessment Act 1915 (Cth) (ITAA 1915) was in a form not materially distinguishable from s 199(1) of the ITAA 1936 as it stood prior to its amendment in 1986, i.e. the words "increase or vary" were employed in relation to the assessment, it was opined (at 48) in a joint judgement of six judges that "the fact that an assessment is for too small an amount is [not] any reason for setting aside the assessment at the instance of the person assessed". That judgement is silent as to whether the assessment might have been increased at the instance of the Deputy Commissioner, had positions been reversed, although the express conferral of a power to increase the assessment suggests that such an order could lawfully then have been made. Again in respect of an appeal determined when the Court's powers, including that of reducing the assessment, were as set out in the former s 199(1) of the ITAA 1936, and notwithstanding that he did not adopt the method of calculation promoted by the taxpayer on objection and before him on appeal, Windeyer J in Mercantile Credits Ltd v Commissioner of Taxation [1971] HCA 1 ; (1971) 123 CLR 476 at 489 had no difficulty in concluding that the assessments concerned should be varied by order so as to reduce the amounts of the tax payable. Saffron v Commissioner of Taxation (1994) 94 ATC 4049 (Saffron's Case) is a case which preceded the ANZ Savings Bank Case but which was decided after the 1986 amendments. Saffron's Case was an appeal from the Administrative Appeals Tribunal, not an appeal in the original jurisdiction against an objection decision. .. I must make my own decisions as to the facts. As Walsh J said in Krew's case at 4219, "A witness upon whose word one cannot rely may yet give evidence which is true in part. " In that case, although Walsh J held that he could not accept the appellant himself as a reliable witness, he nevertheless found that several of the facts alleged by the taxpayer were established as a matter of probability and accordingly that four of the amended assessments before the Court should be set aside. Moreover, in the calculation of the taxable incomes of years past, exact proof may not be available. However, though the observation made by Davies J that "effect must be given to that conclusion" is no less generic than his Honour's other observations, it is necessary to recall that he was not called upon in that case expressly to decide whether it was within the Court's power to set aside the objection decision so as to increase the amount of an appellant taxpayer's taxable income. The other two judges constituting the Full Court in Saffron's Case , Gummow and Lee JJ, did not find it necessary to make such generic observations. In this case, though I have not accepted aspects of Mr Russell's evidence as to his income in the years in question, I am in respect of the 2001 income year satisfied, as a matter of probability, that Mr Russell's taxable income for that year has been incorrectly assessed and that the true amount of his taxable income for that year is $1869.23 higher than that assessed. Had the former s 199(1) been applicable, I should therefore have ordered that the assessment be increased. One constraint on the width of the powers which the Court may now exercise under s 14ZZP of the TAA must be the nature and extent of the "matter" in respect of which the Court is invested with Federal jurisdiction. In respect of a taxation appeal that investment of jurisdiction is implicit in the conferring, pursuant to s 14ZZ of the TAA, on a person dissatisfied with the Commissioner's objection decision of a right of appeal to this Court against that decision as an alternative to applying to the Administrative Appeals Tribunal for the review of that decision. Since 1986, it has been the correctness of the decision on the objection against the assessment which is, in terms of the formulation of "matter" in Re Judiciary and Navigation Acts [1921] HCA 20 ; (1921) 29 CLR 257 at 265, "the subject matter for determination" and the source of the "immediate right, duty or liability to be established by the determination of the Court". The Commissioner's obligation in respect of an objection is, materially, within the required period, to decide whether to: What s 14ZY does not put forward as an alternative for the Commissioner in deciding the objection is the increasing of the assessment which is the subject of the objection. That being so, it would be seem an odd result if the subject matter for determination on appeal included whether the Commissioner should not only have disallowed the objection but also whether he should have increased it. That is not to say that an administrative sequel to the disallowance of an objection might not have been a decision to issue an amended assessment increasing a taxpayer's liability. Consideration of an unmeritorious objection might nonetheless reveal that the original assessment of taxable income was too low. That though would be a separate decision from the objection disallowance decision and permissible only to the extent that the issuing of an amended assessment which increased liability was still lawfully possible pursuant to s 170 of the ITAA 1936. If so, separate rights of objection and subsequent appeal to this Court or review by the Tribunal in the event of dissatisfaction with the objection decision would exist in respect of that amended assessment and later objection decision. For these reasons, I do not, as presently advised, conclude that the powers exercisable by the Court in the circumstances obtaining in respect of the 2001 income year extend to the setting aside of the decision disallowing the objection, the making of an order setting aside the assessment concerned and the making of a declaration that Mr Russell's taxable income for that income year was $1869.23 higher than that assessed. I have used the qualification "as presently advised" deliberately. Whether the amount of Mr Russell's 2001 taxable income and related tax liability might lawfully be the subject of increase by consequential amended assessment as a consequence of the orders disposing of the income tax appeal was not a subject expressly addressed by the parties in submissions. Nor did I raise that subject of my own motion in the course of submissions. The conclusion which I have reached as to an absence of power is therefore necessarily provisional. I consider that procedural fairness dictates that, in respect of so much of the income tax appeal as relates to the 2001 income year income tax, Mr Russell and the Commissioner should, in the first instance, have an opportunity, after considering these reasons for judgement, to bring in short minutes of the orders which they submit are appropriate to give effect to the conclusions and findings which I have made, together with supplementary submissions as to the lawful authority for the making of such proposed orders. He maintains though that a base penalty amount worked out under s 284-90(1) of Schedule 1 to the TAA the basis that Mr Russell's "tax shortfall" resulted from "intentional disregard" of a taxation law by him and has not been shown to be excessive. Accordingly, "intentional disregard" of the ITAA 1936 or regulations requires, inter alia, an understanding by the taxpayer of the effect of the relevant legislation or regulations, an appreciation by the taxpayer of how that legislation or regulation applies to the circumstances of the taxpayer, and finally, deliberate conduct of the taxpayer so as to flout the ITAA 1936 or regulations. The legislation treats "intentional disregard" differently from, and more seriously than, negligence to comply with the Act (cf s 226G) or recklessness with regard to the correct operation of the Act (cf s 226H). There is nothing in the judgements delivered in the Full Court which would call into question the correctness of her Honour's conception of what constitutes "intentional disregard". I respectfully agree with her Honour's observations. They serve to confirm what a reading in context of "results from intentional disregard" would otherwise suggest. Within s 290-40 of Schedule 1 to the TAA, Parliament has specified gradations of increasing severity in terms of conduct by a taxpayer or his, her or its agent which has resulted in a tax shortfall. Of these, "intentional disregard" is the most serious in terms of the infliction of a base penalty. It is intended to be qualitatively different to and more severe than "recklessness". That suggests that wilful blindness of a kind which in other contexts has been regarded as sufficient to supply the mental element in adverbial qualifications such as "knowingly" or "wilfully", q.v. Iannella v. French [1968] HCA 14 ; (1968) 119 CLR 84 at 95-96 per Barwick CJ and Comptroller-General of Customs v Woodlands Enterprises Pty Ltd [1996] 1 Qd R 589 at 602-603 per Pincus JA, McPherson JA agreeing, is insufficient to supply the mental element in "intentional disregard". Rather, conduct of that wilfully blind kind would fall under the rubric of "recklessness" for base penalty purposes. In support of his submission that Mr Russell had not shown an "intentional disregard" base penalty to be excessive the Commissioner pointed to Mr Russell's occupational background. Mr Russell's occupational background is relevant to, but not determinative of, any conclusion as to whether his conduct ought to be classed as "intentional disregard". Mr Russell was once registered to practise as an accountant in New Zealand, but never in Australia. It is there that he undertook his professional training. I do have evidence that he has held himself out in Australia as having taxation expertise, but that professed expertise is in the field of GST, and is on the basis of having practised for many years in New Zealand. There is no evidence that he has ever been a registered tax agent in Australia or that he was employed at Tradecorp for his expertise in Australian taxation law and practice. His work there was in the fields of financial and managerial accounting. Mr Russell does acknowledge knowledge of New Zealand taxation law applied over some 15 years in practice as a public accountant in that country. I understood that to be an acknowledgement of more than just knowledge of New Zealand GST related law and practice but extended to New Zealand income tax law and practice. Though one might expect that his broader taxation knowledge embraced at least some understanding of general income tax law principles such as what might constitute income under ordinary concepts, capital receipts and payments on revenue and capital account which would have doubtless have some transnational relevance, it does not follow from this that he is to be taken, in the income years in question, just by virtue of his occupation, with an awareness of Australia's personal services income tax regime as found in Part 2-42 of the ITAA. There were self-evident gaps, too, in Mr Russell's general law knowledge in respect of matters relevant to income taxation. I am well satisfied that he understood the concept of a company as a separate legal entity having regard to the evidence he gave in relation to Ancath. He quite plainly did not though understand that a partnership could not continue to exist with only one member left to carry on business under the partnership's business name. I thought he was genuinely ignorant in respect of this matter. Such is the pervasiveness of accountants in the provision of taxation advice in Australia it is necessary to remind oneself of the potential limitations in the undertaking of this role that this profession has in terms of training in and understanding of the general law. I mean no disrespect to the Commissioner and his officers in observing that it is sometimes easy, when a matter such as the partnership law issue which I have mentioned seems trite, to classify what is truly and objectively ignorance or genuine misunderstanding on the part of others as intentional disregard. It is tempting also to assimilate Mr Russell's absence of candour in evidence as to the degree of control that he was able to exercise over Ancath with intentional disregard of a taxation law when returning income in respect of each of the income years in question. This absence of candour, though, was later conduct. Mr Russell professed not to be aware in the income years in question of the personal services income regime in Part 2-42 of the ITAA 1997. He also professed a belief that the income received from Tradecorp by Ancath was its income returnable and taxable in New Zealand. He also professed a belief, on the strength of knowledge of the existence of double taxation arrangements, that Ancath's income was thereby prevented from being taxed twice. It is necessary to recall that it was Mr Russell who prepared Ancath's New Zealand income tax returns and that the Tradecorp sourced income was included in these returns. That conduct is consistent with his professed beliefs. Another way of characterising events is that Mr Russell well knew the degree of control he was able to exercise over Ancath, but was truly ignorant of the personal services income regime in Part 2-42 of the ITAA 1997. With that ignorance, and allowing room for argument about whether Ancath ought to be regarded as having a "permanent establishment" in Australia, it is by no means impossible to see how someone with Mr Russell's general understanding of separate corporate legal personality and general income tax law concepts might hold the view that Ancath had to return the Tradecorp income in New Zealand and only in that country but that the receipt of that income by Ancath carried no Australian income taxation law consequences for him personally. I prefer this characterisation of events. Accepting that means that Mr Russell has shown that the base penalty amount is excessive. He has shown that he did not have an understanding of his personal taxation responsibility arising from the operation of Part 2-42 of the ITAA 1997 in his circumstances and deliberately flouted a responsibility, notwithstanding that understanding, when returning his income for the income years in question. It does not follow from such a conclusion that Mr Russell has shown that no base penalty amount is applicable. Notwithstanding this, the Commissioner did not contend in the alternative to submitting that Mr Russell had not at all discharged the onus of proving the penalty assessment to be excessive, that the facts nonetheless reveal liability to some lesser base penalty amount. In those fields, recklessness will usually be found to have been established if the person's conduct shows disregard of, or indifference to, consequences foreseeable by a reasonable person. In some contexts a subjective test is applied, but in others the test is objective. So understood, the proscribed conduct is more than mere negligence and must amount to gross carelessness. Wherever a tax return includes deductions that are not allowable, a foreseeable consequence is that there will be a tax shortfall, particularly in a system of self assessment. But, in the ordinary case, the mere fact that a tax return includes a deduction which is not allowable is not of itself sufficient to expose the taxpayer to a penalty. Negligence, at least must be established although there are some sections (eg s 226K) which impose a liability in particular circumstances even if the taxpayer has not been negligent. The context makes it clear that recklessness means something more than failure to exercise reasonable care (s 226G), but less than an intentional disregard of the Act (s 226J). I do not consider that he has been "reckless". Has he, nonetheless, failed to take reasonable care to comply with the ITAA 1997, in particular, Part 2-42, such that a tax shortfall has resulted in each income year? Mr Russell seems to me to have operated on the assumption, notwithstanding his professed ignorance at the time of Australian income tax law, that his and Ancath's positions under Australian income tax law were, for all practical purposes, the same as those which prevailed under the New Zealand income tax law with which he had at least passing familiarity. Whilst some of the tax law is very similar to New Zealand, there are lots of areas that are totally different, and, in fact, so different that there isn't a comparable in New Zealand. And I was just my days of study are long gone, and I just wasn't interested. The adoption of Ancath as the entity via which Tradecorp would come to have the benefit of his services exhibited a degree of sophistication on both Mr Russell's and Mr Zarb's parts. He was not to be just one of Tradecorp's wage and salary earners. Yet he must have known, or at least he has not disproved, that he knew that he and only he was to perform all of the work for which Tradecorp was to pay money. Had he undertaken that work as an employee of Tradecorp there could have been no question that he would thereby be personally liable to Australian income tax as a wage and salary earner. Yet, notwithstanding the degree of sophistication in the arrangement and his realisation that there were "lots of areas" in which Australian taxation law was "totally different" to that of New Zealand and his own lack of interest in studying Australian taxation law, he chose not to seek any advice at all about what might be the Australian taxation law consequences of the adoption of the arrangement whereby Ancath came to be interposed. That to me in the circumstances was a failure to take reasonable care to comply with the ITAA 1997. In each income year that failure resulted in a false statement being made by Mr Russell as to his assessable income and, in turn, to a tax shortfall. Having regard to item 3 of the table in s 284-90(1) of schedule 1 to the TAA, he is liable under s 284-75 to pay an administrative penalty of 25% of his shortfall amount for these income years. There remains the question of whether the Commissioner was in error not to remit any penalty? As to this, either by concession or by virtue of the conclusions which I have reached in respect of applicable base penalty category, the Commissioner's decision is exposed as one founded on premises which were wrong in law. It thus falls to the Court to reach its own conclusion as to how the Commissioner ought to have exercised his remission discretion: see, by analogy, Kolotex Hosiery (Australia) Pty Ltd v Commissioner of Taxation (1975) 132 CLR 535 at 567-568 and 578-579. That art 7 of the NZ Double Taxation Agreement looks to enterprise, not profit per se, is, as the French decision I have noted in respect of this type of OECD Model Agreement, underscores a subject of some controversy and, in domestic law, hitherto novelty. Further, Mr Russell was patently not seeking to conceal Ancath's income from Tradecorp from revenue officers on both sides of the Tasman Sea. He was careless, but these two factors, in my opinion, tell in favour of the remission of the whole of the penalty on this occasion. It necessarily follows from this conclusion that, on and from this date, there was no partnership "entity" entitled to claim input tax credits under the GST Act. To this extent, the appeal against the GST assessment must fail. It remains to consider whether, in so far as the appeal relates to the period prior to 23 February 2004, Mr Russell has shown that the GST Assessment of the net amount is excessive? Critical to the determination of this question is whether the partnership was engaged in an activity constituting an "enterprise" in the period prior to 23 February 2004? Three activities were put forward by Mr Russell as constituting an "enterprise": I shall shortly consider the merits of each of these propositions. It is first necessary to make some general observations in relation to the concept of an "enterprise" for the purposes of the GST Act. "Enterprise" is a defined term. The nature of the activities, particularly whether they have the purpose of profit-making, may be important. However, an immediate purpose of profit-making in a particular income year does not appear to be essential. Certainly it may be held a person is carrying on business notwithstanding his profit is small or even where he is making a loss. Repetition and regularity of the activities is also important. However, every business has to begin, and even isolated activities may in the circumstances he held to be the commencement of carrying on business. Again, organization of activities in a business-like manner, the keeping of books, records and the use of system may all serve to indicate that a business is being carried on. The fact that, concurrently with the activities in question, the taxpayer carries on the practice of a profession or another business, does not preclude a finding that his additional activities constitute the carrying on of a business. The volume of his operations and the amount of capital employed by him may be significant. However, if what he is doing is more properly described as the pursuit of a hobby or recreation or an addiction to a sport, he will not be held to be carrying on a business, even though his operations are fairly substantial. It is necessary to examine the activities engaged in, including their nature and extent (see Martin v FCT [1953] HCA 100 ; (1953) 90 CLR 470 at 474). Activities may constitute the carrying on of a business even though the activities are carried on in a small way and it is not for the Commissioner to dictate to a taxpayer in which business the taxpayer engages or how to run a business profitably or economically (see Tweedle v FCT [1942] HCA 40 ; (1952) 180 CLR 1). Provided that an activity said to constitute carrying on business is engaged in for the purpose of profit on a continuous and repetitive basis, that activity may constitute the carrying on of business (see Hope v Bathurst City Council [1980] HCA 16 ; (1980) 144 CLR 1). [112] If there were no real expectation of a profit from engaging in a particular activity, there will be real doubt as to whether engaging in that activity can be said to be the carrying on of a business. Where the expenses and outgoings of an activity are disproportionate to any income that might reasonably have been expected from engaging in the activity that involved incurring those expenses and outgoings, it may be legitimate to draw an inference that the expenses and outgoings were not incurred in gaining or producing the relevant assessable income but were incurred for some other purpose. [113] Where expenses and outgoings claimed as deductions are disproportionate to the assessable income produced, subjective factors, including the direct and indirect objects of a taxpayer, may become determinative (see Fletcher v FCT [1991] HCA 42 ; (1991) 173 CLR 1 at 17---19). Where an expense or outgoing claimed as an expense or outgoing of a business is disproportionate to any assessable income that may be gained, it will not be as easy to conclude that the expense or outgoing was incurred in gaining or producing that income (see Spassked Pty Ltd v Commissioner of Taxation [2003] FCAFC 282 ; (2003) 136 FCR 441 at [64]). [114] The state of mind or intention of a taxpayer may be relevant to the question of whether or not that taxpayer is carrying on a business. Even where a transaction produces no income, if the intention of the relevant taxpayer is that the transaction is the first step in a business, that subjective state of mind may be relevant. The acquisition of Athena was, the Taxpayers say, the first step in the carrying on of a business (see Fairway Estate Pty Ltd v FCT [1970] HCA 29 ; (1970) 123 CLR 153 at 166.8). Further, it is not for the Commissioner to dictate to a taxpayer in what way a business should be run. A business may be carried on even though it is not profitable or economical (see Tweedle v FCT [1942] HCA 40 ; (1952) 180 CLR 1) , provided it is carried on with the purpose of making a profit (see FCT v Stone (2005) ATC 4234 at 4243). The Taxpayers say that they had a profit making purpose or intention in relation to the use of Athena. One must therefore be careful not wholly to assimilate the concept of a business for income tax law purposes with the concept of an "enterprise" for GST law purposes. In the present case though the extensions beyond "business" evident in the definition of "enterprise" are not raised on the facts. Was an "enterprise" in the form of an accounting practice carried on by the partnership in the period from 1 July 2000 to the date of its dissolution on 23 February 2004? Mr Russell's evidence was that, under the name AW Russell and Co, an accountancy practice was carried on. His oral evidence was that there was "nothing much" by way of clients for such a practice in this period apart from Ancath. There was likewise "nothing much" in any other evidence would suggest that the partnership had any wider clientele during the period prior to 23 February 2004. Mr Russell introduced in evidence what purported to be a written agreement made between the partnership and Ancath in August 2000 for the provision of services to Ancath by the partnership. Mr Russell instanced his being made available to Tradecorp to fulfil Ancath's obligation to Tradecorp under the Tradecorp Agreement as the provision of services to Ancath by the partnership. The Commissioner disputed the authenticity of the purported agreement as between the partnership and Ancath. In any event, the Commissioner contended that Mr Russell had not demonstrated that the agreement was acted upon. Clause 7 of the Agreement provided, inter alia, that the partnership would provide the following services to Ancath: The only personnel available in Australia to the partnership were Mr Russell and his then wife. She was not a qualified accountant although, according to Mr Russell, she was a member of the Institute of Directors in London and had experience in corporate receivership and liquidation work. It is not necessary to reach a conclusion about whether Mrs Russell did indeed have such a qualification and experience There is no evidence that she undertook or even sought to undertake supervision or checking of Mr Russell's work. Rather, the evidence is that supervision of Mr Russell while he was engaged to work in Tradecorp's business was undertaken either by Mr Tony Zarb or Ms Elizabeth Zarb. It was, I note, these persons to whom Mr Russell directed a leave application in March 2004. In his statement to the Queensland Industrial Relation Commission, although Mr Russell set out at some length how Ancath came to be the vehicle by which his services where provided to Tradecorp, there is no reference at all by him to Ancath, in turn, making an agreement with the partnership pursuant to which his services would come to be provided. The only reference in the statement to the Industrial Commission in relation to the partnership is to its role as Ancath's Australian agent for the purpose of collecting goods and services tax in this country from Tradecorp. For many years I operated my own private practice before coming to Australia. Since then I have not been in a public practice environment, because of my lack of Australian tax knowledge, and instead I have been involved in financial and management accounting work. Further, Mr Russell was adamant in evidence that he was an employee of Ancath. Ancath was obliged under the Tradecorp Agreement to make his services available to Tradecorp. It did not need to engage the partnership to discharge that obligation. It could call on its employee to undertake the task. The general authorities concerning the carrying on of the business to which I have referred certainly do not foreclose a conclusion that a partnership with but one client is carrying on a business. It is though for Mr Russell to prove that the partnership was carrying on an enterprise. It is possible, perhaps, that the partnership agreement with Ancath was genuine but the description of services referred to cl 7 does not accord with the evidence which I have of the services which Mr Russell actually performed at Tradecorp's premises. Nor is it consistent with the evidence which he gave to the Industrial Commission or his evidence of being an employee of Ancath. I conclude that the partnership did not deploy Mr Russell to Tradecorp in fulfilment of any agreement the partnership has with Ancath. Ancath deployed him there as its employee. To the extent that taxation returns suggest otherwise, they are predicted upon a misconception of Mr Russell's status. It is not necessary for the purposes of the conclusion I have reached to conclude that the August 2000 agreement as between the partnership and Ancath put forward by Mr Russell was a sham or a recent invention. It is enough to conclude, as I do, that it was not acted upon in relation to the work which he performed at Tradecorp. In so concluding, I do not exclude the possibility that some separate accountancy practice role under the name AW Russell and Co was envisaged for the partnership in Australia, by Mr Russell and his wife before they came here. It is just that this did not come to pass in the period in question in respect of the performing by Mr Russell of financial and managerial accounting work at Tradecorp's premises. There is another dimension to the dealings between Ancath and Tradecorp in which the partnership did participate. The partnership did act as Ancath's Australian agent for the purposes of collecting the GST payable in respect of the service supplied by Ancath to Tradecorp under the Tradecorp Agreement. It appears though that it undertook that role gratuitously. That does not constitute an activity which constitutes an "enterprise". It follows from this that Mr Russell has not proved that the Commissioner's GST assessment was excessive in so far as it was predicated upon the disallowance of $27,284 in respect of input tax credits claimed in respect of an asserted partnership accountancy practice. I next consider whether the partnership carried on a forestry enterprise in the period prior to 23 February 2004. I am satisfied that, upon the acquisition of the Sarina hinterland property by Mr Russell and his then wife in 2001, a deliberate program of tree planting was embarked upon. Some of the trees where planted in a line along the front boundary of the property to act as a buffer from an adjacent rail and road corridor. That though does not account for all of the plantings. The property in area is about 5.5 acres, including an access road. Of this total area about 1 acre is devoted to the residence, associated sheds, pool and driveway. The balance, of about 4.5 acres, has been given over, with varying degrees of success, to the planting of trees. That there has been a deliberate course of planting is evident in some of the colour photos of the property which became exhibits. A sketch plan of the property prepared by one of the visiting tax auditors, while it gives a good idea of key locations on the property and its immediate surrounds, does not accurately depict the nature and extent of the plantings. In fairness to its author, I did not understand that it was intended to be anything other than a general locational sketch. Mr Russell has been able to have the benefit in respect of work on the property of labour provided by visitors to the property under the auspices of an organisation known as Willing Workers on Organic Farms (WWOOF) with workers so provided being nicknamed "WWOOFers". The rest of the day was theirs to do whatever they liked and we provided them with three meals a day and accommodation. The WWOOFer organisation puts out an annual booklet in which it lists all the WWOOFer hosts and Catherine and I were WWOOFer hosts and we qualified as a WWOOFer host because of the farm forestry activity. We had a number of people stay at the property right from the early days in - of owning it in 2001 and they were very helpful. There was a lot of work to do to get things underway. Internal fencing to be removed. Some of them helped with that. Some of them helped with the landscaping around the swimming pool because I had actually built the swimming pool and used some contractors to help me. Some of the WWOOFers helped with the landscaping. Other WWOOFers helped with such things as mulching the seedlings, that s the seedlings, the big lot that were planted in 2002 in particular and they just generally helped around the property be it to do with mostly to do with the farm forestry but also if it was construction work relating to the nudist the naturist retreat. It readily explains how Mr Russell, while undertaking what amounted to full time work at Tradecorp until August 2004, was able to achieve the state of development of the property, including tree plantings, in the period from its acquisition until 2004. He mentioned, and I also accept, that, after he and his wife separated, he did not keep up membership of the WWOOF organisation. As he put it, when his wife Catherine left, "it was a single man's house" and "I felt it was inappropriate to have people who I didn't really know, and often it was women, in a single man's environment at that stage". Mr Russell's own evidence concerning the forestry activities of the partnership was supplemented by evidence by Mr Graham McKenzie. Mr McKenzie, inter alia, carries on business as a farm forester in Central Queensland. He is vice president on the Board of Australian Forest Growers, which is the national association representing private forest growers. He is also a member of the management committee of the Central Queensland Forest Association. That body was established in 2002. In addition, he is secretary and a board member of the Central Queensland Forestry Cooperative. Between 2002 and 2006, Mr McKenzie worked part-time for the Queensland Department of Primary Industries and Fisheries as a private forestry extension officer. He worked extensively with the Department of the Natural Resources and Water when that Department introduced its "Code applying to a Native Forest Practice on Freehold Land". I found Mr McKenzie to be an impressive, independent, knowledgeable witness. Mr McKenzie inspected the Sarina hinterland property in December 2007. In a subsequent report he detailed a number of tree species there which were being silviculturally managed on the property. Each of these species, he opined in his report, had previously been harvested from native forest in Queensland as commercial timber trees. There has been some hits and misses, which is my very untechnical term. Basically there has been some success and some failures. So he has planted lots of different species over a six year period, some of those trees have worked, some of those trees have not worked on this particular site. That is why it is all hickledee pickledee looking in some sense. But it doesn't look like a plantation, which most people might think of as a plantation in terms of mono-culture. It doesn't look like a paddock full of Radiata pine that are all the same height and all the same size and so on, because that it's not what it is. It's a whole heap of different species planted over an incremental period of time, with some other wildings that are growing in there as well. So certainly it is a mixed forest, its not a single species forest, and its mixed aged as well as mixed species. Some of the trees on the property are the result of the growth from seeding from trees on surrounding land. Mr McKenzie had, to his recollection, first met Mr Russell in 2004 at "Sarina Land Care" field days. Mr McKenzie had attended these in his expert advisory capacity while working part-time for the Queensland Department of Primary Industries and Fisheries. That suggests strongly to me that Mr Russell's interest in forestry for profit was not a recent contrivance, a mere sequel to the taxation audit. Mr McKenzie related that the region in which the Sarina hinterland property was situated had gone into drought in mid 2002 and only emerged from drought in 2007. He described it as "the longest and worst drought that Mackay had ever had in recorded history". He attributed some of the species losses on the property to the adverse climatic conditions in the drought period. He mentioned that, in the region, there had been, "very very dramatic failures of planted trees which previously governments had planted, governments had advised other people to plant; trees that go up to 25 metres high, 8, 9 years old, and just died". He also related how forestry was an emerging industry in Central Queensland. That meant that there was a degree of trial and error in terms of which species were the most suitable in the region for commercial timber purposes. I accept all of Mr McKenzie's evidence. The Commissioner led none to the contrary. I note that there is reference to the drought in the region in an "Australian Forest Growers Information Sheet" entitled "Sustainable Small Scale Rainforest Harvesting Operation --- A Case Study" which was in evidence before me. Mr Russell pointed to costings in this particular case study to corroborate those which he had used in his own plan in respect of the plantings on the property to demonstrate that it was possible to derive a profit from the scale of the plantings. The Commissioner challenged the utility of the document for this corroborative purpose, describing it as hearsay but in any event submitted that the costing in it concerned a different forestry property. I regard the information sheet as a business record of the Australian Forest Growers Organisation which is the repository of information gathered and opinions expressed by that organisation in the ordinary course of its activities. That information, in terms of s 69(2)(b) of the Commonwealth Evidence Act , appears to have been "directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact". So much is apparent by necessary inference on the document's face. The information sheet was patently not brought into existence for the purposes of the present litigation. The effect of s 69 is that the hearsay rule does not apply to the document. The particular author of the information sheet is not apparent. Mr McKenzie is on the board of Australian Forest Growers but did not claim authorship of the information sheet. The Commissioner has thus not had the opportunity to cross examine that author in respect of opinions recorded in the document. The property described in the information sheet is different to the Sarina hinterland property in that it is larger. That necessarily affects the utility of the costs set out in the information sheet. The fact that the information sheet exists at all is though eloquent. It evidences that sustainable, commercial small scale forestry in the Central Queensland region is a subject in respect of which information is being provided by an industry organisation. It also highlights how small scale harvesting can be undertaken. Mr Russell deposed to a longstanding interest in forestry which had predated to his coming to Australia. He had been an honorary forest ranger in New Zealand. His evidence in this regard included New Zealand government documents, which I accept were genuine, corroborating that interest. Mr Russell also deposed to how it was possible at minimal cost to secure and how he had secured suitable trees for plantation use either on a subsided basis or via Sarina Landcare. I accept this evidence. Further, the zoning of the property permits the conduct of an agricultural operation such as forestry. The nature and extent of the plantings is, in my opinion, more extensive than just that referable to a hobby or a desire to improve amenity, although I accept that amenity considerations were not ignored so far as they interplayed with a desire to provide a property which was an attractive naturist retreat. It is not possible to ascribe the extent of the planting just to a desire to create a buffer along his front boundary. The plantings were not though for private or domestic purposes. The trees were planted with a view eventually to making money from them by selective logging. The nature and extent of the plantings at the property are consistent with Mr Russell's evidence of a long standing interest in forestry. I was at one stage inclined to regard an assertion of a desire to use the property as a naturist retreat and for forestry purposes as mutually exclusive if only on the basis that tree clearing would be detrimental to privacy. However, once it is appreciated that this is small scale forestry and that selective clearing could be undertaken as a matter of property management this does not strike me as a necessarily fatal inconsistency in respect of asserted use. By its very nature, a forestry operation looks to the longer term for its returns. I remind myself, too, that the embarking upon plantings corresponded with a drought in the region of unprecedented severity. That phenomenon and the as yet experimental quality of suitable plantation tree selection for the region serves to explain the appearance of the plantation. Further, as Thomas v FCT (1972) 46 ALJR 397 (Thomas' Case) reminds, a man may carry on business if only in a small and, as Mr McKenzie nicely put it, "hickledee pickledee" way. It is possible to see, having regard to Mr Russell's costings, how the plantings might have been regarded as being able to be turned to a profit. I did not regard these costings as but a recent invention on the part of Mr Russell. Taking all of these factors into account, I am satisfied that the partnership did over the period up to 23 February 2004 carry on an enterprise of forestry operations. It did so in an innovative, perhaps also idiosyncratic, way but with a view to profit. It is not for the Commissioner to limit the entrepreneurial spirit. It follows from this that the partnership was entitled to claim input tax credits in respect of that enterprise. The last enterprise allegedly conducted by the partnership is that of a naturist retreat. Mr Russell put forward in evidence a business plan which he said he prepared in either late 2001 or early 2002 in respect of the enterprise. It is entitled "Catherine's Sarina Nudist Retreat". Mr Russell stated that he had deferred the undertaking of "Stage 2" activities as a result of his separation from his wife and because of unfinancial uncertainties introduced by the taxation investigation and subsequent assessments which remained under challenged. The Commissioner did not, in terms, submit that the plan was a recent fabrication. The work described in Stage 1 has indeed been undertaken. In a sense, that corroborates Mr Russell's account, but that work is equally consistent with the development of a residential property for purely private residential purposes. Whether, truly, these steps evidence the first stage in a plan directed to the conduct of a naturist retreat relies very much on taking Mr Russell at his word. The variance between his evidence before the Queensland Industrial Relations Commission and before me in relation to his ability to control Ancath does make one sceptical. Nonetheless, Mr Russell did, in the course of his oral evidence, exhibit what I thought was unfeigned, unrehearsed and uncontrived knowledge on subjects about which one might expect a person interested in naturism and proposing to establish a resort at Sarina might have knowledge. He was aware, for example, of beaches at Sarina and further north in Queensland (Balding Bay on Magnetic Island) where nude bathing, though not lawful, was nonetheless tolerated. He described, candidly and, I thought, spontaneously, in his oral evidence the nature and extent of the demand for naturist facilities, particularly amongst the "Grey Nomads". Further, the very nature of the proposal is so unusual that it seemed to me inherently unlikely that it was a contrivance. It does not follow from this that the partnership should be regarded as carrying on an enterprise of a naturist retreat for the period up to 23 February 2004. To date, some fellow naturists have stayed at the Sarina hinterland property at Mr Russell's invitation but not on a paying basis. Some, doubtless, have been "WWOOFers". Mr Russell described such non-paying attendances as "market research". To like end, he is also visited an operating naturist retreat in the Sarina area. Mr Russell also prepared, as part of the naturist retreat business plan, financial projections. One item of income shown on these projections is income from the provision of massage. Mr Russell stated, and I accept, that he had secured massage qualifications. These projections do show that it is possible for the retreat to operate at a profit after its commencement. I accept that these projections are not a recent contrivance. That they form part of a document entitled with the name of Mr Russell's now former wife assists in the reaching of that conclusion. They do though seem optimistic in terms of guest numbers; optimistic in the sense that they are assume that in excess of 3,000 people will stay that the retreat in the first year of its operation. I note though that Mr Russell and his former wife travelled extensively in the North Queensland (so he related and I accept) to various naturist retreats to get what he described as a "feel" for likely demand. In respect of the naturist retreat the claimed input tax credits of $2,739 relate to acquisitions of $30,139, principally in respect of the construction of the swimming pool on the Sarina hinterland property. When the definition of "carrying on" is recalled, it can be seen that a thing may be acquired for a creditable purpose to the extent that it is acquired in the course of the commencement of, materially, a business. The converse of this, necessarily, in my opinion, is that a thing acquired otherwise than in the course of the commencement of a business, even though it may ultimately be deployed in a business once that business commences, is not a acquired for a creditable purpose. An acquisition may be a creditable acquisition even though it would not give rise to a deduction under s 8-1 of the ITAA 1997. For example, an acquisition on capital account in the course of the carrying on of a business would not give rise to a deduction under s 8-1 of the ITAA 1997 but, all other things being equal, would give rise a creditable acquisition. That the notion of a creditable acquisition is wider than the notion of an income tax deduction expenditure raises an interrogative note about why "carrying on" was defined in such an inclusive way. Commencement and termination expenditures can, in the income tax deduction context, be regarded as not incurred in, ie in the course of, the carrying on of a business. Are, for example, expenditures on capital works in respect of an accommodation facility before that facility has opened its doors to paying customers, to be regarded as expenditures "in the course of the commencement of the accommodation facility business"? Identifying the "commencement" of a business is, obviously, a question of fact but that does not mean that the question will always admit of an easy answer. That is nicely illustrated by Peerless Marine . Peerless Marine professed to be carrying on a boat production business in respect of luxury motor cruisers. It had sold none but sought, inter alia, to claim input tax credits in respect of the design and construction of a prototype. It succeeded in establishing that its then activity did amount to an "enterprise" for GST purposes because, inter alia, there was evidence that the development and successful exhibiting and availability for inspection of a prototype was an essential first step in the carrying on of such a business, not a precursor to the commencement of that business. Determining whether or not a particular business exists calls for a thorough understanding of the nature of the market in which the asserted business operates and exactly what is entailed in commencing to carry on business in that market. On this basis, the partnership is not entitled to the input tax credits claimed because they were not acquired for a creditable purpose. During the course of what Mr Russell termed "Stage 1" in his business plan, there was not yet a business of a naturist retreat being carried on, only the undertaking of steps which were precursors to the commencement of such a business. A remaining issue is whether, insofar as it related to a period prior to 1 July 2002, the issuing of the GST assessment was beyond power. The inspiration for Mr Russell's raising this issue would seem to be the supposed expiration of the 4 year period after which, subject to an exception to which I shall shortly refer, in the absence of a notice from the Commissioner within that period requiring payment, an unpaid net amount together with any related general interest charge ceases to be payable: see s 105-50 of Schedule 1 to the TAA. The exception to this statutory expiration arises where the Commissioner is satisfied that the payment of the amount was avoided by fraud or evasion. The short answer to Mr Russell's reliance on this provision was provided by the Commissioner in submissions. It only applies to the situation where a net amount of GST is payable to the Commissioner. That conclusion flows necessarily from the words "payable by you" in the provision. Section 105-50 of Schedule 1 to the TAA has nothing at all to say where, as is now the case here, there is no controversy about an unpaid net amount, only a controversy about an entitlement to claim particular input tax credits. It is also excessive insofar as the base penalty amount has been predicated on the basis of a lack of entitlement on the part of the partnership to claim input tax credits in respect of a forestry enterprise. The claiming of these input tax credits was a matter of entitlement and did not give rise to a tax shortfall. Tax shortfall amounts have though occurred insofar as, on the partnership's business activity statements (BAS), input tax credits have been claimed on the basis of the alleged conduct of an accountancy practice and a naturist retreat by that "entity". The amount of the entitled input tax credits is in this regard false. It is overstated. The Commissioner's position is that, if it is concluded that the partnership was dissolved on or about 23 February 2004, there will be no shortfall amounts the subject of the appeal from March 2004 onwards. I agree. There are though shortfall amounts in respect of the period before then. These amounts are not as assessed by the Commissioner because those shortfall amounts include the disallowance of the input tax credits claimed in respect of the carrying on of a forestry enterprise. The shortfall amounts attributable to the wrongful claiming of input tax credits in respect of the asserted accountancy practice and naturist retreat enterprises are though correct. The table of shortfall amounts annexed to the Commissioner's submissions on the GST appeal gives monthly total shortfalls undifferentiated by reference to component parts. There are therefore necessary calculations and adjustments to be made to these figures so as to allow for the success which Mr Russell has enjoyed. The Commissioner has assessed base penalty on the 75%, "intentional disregard" basis in respect of all of the tax shortfalls. I have already discussed what is entailed in the application of this and the other, lesser base penalty percentages when considering the income tax penalty assessments. It does not at all follow the same base penalty amount or even any should apply to all of the remaining tax shortfalls. The tax shortfalls fall into two distinct groups, those attributable to the misconceived accountancy practice enterprise claim and those attributable to the misconceived naturist retreat claim. Of these two groups, the shortfall in respect of the accountancy practice input tax credit claims is the more serious. Mr Russell knew that he was an employee of Ancath. Further, on the evidence, he was able to control Ancath. GST was an area in respect of which, on the strength of his New Zealand experience, he professed expertise in this country as well. There are close affinities between New Zealand's GST legislation and the GST Act. Against this background, I am not satisfied that Mr Russell has proved that the assessment of base penalty in respect of these tax shortfalls was excessive. To put forward, as Mr Russell did, BAS in which the partnership claimed an input tax credit in respect of an accountancy practice with Ancath as its client in circumstances where he knew that he as an employee, not as a partner in A W Russell & Co, was rendering services on behalf of Ancath to Tradecorp was, for a man of his professed knowledge of GST, intentionally to disregard a known position. It was more than reckless. The position in respect of the claimed naturist retreat enterprise input tax credits requires separate consideration. The naturist WWOOFers who assisted in the forestry enterprise doubtless gave feedback incidentally and anecdotally to Mr Russell as to the demand for and likely success of a naturist retreat enterprise on the property, but that did not mean that a naturist retreat enterprise was then being conducted. The presence of such persons on the property was primarily referable either to the forestry enterprise then being conducted or to the development of the property to a stage where a naturist enterprise could be conducted (or to both). It is not hard though to see how the very presence of fellow naturists on the property might make it seem to Mr Russell that the naturist enterprise had commenced. I did not have the impression from his evidence in respect of the naturist retreat that he set out intentionally to disregard a lack of entitlement to claim input tax credits, as opposed not to turning his mind to an obvious fact, which was that the property was not yet at the stage where the naturist retreat enterprise could commence. In so doing, he closed his eyes to the obvious. That was reckless. As to the Commissioner's remission decision in respect of penalty, it follows that, both by concession and having regard to the conclusions which I have reached not only as to which enterprises were and were not being conducted as well as the appropriate base penalty percentages, that the remission decision was made on diverse premises which were wrong in law. The remission discretion having thus miscarried, it falls on appeal to determine how it ought to have been exercised. At the time when the various BAS were submitted, Mr Russell was new to Australia but not, by his own acknowledgement, new to the operation of an analogous GST regime in his country of former residence. Insofar as his GST tax shortfall is referable to intentional disregard, I do not consider that any remission of penalty is warranted. He was well aware of his status with Ancath and, knowing that, cast the partnership BAS to that extent on a knowingly false premise. The position in relation to the tax shortfall flowing from the misconceived naturist enterprise input tax credit claim is more complex. Though Parliament has, in the modern era, adopted fixed base penalty categories, it has conferred a power to remit penalty otherwise imposed by law as a matter of discretion. In other words, though a taxpayer's case might fall within a particular penalty category, a discretion remains to be exercised in that person's particular circumstances having regard also to the purpose of the penalty regime. The latter must include the purposes of both encouraging compliance and discouraging non-compliance both generally and in the particular case. While I consider that he closed his eyes to the obvious, it must be acknowledged that Mr Russell nonetheless had the task of differentiating in his own mind and in respect of the one property a forestry operation which one might regard as having commenced with the internal clearing of the property's fences and the initial plantings and the development phase of the naturist retreat which had not as that stage commenced business. Like naturist minded WWOOFers were, in part, assisting in each activity. Had the naturist retreat already commenced as an enterprise, the addition of a swimming pool to improve the site's amenities might well have given rise to input tax credit entitlements (subject to resolving any proportional private or domestic use issues). Mr Russell uncritically took the course advantageous to him whereas one might have expected a person of his background and experience to take the more prudent course of seeking a ruling from the Commissioner. That, to me, tells against any remission of the penalty for recklessness in the particular circumstances of his case. Both by concession and otherwise for reasons given above, the appeals must be allowed. Mr Russell has, however, only enjoyed limited success. Other orders must be made under s 14ZZ of the TAA which will enable the Commissioner to take necessary action to implement this decision in accordance with the reasons for judgement, including amending assessments. There is a question as to whether such orders may permissibly include an order which would, in respect of one income year, increase the amount of Mr Russell's taxable income. (c) Confirming the objection decision insofar as it concludes that the assessment in respect of the 2001 year was not excessive but on the basis that Mr Russell's taxable income for that year was $1869.23 higher than that assessed and thus his assessed tax was in fact lower than that payable in respect of that higher taxable income. (c) Setting aside the Commissioner's remission decision and, in lieu thereof, ordering that Mr Russell's base penalty liability be remitted in full. (b) In lieu thereof, setting aside the assessment and remitting the matter to the Commissioner for the issuing of an amended assessment on the footing that the resident agent amount should be excluded and that the partnership is entitled to such input tax credits as relate to the conduct of a forestry enterprise up to 23 February 2004 but not otherwise entitled to the input tax credits claimed. To pronounce some final orders immediately and to defer the making of others pending consideration of supplementary submissions would be to bifurcate the period from which the time for any appeal would run. While that might be remedied by an appropriate order extending time, the better course, in my opinion, is to direct the parties to bring in short minutes of orders to give effect to the reasons for judgement accompanied by such supplementary submissions as they may be advised in respect of the ability to increase an assessment and then later to list the matter for the pronouncing at the one time of final orders and the publication of such supplementary reasons for judgement as may be consequentially necessary. That course particularly commends itself given the number of issues dealt with, the need for the parties to have time to consider lengthy reasons for judgement and that it is in the interests of justice that Mr Russell be permitted to attend by telephone the publication of these reasons. I propose therefore to give directions to achieve this end. I certify that the preceding two hundred and seventy-three (273) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | income tax and penalty assessments issued by commissioner of taxation allegedly false or misleading statements as to personal services by the appellant as to his income resulting in a tax shortfall whether the income received by a new zealand incorporated company from an australian company was mainly a reward for the appellant's personal efforts or skills whether the aforementioned income constituted the appellant's "personal services income" whether the new zealand company was a "personal services entity" whether 80% of the appellant's personal services income was from the same entity whether the appellant met the results test under s 87-18 income tax assessment act 1997 (cth) whether an overseas company can be a personal services entity in relation to the assessment of personal services income of an individual whether the attribution of income paid to the new zealand company by the australian company as the appellant's personal services income is contrary to the australia-new zealand double taxation agreement whether the penalty assessment for intentional disregard of a taxation law was assessed correctly whether the commissioner's related penalty remission decision was attended with error such that the court should reach its own conclusion on that subject held payments from australian company to new zealand company constituted part of the appellant's "personal services income" held payments were an additional commission reward for services or skills provided to australian company held new zealand company was a "personal services entity" held appellant's "personal services income" was not income from conducting a "personal services business" held new zealand company can be a "personal services entity" in respect of part 2 42 of the income tax assessment act 1997 (cth) held nz double taxation agreement subjects the appellant to taxation in australia in respect of the appellant's "personal services income" pursuant to part 2 42 of the income tax assessment act 1997 (cth) held appeal allowed question as to whether possible by court order to increase the amount of an assessment on an appeal from an objection decision reserved for consideration after receipt of supplementary submissions goods and services tax whether the assessment of the gst net amount and related penalty assessment was excessive whether any of the items the subject of the claimed input tax credits were acquired by the partnership in carrying on an "enterprise" characterisation of the "enterprise" of the partnership whether the items the subject of the claimed input tax credits were of a private or domestic nature whether the statutory pre-conditions to the assessment of the base penalty were satisfied whether the commissioner of taxation properly exercised his discretion not to remit the base penalty whether the commissioner of taxation's opinion that there was an avoidance of tax due to fraud or evasion was an error of law held gst assessment excessive held entitlement to claim tax credits in respect of forestry enterprise was an entitlement held no entitlement to claim tax credits in respect of accountancy practice and naturist retreat held commissioner of taxation's remission decision was a error of law held appeal allowed taxation taxation |
His Honour refused an application for intervention of the Federal Magistrates Court by way of constitutional writs in relation to a decision adverse to the appellant made by the Refugee Review Tribunal ('the Tribunal'). 2 The appellant had claimed to be a democrat, a supporter of the independence of Tibet and a Falun Gong adherent in Communist, authoritarian and imperialist China. He did not avail himself of the opportunity to attend to assist the Tribunal and contented himself with the scanty and undetailed claims made in his visa application. Unsurprisingly, the Tribunal felt that there was insufficient information before it to found a conclusion that the appellant was entitled to refugee status. 3 Before the Federal Magistrates Court the appellant claimed that the Tribunal had failed to consider particular aspects of his claims or his claims at all, had failed to give him adequate particulars of the independent information (although there was none), had failed to provide a rational foundation for its decision, and had failed to provide him with an adequate opportunity to respond to the substance of the information. The appellant filed no written submissions before the Federal Magistrate and, unrepresented, made no oral submissions in support of his application. Nevertheless, the learned Federal Magistrate burdened himself with some pages of detailed consideration of what might possibly have existed to found any of the generalised and, as counsel for the Minister describes them, formulaic claims that were asserted in the documentation before his Honour. I am satisfied that none of the grounds identified in either the applicant's original application or his amended application can be sustained. To satisfy this obligation, I have read all of the material in the Court Book and reconsidered the Tribunal decision. It is not apparent that there are any other grounds of review that exist to suggest that the Tribunal made a jurisdictional error in its decision-making process. There is no obligation on a court, that I am aware of, independently to consider for itself whether a self-represented litigant might, despite the inadequacies of presentation of his or her position, have a case for the court's intervention. A strike-out application may stand in a special condition where a self-represented applicant is involved, but on an ordinary hearing it is for an applicant, self-represented or not, to make out his or her case. 5 In refugee cases it has become common for members of this Court, and of the Federal Magistrates Court, to run their eye over the materials lest, when so much might be at stake, an unrepresented applicant might either fail altogether to see an obviously arguable ground for the Court's intervention or, as Mr Johnson aptly put it, by the scatter gun approach commonly employed, aim at everything but the right point. In so doing, members of both courts act from a degree of charity and concern that Australia should not unlawfully deal with an asylum seeker, but there is no obligation on the members of those courts, in my opinion, to do so. The present is an instance where the appellant passed up an opportunity, if he had anything truthful and additional to add to what he already put before the Tribunal, to do so. He further passed up the opportunity to profit from the legal advice which, in the charity of the Australian people, he had been given. 6 I am not critical of the learned Federal Magistrate for considering the matter with the extreme care with which he did. I would merely wish to lighten his load in future. There is no need in such a case to deal with more than the bare essentials, and I do not intend to engage in similar supererogation. After some coaxing to say anything at all that he might wish to say here, the appellant volunteered, correctly, that the learned Federal Magistrate had carefully examined his case. He simply asked that I would reconsider the matter all over again. 7 The learned Federal Magistrate was right for the reasons he gave. The appeal will be dismissed with costs, assessed in the sum of $3600. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick. | migration review of decisions judicial review no necessity for independent consideration of any possible arguments that might be put in support of claim to refugee status citizenship and migration |
On the strength of that 'agreement', Mr Weimann wishes to take appropriate steps to conclude the current litigation with Allphones. In this proceeding, the matter is set down for trial before Barker J from 3 December 2009. Allphones says that no agreement was reached, that the trial dates should be preserved and that the trial should continue. This motion has been brought as a matter of urgency to determine whether or not an agreement was reached so as to enable various other steps which I will describe to occur in the event I conclude there was a binding agreement. It is necessary to deal with the matters promptly in light of the imminent trial dates. Part of that history is described in the recent Full Court decision Allphones Retail Pty Ltd (ACN 008 168 090) v Weimann [2009] FCAFC 135 (at [40]-[45]). As part of the process by which the group action franchise disputation has continued, an extensive mediation was conducted in both Perth and Adelaide over various dates as a result of which documents were produced. The question is whether the document ultimately produced evidences an oral agreement in relation to settlement of the proceeding (the Weimann proceeding). For the reasons which follow, I am unable to conclude that any binding agreement was reached. The Court fix a date by which any group member may opt out of the proceedings. Pursuant to s 33V(1) of the Federal Court Act , the proceedings be dismissed upon the terms of settlement set forth in the document entitled 'Agreed Outline of Mediation Settlement --- New Agreement' annexed to the affidavit of Robyn Aline Chew dated 21 October 2009. The respondent pay the applicant's costs of the motion. By consent, the parties have agreed that both annexures 'RAC-11' and 'RAC-8' to the affidavit of Ms Chew, being annexures 'A' and 'B' to these reasons, be confidential. As to s 50 FCA, I am satisfied that the request of the parties for me to make confidentiality orders in respect of the annexures is appropriate. The basis of my conclusion in relation to the substantive motion is sufficiently evident from the reasons but the disclosure of the alleged detailed outcome of the mediation when settlement was not achieved can not be appropriate especially when there is to be a trial of the mediated proceeding within a short period of time. Such disclosure may be prejudicial within the meaning of s 50 FCA. The confidential annexures will be available to Judges of this Court and otherwise, only on a limited basis in accordance with specific orders. In Roberts VLR 555, the view taken by the Full Court of the Supreme Court of Victoria was that in simple cases a compromise will be enforceable on a motion for judgment in the proceeding. It is when the compromise involves an issue going beyond the scope of the original proceedings that it cannot be enforced in those proceedings. In that situation, further proceedings are required ( Crisp & Gunn Co-operative Ltd v Hobart Corporation [1963] HCA 55 ; (1963) 110 CLR 538). These, I think, must include the extent to which extraneous matters are involved, how substantial are the questions to be determined, to what extent questions of credibility are likely to arise, and whether pleadings and discovery may be desirable. As the proceedings are representative proceedings they may not be settled without approval of the Court (s 33V(1) FCA). At this stage no opt out date has been set by the Court as required by s 33J FCA. Although the group members have apparently been informed of the alleged agreement, the Court is still required to consider whether formal notice should be given to them under s 33X(4) FCA. The approach which has been taken by the parties is that those issues will be addressed once the Court has determined whether or not Allphones is bound by the terms of the settlement agreement. That document is said to evidence the oral agreement. He contends that Allphones purported to repudiate the agreement by purporting to amend its 'offer' on Wednesday, 14 October 2009. Mr Weimann and the other franchisees represented in this proceeding seek to enforce the agreement. I propose to take the majority of the summary on this topic from the affidavits of Ms Chew and her husband and partner in the legal practice of 'chew+matthews', Mr Idris Mark Owain Matthews. An affidavit was also sworn by the Allphones' solicitor, Ms Fiona June Steffensen and another by Mr Anthony Richard Mitchell who is the Chairman of the Board of Directors of Allphones. In light of the conclusion I have reached, it is unnecessary to express views in relation to credibility. The fact that I am taking most of the information surrounding the circumstances giving rise to the alleged agreement from the evidence of Ms Chew is largely because it is more comprehensive, more detailed and was, in substantial measure on the key issues, uncontentious. I also consider that it is undesirable in light of the conclusion that I have reached to express views one way or another on the topic of credibility. There is an imminent trial. The conclusions I have reached require no determination on the basis of credit. I should also indicate that while there were a significant number of objections raised to the evidence led for Allphones, it is unnecessary to resolve those in detail as the evidence for Mr Weimann may be accepted as correct without changing the conclusion as reached. I will, however, say something in due course about evidence of subjective intention or belief. Relevantly, the story starts on about 29 August 2008. Allphones that day sent to Mr Weimann and his wife a notice of dispute (the Notice of Dispute). It was in standard form and sent to other Allphones' franchisees. By the Notice of Dispute, Allphones was commencing the dispute resolution process in order to resolve the issues set out in the notice. Allphones proposed in the document that the disputes be resolved by negotiation or if they could not be resolved by negotiation, by mediation. It recognised the fact the Australian Competition and Consumer Commission (ACCC) had brought proceedings against Allphones and three of its executives alleging that in various respects the conduct of Allphones towards its franchisees had been misleading and deceptive, unconscionable and in breach of the Franchising Code of Conduct (the Code). The Notice of Dispute recorded that on or about 22 August 2008, the ACCC had written to Allphones' franchisees seeking expressions of interest to participate in proposed proceedings against Allphones pursuant to s 87(1B) of the Trade Practices Act 1974 (Cth) (TPA). Allphones observed that it was likely to be some time before either of the existing Court proceedings or any contemplated proceedings could be finally resolved. As the matters in dispute impacted on the business directly, Allphones sought to resolve them as soon as possible. Allphones identified the principal issues arising from the Court proceedings that should be addressed by negotiation or mediation between Allphones and its 'eligible' franchisees (being those franchisees party to an Old Agreement being a franchise agreement entered into with Allphones before Allphones adopted its New Agreement in September 2007 (the Old Agreement)). They were: whether or not Allphones was or is entitled to charge to eligible franchisees and/or deduct from payments to them certain amounts charged or deducted during certain periods for the services or capital improvements said to be carried out by Allphones; whether Allphones was or is entitled to charge to eligible franchisees and/or deduct from payments to franchisees other amounts charged or deducted during certain periods; whether Allphones was or is obliged to share with the eligible franchisees certain bonuses received from carriers to the extent that such bonuses have not been shared with them; whether Allphones was or is obliged to share with the eligible franchisees certain payments of the nature of co-op advertising, support and rebates received from handset and equipment suppliers to the extent that the payments have not been shared with them; whether certain statements Allphones has made in brochures and on its website were false and misleading and caused any loss or damage as a result; whether Allphones has committed breaches of the Code and whether any eligible franchisees have suffered any loss or damages as a result; whether information Allphones has supplied or is supplying to eligible franchisees about charges and receipts of the kinds referred to in 1, 2 and 3 above about carrier commission rates have been adequate; whether the arrangements for any franchisees' association had been appropriate; whether Allphones has imposed stock hold or commission hold on eligible franchisees in circumstances where it was not entitled to do so and whether any eligible franchisee has suffered loss or damage as a result; and whether the terms of the Old Agreement provide for payments to franchisees, whether as MTAC or MTSC or otherwise in respect of data revenue, broadband revenue, upgrades and value added services. The dispute resolution process, according to the Notice of Dispute, was to take place in accordance with the provisions under cl 24 of the Old Agreement. Those provisions do not require amplification at this stage. Allphones nominated a timetable for various steps to be taken in relation to negotiation and mediation and indicated that it would invite the ACCC to participate in the mediation and that if the ACCC chose not to do so, Allphones intended to keep the ACCC informed of the mediation's progress. Each of the clients of chew+matthews have executed mediation agreements in identical terms. Under those agreements both Allphones, as franchisor and each of the franchisees: Appointed Mr Gaszner (the Mediator) to assist them to resolve the dispute between the parties. (The Mediator accepted the appointment). Agreed to try to resolve the dispute consistently with the principles of the Code. Were not to be bound by any comments, suggestions, advice, opinions, statements or recommendations of the Mediator in relation to the issues in dispute. Agreed that the Mediator was entitled to meet with any of the parties or their advisors, jointly or separately. Agreed that the parties 'shall attempt to resolve the dispute by mediation and shall instruct their advisors accordingly'; and Undertook to attend or be represented before the Mediator by persons with ' full authority to settle the dispute within any range and on any terms that can reasonably be anticipated and the parties agree to inform the Mediator immediately should they not have such authority to settle '. (emphasis added) The dispute related to all of the issues detailed in the Notice of Dispute given by Allphones. The Mediator and Mr Mitchell as Chairman of Allphones and Ms Chew initially met on 19 September 2009 in Perth. After that meeting they agreed to continue the mediation in Adelaide on and from 29 September 2009. A substantial number of franchisees were represented at the mediation on and from 29 September 2009 in Adelaide. The majority were represented by chew+matthews. Some were represented by Mr Michael Birch of Birch Partners, another firm of solicitors. The mediation was adjourned on 2 October 2009 and resumed on 12 October 2009 in Adelaide at the Mediator's offices. It was attended by the Mediator, Ms Chew, Mr Matthews, Mr Birch, Mr Mitchell and Ms Steffensen. Ms Chew notes that on arrival at the Mediator's offices, the Mediator showed Ms Chew and Mr Matthews to what has been described as meeting room B. They were subsequently joined by Mr Birch. The three legal representatives of the franchisees discussed their clients' joint initial proposal for resolution of the dispute insofar as it concerned their clients executing New Agreements. Ms Chew by that stage had already drafted the initial proposal after consultation with Mr Birch, Mr Matthews and her clients. At about 11.30 am that day, Mr Birch, Mr Matthews and Ms Chew joined the Mediator, Mr Mitchell and Ms Steffensen in another meeting room (meeting room A). Ms Chew says she gave an oral presentation of her initial proposal to Mr Mitchell and Ms Steffensen. She relied on handwritten notes prompting her for introductory remarks and relied on a prepared draft of the initial proposal dated 9 October 2009 in order to prompt her on the terms of the initial proposal. She made notes on that document during the initial meeting. After that presentation, Mr Birch then informed Mr Mitchell and Ms Steffensen of the proposal advanced by the franchisees in respect of the topic of fees and charges, saying that the franchisees should not be paying the fees and charges but in the interests of reaching agreement, the franchisees, in consideration of Allphones giving up rebates, were prepared to sign up to the New Agreement if Allphones were prepared to not charge the franchisees who were in the mediation any fees and charges other than retention fees which would be 'capped'. Ms Steffensen inquired as to what charges Mr Birch was referring, to which he indicated all of the charges and Ms Chew pointed out that the charges were listed in cl 9 or cl 7 of the New Agreement. She produced a copy of the New Agreement and found the relevant clause and discussed the types of fees listed, what they related to and there ensued a short discussion on some of the issues raised by the initial proposal. At the conclusion of this the franchisees' representatives left meeting room A and returned to meeting room B. On returning to that room, Ms Chew amended the document containing the initial proposal to reflect her handwritten notes on the documents and the other comments made by Mr Birch during the earlier presentation. The amendment was made by editing a Microsoft Word document and underlining (by tracking) the amended portions (Franchisees' Proposal V1). At some point while this process was ensuing, the Mediator came into meeting room B and asked the franchisees' representatives whether they had a proposal on the issue of compensation to which Ms Chew replied 'Our proposal is 100 cents in the dollar. They have had a year to make an offer on compensation and they have never offered us anything'. At approximately 12.30 pm, the Mediator returned to meeting room B and asked whether the representatives of the franchisees had (in electronic format) a Word document of the proposal as the Allphones' representatives wanted to mark-up that Word document with their counter-proposal. The Mediator produced a USB flash drive and Ms Chew copied the amended document to it. In the following two and a half hours, Mr Mitchell came into meeting room B on a couple of occasions to inform the franchisees' representatives of the conversations he had been having with personnel in Allphones. On one of those visits he produced an email from Mr Tony Baker concerning the pricing of accessories and handsets. At about 3.00 pm, the Mediator delivered to the legal representatives of the franchisees an amended version of the Franchisees' Proposal V1 with the amendments underlined saying 'here is their proposal'. A copy of that proposal (Allphones' Proposal 1) is annexed to these reasons as Annexure 'B'. The Mediator left the room while the franchisees' representatives discussed the amendments and made notes on the document. Some 20 minutes later, the franchisees' representatives returned to meeting room A and joined the Mediator, Mr Mitchell and Ms Steffensen. Ms Chew said 'Thank you for your proposal. There are just a few issues we want to respond to and get clarification on'. She said that first, the franchisees would not be writing to Allphones about the mark down policy. She said that in their view it was a breach of the TPA to do so and needed to be withdrawn. There was discussion on that issue but it was not clear on the evidence whether or not it was resolved. There was discussion concerning a proposed amendment to cl 5(c). Mr Birch said it was necessary to add the words 'by the Franchisor' after 'terminated' in that clause and required another minor adjustment of detail which Ms Steffensen noted. The franchisees' representatives required the fees and charges section to be changed so that 12 months would be changed to 24 months. This was also noted by Ms Steffensen. Ms Chew raised the question as to why, in relation to cl 11 dealing with transparency, the provision of reports was subject to 'best endeavours' to which Mr Mitchell responded that there has been an undertaking to discuss with the carriers the provision of the reports. Ms Chew said 'Ok fair enough. What about the retention reports?'. There was then discussion about the various other statements and a short discussion on whether to prescribe a set period for the provision of tax invoices prior to any set-offs made by Allphones against franchisees' commissions. At the conclusion of that discussion, Mr Birch said 'I am happy to leave it as reasonable'. Ms Chew said 'Yes, perhaps it is best to leave it as "reasonable"'. She then struck out the words '7 days' written next to item 12 of Allphones' Proposal 1. Ms Chew then asked a question concerning cl 14.4 and, in particular, what was meant by 'subject to drafting'? She had pointed out that there was a relocation clause in the template agreement for franchisees who hold their own lease and suggested that clause be used. Mr Mitchell responded to that saying that 'when AllVentures holds the lease, then it is a little different. It's not so straightforward'. Ms Chew responded that it was irrelevant because the location was always subject to the franchisor's consent, however she was happy with leaving that issue ('subject to drafting') as being 'subject to drafting'. At the completion of this exchange, Ms Chew said 'That is all of our comments. To recap, we want all the changes to 5(c), fee relief for 24 months and the best endeavours obligation should not apply to the MTSC statements'. Ms Steffensen said 'Ok we will discuss that'. The franchisees' representatives then left the room and returned to meeting room B and were only there for a few moments before either Ms Steffensen or the Mediator called them back into meeting room A. The next event of major significance to Mr Weimann's claim is that Ms Chew says that at approximately 4.00 pm, on return to meeting room A, Ms Steffensen said words which, in substance, were 'Allphones accepts your proposal'. Everyone was in attendance. Ms Chew said 'Thank you. That is great'. Mr Birch said something similar. Ms Steffensen then: read out the changes to be made to 5(c); confirmed that 12 months would be replaced with 24 months with respect to the fee relief; and MTSC statements would not be subject to the best endeavours obligation. Ms Chew placed a tick next to 24 that she had written in item 9, fees and charges annexed to item 11(iii) in the Allphones' Proposal 1 as Ms Steffensen spoke. After some pleasantries, the Mediator said words to the effect that 'now the hard work had been done, it was necessary to attend to the practicalities of who would be drafting the side agreement and amending the New Franchise Agreement'. Ms Steffensen said to Ms Chew 'why don't you draft the changes to clause 16.3, since you said you had some standard wording and also clause 7.10 of the New Agreement'. Ms Chew agreed and made a note of that on Allphones' Proposal 1 and volunteered to draft the 'side agreement'. Ms Steffensen said she would draft the release. Ms Chew also noted that on her copy of Allphones' Proposal 1. Ms Steffensen then said 'What about the deeds of release?'. Either Mr Birch or Mr Matthews said the 'deal is not contingent upon deeds of release for the ACCC action' which Ms Chew confirmed. Mr Matthews sought confirmation that the release was only sought in respect of the Weimann proceeding. There were exchanges about this, ending with Mr Mitchell making it clear that 'We understand that this deal only relates to the Weimann action'. He said 'I want the Weimann action to settle'. To that, Ms Chew identified two of the franchisees who would not settle. The Mediator asked 'What has to happen to settle the Weimann action? ' to which Ms Chew said 'The Settlement Agreement needs to go before the Judge and he needs to approve it' to which Mr Mitchell said 'I want the opportunity to settle the ACCC action also. What will it take to settle the ACCC action as well? ' and Mr Matthews said 'a cheque to our clients' to which Mr Birch suggested that Mr Mitchell should make an offer. Mr Mitchell said that the problem was that the franchisees were expecting 'telephone numbers'. He continued with words to the effect 'I cannot discriminate between those franchisees that have already signed deeds of release and those that haven't'. To this the Mediator said the 'mediation would remain open', to which Ms Chew asked 'Isn't the mediation over?'. Ms Steffensen said 'It is a formality, the mediation has to remain open until the final documents are signed'. The Mediator said 'That is correct' to which Ms Chew said 'Well I want everyone to be clear that it is going to take some time for me to contact clients to let them know the deal and then document the side agreement and have them all signed up'. This delay appeared to be accepted. Mr Mitchell reinstated his desire to settle the Weimann proceeding at which point Mr Birch said that he had to leave to catch his flight to Sydney and said that he needed to talk about those of his clients that were in the mediation but who had already signed New Agreements. Ms Chew said that she also had two clients who have already had to sign the New Agreement but they would like to be able to sign the side agreement. Ms Steffensen asked why those clients should have the benefit of the mediation settlement to which Ms Chew said 'Because they were told by Allphones that if they signed the New Agreement they would get the benefit of any changes that were subsequently agreed and they are a part of the mediation and know about the benefits and concessions that the rest of the Mediation Clients will receive under the side agreement'. Mr Birch left and Ms Chew continued to discuss the topic of individual clients of chew+matthews who would need further discussion between the parties in order for them to sign the New Agreement and the side agreement. Ms Steffensen said 'why don't we record this directly into the agreed document' and stood up to type in the amendments into the computer which was positioned in the corner of the room. Mr Birch stood up, shook hands and left, thanking people and bestowing his 'full authority in the capable hands of Robyn and Idris in respect of any tidying up of the document that may be necessary'. On departure by Mr Birch, the Mediator projected the Allphones' Proposal 1 onto a large screen which everyone in the room could see. Ms Steffensen then amended the document by typing her notes from her earlier discussion with Mr Birch regarding Mr Birch's three clients. Ms Chew and all others were able to see changes being made as the document was projected onto the screen. There was discussion about the detail concerning those clients who were not part of the settlement agreement. After discussion about two particular franchisees, Ms Chew said to Mr Mitchell 'What a mess, but I think this deal will sort them out' to which Mr Mitchell said 'No, I think there was some funny business going on there. Allphones tried to do the right thing, but it all got messed up'. After discussion on these matters, Ms Steffensen then rolled back to the top of the document on the screen and asked 'What is the title of the Document?'. After some exchanges it was agreed that the title should be ' Agreed Outline of Mediation Settlement, 12 October 2009 --- New Agreement ' (the Agreed Outline). Ms Steffensen then made further amendments to the Agreed Outline. She made changes to cl 5(c) to the period of fee relief and to the section on transparency, typing in 'mutual releases in relation to the Weimann proceeding' at the end of the table in the Agreed Outline. Ms Chew said that the franchisees would want the normal boiler plate clauses including a clause that provides for the side agreement to prevail over any inconsistency in the New Agreement. Ms Steffensen included the words 'Side agreement to prevail'. Ms Steffensen then typed in the section headed 'Attendees at the Mediation' in the document. The Mediator then left the room and collected printed copies of the Agreed Outline which the parties began reading. In the course of that reading, Ms Chew said to Ms Steffensen 'The points raised in item 1 are not really necessary. The agreement on the rebates is that the position remains unchanged'. Ms Steffensen then deleted the first two paragraphs in item 1 and typed 'the new agreement applies unchanged in respect of rebates'. There was also discussion about where the third paragraph on local incentives should go as it did not really belong under the heading 'rebates'. That was shifted to paragraph 2 by Ms Steffensen. Ms Chew then observed that it would be necessary to change the words such as 'offer' or 'propose'. Ms Steffensen and Ms Chew discussed deleting para 2 of item 2. That was agreed. They continued working through the Agreed Outline with Ms Steffensen either deleting or changing text in accordance with agreement between the two solicitors. At some point during this process, Ms Chew took over from Ms Steffensen. There was discussion about keeping 'the deal' confidential and how that could be achieved and whether or not Ms Chew would circulate the Agreed Outline. It was agreed to include the fact that it was confidential on the top of the document. Ms Steffensen who was then back in front of the computer typed in 'Without Prejudice and Confidential' on the top of the Agreed Outline to which Mr Mitchell objected as it was legal language. He suggested that it needed to 'state something like confidential and not to be circulated'. That was agreed. Mr Birch's name which had been omitted was added to the list of mediation attendees. There were colons next to each name, Ms Chew asked what they were for and Ms Steffensen said 'for all of us to sign the document'. Ms Chew said 'Why do we have to sign it? Michael can't sign he's not here'. The Mediator said that 'Michael can sign it tomorrow'. Ms Chew said 'but I need to talk to all of my clients first' to which Ms Steffensen became frustrated and said 'You told us you had full authority. What have we been doing all day? This is totally unacceptable'. The Mediator said 'She is right. Everyone did say they had full authority and it is a requirement of the mediation'. Ms Chew said that she did have full authority but she had to discuss the deal with the clients . She had 'a file of instructions from all of my clients with all of their individual issues and they will be asking why those matters were not reflected in the deal and I will have to manage that'. She said, alternatively, 'we can through all of my individual instructions and change the document to reflect them. We can go back to two and a half years for the fee relief'. Mr Mitchell said 'No no we don't want to change anything. I understand that you have to recommend the deal to your clients'. Mr Matthews said 'To be clear, the words in this document will not change'. Someone said that it was an Agreed Outline and Ms Chew said 'Yes it is stated to be agreed at the top' and 'I want to talk to my clients through this deal and point out the benefits for them and why this is a good deal for them' to which Mr Mitchell said 'I understand that and if they don't take their legal advice then they are stupid. If you have trouble getting anyone over the line then we can talk with them together'. Ms Chew said 'Thank you Tony. You know which franchisees that you and I will have to have a discussion with. They are the ones identified in the additional issues '. Mr Mitchell said 'Why don't we get the Mediator to sign the document' and Ms Chew agreed. Mr Mitchell said 'I am good for something' and Ms Chew said 'Tony you were critical to reaching this settlement. It never would have happened without you'. The Mediator signed the mediation agreement in the presence of those still in the room and there were parting comments including Ms Chew shaking Mr Mitchell's hand thanking him again for his assistance and Mr Mitchell saying 'We have to settle the Weimann action' to which Ms Chew said 'Don't worry Tony it is settled'. On the following day, the Mediator circulated the Agreed Outline now in the form annexed to these reasons as Annexure 'A' and bearing his signature. In the event that this offer is not accepted by each of the Weimann Group Members, Allphones settlement offer is withdrawn. Allphones will not consent to any further extension. Allphones position is that any further settlement discussions can occur and parallel to the prosecution of the proceedings, as is the usual case in commercial litigation. If there were other significant loose ends or matters undecided in the agreement evidenced by the Agreed Outline, it was open to Allphones to continue to negotiate as part of the attempted completion process. Summary judgment, as this application effectively is, can only be the preserve of the clearest of cases. The very fact that it was necessary to strenuously cross-examine two of Allphones' deponents in relation to the oral agreement may well suggest that this is not such a clear cut case. The fact that I was strenuously urged by counsel for Mr Weimann to reject parts of the oral evidence of Allphones' deponents and the fact that the contract may only be certain if certain clauses were severed each strongly militate against a binding and concluded agreement having been reached - but especially one in respect of which summary judgment could be obtained. These comments are not intended in any way to be critical of the process that has been taken by Mr Weimann because the whole purpose of mediating was to endeavour to avoid a trial and Mr Weimann was entitled to advocate his view that an agreement had been reached with only a few matters of detail to be resolved in good faith. I am unable to conclude for reasons that follow that it can be said that the parties had reached a binding agreement so as to dispose of the proceedings. Before doing so, I should address the primary arguments advanced for Mr Weimann in favour of a binding agreement. The first of the indicia that the parties intended to be bound immediately was said to be evidenced by the departure of Mr Birch prior to the end of the meeting. It is an objective fact and I have so found that Mr Birch did leave prior to the end of the meeting and left the completion of matters on behalf of the franchisees in the hands of Ms Chew and Mr Matthews. However, I take that as being totally neutral to completion of an agreement. Mr Birch had a plane to catch, he made that clear as he left. Whether or not the loose ends were tied up on or after his departure or even if Mr Birch himself (who not insignificantly was not called to give evidence) was persuaded that a concluded and binding agreement had been reached, the test is an objective one. That is, objectively viewed, did each of the parties have the necessary intent to create legal relations and did they, in fact, do so? Mr Birch's departure is equally as consistent with needing to catch the plane in the hope that Ms Chew and Mr Matthews would be able to tie up the loose ends as it is with needing to catch the plane but, in fact, Ms Chew and Mr Matthews being unable to tie up the loose ends. It is one matter to desire to finalize agreement but another, objectively viewed, for that desire to be achieved. The next fact relied upon by Mr Weimann is the removal of the language of 'proposal' and 'offer' from the document jointly by Ms Steffensen and Ms Chew and the substitution of words consistent with a concluded agreement. I would take this aspect as certainly going towards the intention of the parties to achieve a concluded agreement but taken alone, without proper analysis, it does not show that they achieved that objective. Certainly on the evidence of Ms Chew, which I have accepted, all of the parties at the mediation were keen to achieve an agreement. While other constructions might be open (even accepting the substance of her evidence entirely), the change of language in the document is consistent only with an intention to try to reach an agreement. In contrast, the fact that none of them signed the document other than the Mediator would strongly suggest that an agreement had not been reached. Next, Mr Weimann relies on the importance placed by Ms Steffensen on the authority of those representing the franchisees. It is argued that whether such authority was held would be irrelevant if the document was only intended to be an offer and not a record of the parties' agreement. I do not consider that this is a powerful factor. Clearly it was central even to the making of a reliable offer that the franchisees had empowered their solicitors to do so. It would be equally as important for the making of a binding offer as the making of an acceptance. In saying this, I do not wish to be accepting that describing the document ultimately produced from the mediation (but not signed by anybody) as an 'offer' is accurate. Indeed, the title to the document which was a composite title achieved by joint contributions is in turn non-specific. Even the title 'Agreed Outline of Mediation Settlement --- New Agreement' does not bear the precision which one might expect if firm agreement had been reached on each of the component elements of that which still had to be resolved. While the Agreed Outline might have been agreed, it is an outline that was agreed rather than an agreement, even in principle, as to every element in dispute. Some significant parts of it were still outstanding for determination. Next and of greater importance I think is the argument that Mr Mitchell accepted that the matter had settled (as did Ms Chew). Accepting Ms Chew's evidence as to Mr Mitchell's desire to settle the Weimann proceeding, his expression of belief that the discussion had achieved a settlement, (assuming that belief also to be true), does not really carry the matter much further. It may be that a belief that was genuinely held at the completion of the mediation but on reflection and on consideration of the remaining issues and complexities required to be resolved it was an ill-founded belief or more of a hope. A statement that the complex litigation had settled from either party given that there had simply been oral exchanges perhaps evidenced by a jointly produced outline which left a number of matters outstanding does not, as a matter of objective fact, constitute a binding agreement. The next factor to which weight is given by Mr Weimann is Ms Steffensen's acknowledgement that the holding open of the mediation was a 'formality'. One can understand why such a statement may be relied upon by Mr Weimann to support a submission that Allphones genuinely considered and conveyed that all substantive matters had been concluded and that the keeping open of the mediation was simply until the documentation was completed. I can accept that this factor may go towards an argument that there was an intention on the part of the parties to be bound immediately but it does not solve the question of whether, in fact, there was something by which they could be bound. There is then Mr Mitchell's request that the Mediator sign the document (which the Mediator did). As to this, Mr Weimann argues that there would be no point in Mr Mitchell requiring the Mediator to sign the document if he did not wish to record the fact that the Mediator was confirming that the parties had reached agreement on the matters it contained. The whole topic of signature or lack of it to the document is something of a mystery. Allphones itself now contends that Mr Mitchell did not have authority to bind the Board at the mediation. I do not accept this argument. The execution of the mediation agreement with its confirmation of authority and the attendance in the mediation over several days and the outline of events on the evidence of Ms Chew whose evidence I have accepted in substance, make it clear that the whole purpose of the mediation was to reach an agreement to settle at least the Weimann proceeding. If that was so, one may wonder why none of the parties to the litigation was prepared to sign the document. The lack of signature to the document said to evidence the oral agreement (when provision for signature was made on it) is a powerful factor against the parties intending to be immediately bound. There is also and I will discuss this further below, the factor that Ms Chew herself in the circumstances was not prepared to sign the Agreed Outline until 'selling it' to her clients. I accept her evidence that she was strongly of the belief that a 'great deal' had been done for her clients and she believed she could persuade them to that effect but that it did constitute a compromise of their expectations. That being so, she believed she would have to sell it to them. On the other hand, she had a binding and comprehensive authority and was able to conclude the agreement at least from her clients' perspective on that day. But it seems that no one wanted to sign the agreement other than the Mediator. One can only be left with the impression that at that stage no one was prepared to bind themselves, commit or lock into the arrangements that had been reached such as they were. However, all this aside, I think that there are further difficulties in relying on the agreement in which specific performance is sought. It is to be recalled that each of the mediation franchisees was and remains subject to a binding franchise agreement called the Old Agreement. For the purpose of the mediation, what was being negotiated was the terms of a proposed new franchise agreement that was sought by Allphones as a condition of any settlement. The Agreed Outline reflects amendments contemplated to the proposed agreement rather than variations to the Old Agreement to which the mediation franchisees are currently a party. In other words the proposal from the mediation was that Allphones be permitted to rely upon its New Agreement circulated to all franchisees subject to modifications which would be reflected in an agreement reached in the mediation with these particular franchisees in the Weimann proceeding. To give effect to any settlement, it was necessary that each of the franchisees agree with Allphones to terminate their existing franchise agreement, that is, the Old Agreement and to execute a new franchise agreement in substitution for it to incorporate modifications to the existing proposed agreement as negotiated during the mediation together with revised clauses yet to be prepared by Ms Chew for insertion to cl 7.10 and cl 16.3. Additionally, Allphones and each franchisee would have to enter into a 'side agreement' which was also subsequently to be prepared by Ms Chew. Then, each franchisee had also to execute an appropriate release. The terms of that document were subsequently to be prepared by Ms Steffensen. One can imagine that some of these agreements may not entail much complexity or disputation but given the history of unhappy relationships between these parties, that prospect would be slim. It also followed then that prior to execution of the New Agreement the Code would also impose obligations. The obligations under the Code would be imposed on Allphones as franchisor to provide each franchisee a copy of the Code, a disclosure statement and a copy of the New Agreement in the form in which it is to be executed, at least 14 days before the franchisee entered into the New Agreement (the Code, cl 10). It appears that Allphones made some reference to this in the course of the mediation and whether it was alive to the point or not, the obligations were imposed by force of statute. At least one factor relevant therefore to take into account on the argument as to whether the parties intended to be immediately bound was the fact that a variety of documentation required completion and in particular, the New Agreement required a 14 day cooling off period before execution could be required. That evidence is not of assistance in the circumstances of this case. His Honour referred in that connection to the decision of the Court of Appeal in Air Great Lakes Pty Ltd and KS Easter (Holdings) Pty Ltd [1985] 2 NSWLR 309. Thus, if A, notwithstanding what he said, had the actual subjective intention that no contract should result, a binding contract may not be held to exist. If the terms of A's promise were such that B, as a reasonable man, would take it to involve a legal commitment and B did not know that A did not intend that there be a binding contract, then a binding contract would result. A would not be permitted to set up, against such a meaning of what he had said, a contrary subjective intention. The law would not, I think, impose the relationship of contract where, eg, A though he was play-acting and B knew of that fact. A's actual subjective intention would be effective to prevent the contract arising. A fortiori, if both A and B had the intention that no contract should result, and each knew of it, then none would be imposed. And, I think, this notwithstanding that a reasonable bystander would take from what they said and did that there was an exchange of congruent promises and a mutual purpose to contract. I put aside for this purpose special cases, of estoppel, third party rights, and the like. It acts, in a sense, as a limiting factor, that is, as a reason for not giving to what on the face of it is an exchange of congruent promises, the legal consequences which would otherwise be given to it. And on this basis, it is, in principle, relevant to know what was the actual subjective intention of each party, in the example that I have given, in order to determine whether the legal relationship of contract is to be held to exist. More correctly, it is relevant to know the intention of the one party where it is the intention of or known to the other. I would emphasise parts of the extract quoted: "... if B knew of A's actual subjective intention"; "... and each knew of it"; and, in particular, the concluding words, "... it is relevant to know the intention of the one party where it is the intention of or known to the other " [emphasis added]. Something that a party has neither said nor done but has kept locked up in the party's head cannot be one of the things by reference to which the law imposes a contract in the way to which his Honour referred. Such an assessment seems to me to be warranted by the approach taken by Mahoney JA in Air Great Lakes ; and I do not consider it to be inconsistent with anything said by Santow J in the Australian Yachting Federation case. The question is one of weight to be given to the outstanding factors, especially in a complex commercial matter. Did the parties intend to make a concluded bargain? ( Lezabar Pty Ltd v Hogan (1989) 4 BPR 9498 at [18] per Gleeson CJ and Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353). In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 the New South Wales Court of Appeal discussed the issue of whether parties to negotiations have agreed upon sufficient matters to produce the consequence that perhaps by reference to implied terms or by resort to considerations of reasonableness a Court will treat their consensus as sufficiently comprehensive to be legally binding. That concept, the Court of Appeal said, was not the same thing as deciding they intended to make a completed bargain. The various alternative possibilities are recognised in the famous High Court decision of Masters [1954] HCA 72 ; 91 CLR 353 in which the Court held (at 360) that where parties who have been in negotiation reach agreement upon terms of a contractual nature but agree that the subject matter of the negotiation is to be dealt with by a formal contract, the case may belong to one of three categories. The first is one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. The second may be a case in which the parties are completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Third is the case where it is the intention of the parties not to make a concluded bargain at all unless and until they execute a formal contract. It has also been suggested that there is a fourth category by way of variation to the first, namely, where the parties intend to be bound immediately by the terms upon which they have agreed while expecting to make a further contract in substitution for the first containing by consent additional terms ( Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628 per McLelland J). Whether the parties reached final agreement or intended to postpone contractual relations or the operation of a particular term is ultimately a question of intention to be objectively ascertained from the language the parties have used or which may be inferred from their conduct. Subjective intention has a very limited role, if any, to play on this topic unless expressed as part of the exchange said to form or contribute to the oral agreement. But, in any event, the issue is primarily one of the construction of the language of the parties, whether it has been expressed orally or in writing ( Lezabar 4 BPR 9498 per Gleeson CJ). As his Honour went on to observe in that case, where the parties make an 'informal agreement' which amounts to a 'limited consensus', it is then necessary for the Court to make a decision concerning their intention to enter into a concluded contract. To make that decision, the Court will need to construe their language and characterise their conduct by reference to any surrounding circumstances which are properly to be regarded as throwing light upon their intention. For Allphones, matters which are stressed are that the Agreed Outline is not expressed in terms of binding rights or obligations. For example, there are no words of compulsion that require the franchisees to enter into new franchise agreements. Secondly, it is argued that it would have been a contravention of the Code to compel the mediation franchisees to enter into new agreements other than on 14 days' notice and it can be inferred that the solicitors for all parties were aware of this legal requirement. Thirdly, the Agreed Outline was not signed by any of the parties and, indeed, Ms Chew expressly refused to sign it on behalf of her clients. Fourthly, it is argued by Allphones that chew+matthews did not have instructions to bind their clients to a settlement (a submission I cannot accept). Fifthly, it is argued that Mr Birch leaving the mediation prior to the finalisation of the document is inconsistent with an intention on his part to be committed. Sixthly, it is argued that it would be incongruous if the parties were intending that some un-stated culmination of terms from the Agreed Outline together with the draft New Agreement circulated over 12 months earlier would together operate as a binding agreement to govern the parties' relationship for years to come. Seventh, Allphones argue that both Ms Steffensen and the Mediator kept the mediation open to enable negotiations to continue. Next, it was argued that the key aspects of the proposed settlement had not been resolved such as the scope of the releases. Ninthly, there were a large number of additional issues specific to each of Ms Chew's clients that would need to be resolved. Finally, it is argued that the conduct of both Ms Chew and Mr Birch subsequent to the mediation was inconsistent with the intention that the Agreed Outline was to have binding effect. In my view, some of these matters carry little weight (for example, the first matter, the fifth matter (which I think is neutral), the seventh matter and the tenth matter carry little weight). The others, however, taken together strongly support a conclusion that, while the parties, at best, hoped that they had achieved an immediately binding agreement at completion of the mediation, there were significant matters outstanding. None was prepared to or did sign the Agreed Outline. Ms Chew was not prepared to sign it until she had 'sold' it to her clients. The scope of the matters to be resolved together with the potential for disputation in relation to them was so significant that the completion of the Agreed Outline, unsigned by the parties, was no more than a step towards reaching agreement. However, if I were to do so, I would not do so in favour of Allphones. The argument for Allphones is that the allegedly binding agreement was struck in the absence of the mediation franchisees and that there was no suggestion from Ms Chew that she contacted any, much less all of the mediation franchisees to obtain their authority prior to the finalisation of the Agreed Outline but rather that she needed to go back to take instructions from them. Equally, it is said, there is no evidence from Mr Birch as to his authority to bind the remainder of the franchisees to any terms of settlement and, indeed, he had left before finalisation of the document. I consider that there was authority, either expressed or implied, by the document executed by all the parties in relation to the mediation. In those circumstances, perhaps at a technical level, the refusal of Ms Chew to sign until she had sold the agreement to her clients was an unnecessary precaution but not an unsurprisingly careful step given the struggle the parties have experienced in the completion of this litigation. In my view, the oral agreement evidenced by the Agreed Outline would be void for uncertainty. The Agreed Outline expressly contemplates that the following matters were still to be negotiated and agreed: The terms of the release to be granted to Allphones and whether or not they were to be mutual releases; The territory applicable to franchisees in a strip mall which was to be negotiated on a case by case basis; The content of the relocation clause for franchisees who are licensees of AllVentures; The change of control provisions; and Above all, the additional issues specified on page 7 of the Agreed Outline. In relation to the latter issue, the Agreed Outline nowhere clearly indicates (absent the most tenuous construction and inference) what the position of the franchisees referred to on page 7 under 'Additional Issues' was to be. It is unclear whether their position had been resolved as part of the Agreed Outline on the one hand, or on the other whether they were excluded from the agreement. While one would lean to the latter position as is the oral evidence for Mr Weimann, the agreement is silent on what was to be done in relation to the 'Additional Issues'. This is particularly significant because the evidence was that those included under the heading of Additional Issues included franchisees who were part of the group included in the representative proceedings in the Weimann proceeding. As the evidence of Ms Chew, which I accept, was that the driving force behind Mr Mitchell's express desire to reach agreement at the mediation was to settle the Weimann proceeding, leaving these franchisees on the Additional Issues page of the Agreed Outline was going to defeat that purpose. Nothing in the agreement throws light on what was to happen with those franchisees. This is a 'loose end' of considerable magnitude. It may be accepted that in an appropriate circumstance, the fact that certain matters are to be negotiated may not mean the parties are starting with a blank piece of paper. It may be comprised of wide notions difficult to falsify. However, a business person, an arbitrator or a judge may well be able to identify some conduct (if it exists) which departs from the contractual norm that the parties have agreed, even if doubt may attend other conduct. If business people are prepared in the exercise of their commercial judgement to constrain themselves by reference to express words that are broad and general, but which have sensible and ascribable meaning, the task of the Court is to give effect to, and not to impede, such solemn express contractual provisions. It may well be that it will be difficult, in any given case, to conclude that a party has not undertaken an honest and genuine attempt to settle a dispute exhibiting a fidelity to the existing bargain. In other cases, however, such a conclusion might be blindingly obvious. Uncertainty of proof, however, does not mean that this is not a real obligation with real content. That should be enforced. In my view, subcl 35.11(c) was not uncertain and had identifiable content. The reasons are an explication of the views of Kirby P and Waddell AJA in Coal Cliff delivered in 1992 and reflected in related contexts in later Court of Appeal judgments. No primary case was run on that basis and no evidence adduced to establish that there could be acceptable severance. The reference to mediation is short and lacking detail. No detailed procedure was set down. If the relevant organisation had existed, it may well have had its own procedures. Nevertheless, the reference of a dispute to an organisation for mediation does not guarantee that a mediation will take place. It is a question depending upon the intention of the parties to be gathered from the instrument as a whole: Whitlock v Brew [1968] HCA 71 ; 118 CLR 445 at 453; 457 and 461; Life Insurance Company of Australia Limited v Phillips [1925] HCA 18 ; 36 CLR 60 at 72; Brooks v Burns Philp Trustee Co Ltd [1969] HCA 4 ; 121 CLR 432 at 442; Amoco Australia Pty Limited v Rocca Bros Motor Engineering Co Pty Ltd (No 2) [1975] UKPCHCA 1 ; 133 CLR 331 at 342. If the elimination of the invalid promises changes the extent only but not the kind of the contract, the valid promises are severable : Putsman v Taylor [1927] 1 KB 637 , at pp 640-1. In United Group Rail Services Ltd the negotiations had not advanced to that level. There was at least an executed contract with a specific negotiation clause under consideration. One could in most instances determine whether or not there had been compliance with it. This oral agreement contains no such clause. As with some other arguments, the need to resort to such a concept within the framework of what is in effect, a summary judgment application for specific performance, suggests that the 'agreement' is far from being obvious. The applicant is to pay the respondent's costs, to be taxed if not agreed. I certify that the preceding one hundred-eleven (111) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | dismissal of proceeding sought on the basis of alleged oral acceptance of written offer at mediation court's jurisdiction to enforce agreement enforcement of settlement agreement whether agreement sufficiently certain to be valid and enforceable whether intention to be bound by any agreement whether subjective intention relevant whether solicitors had authority to settle the proceeding whether certain parts of agreement could be severed from main agreement practice and procedure contract |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs made on 6 August 2005 to refuse to grant a protection visa to the appellant. He applied for a protection visa on 4 May 2005. The appellant claimed to have a well-founded fear of persecution because he is a member of an underground Catholic church. He claimed that in 2004 he was arrested by the Chinese authorities, beaten and detained for eight days and that he had been released after paying a large sum of money. The appellant further claimed that in March 2005 he learned that he would be in danger if he attended an upcoming ceremony at the church. 3 The appellant did not appoint a migration agent in his dealings with the delegate. On 6 August 2005 the delegate made a decision refusing to grant the appellant a protection visa. The decision of the delegate was sent to the appellant at his nominated residential address. It was apparently received by the appellant as he lodged an application for review by the Tribunal on 6 September 2005. 4 The application for review in the Tribunal nominated the same address as the appellant's residential address and a different mailing address as his address for service and correspondence. The appellant did not appoint a migration agent in his application to the Tribunal. 5 On 19 September 2005 the Tribunal wrote to the appellant, not to the mailing address he had specified on his application but to his residential address, informing him of the receipt of his application for review. 6 On 11 October 2005 the Tribunal sent a letter to the mailing address specified on the application for review, stating that the Tribunal had considered the material before it in relation to the application but was unable to make a decision in his favour on this information alone and the Tribunal invited the appellant to attend at a hearing on 7 November 2005. However, this letter of invitation was returned to the Tribunal. Instead, on 4 November 2005 the Tribunal wrote to the appellant at his new residential address notifying him that a letter sent to his mailing address was returned to the Tribunal and seeking confirmation of the appellant's correct mailing address. No reply was received from the appellant, nor was the letter returned. On 7 November 2005, the appellant failed to appear at the hearing and the Tribunal proceeded to make a decision on the appellant's application for review pursuant to s 426A of the Migration Act 1958 (Cth) ('the Act'). As such, the Tribunal was unable to be satisfied that the appellant had a well-founded fear of persecution and affirmed the delegate's decision. The appellant appealed against this decision to the Federal Magistrates Court. He also claimed that the Tribunal failed to exercise its discretion to hold a hearing and had fallen into jurisdictional error by not considering exercising its discretion under s 464A of the Act. Before the Federal Magistrate, the appellant complained that he had provided his telephone number to his migration agent however that person did not provide the details in his application to the Tribunal. 9 The Federal Magistrate, in considering the Tribunal's decision in light of the claims made by the appellant, found that the Tribunal's decision was unaffected by jurisdictional error and was a privative clause decision. It was the view of the Federal Magistrate that the Tribunal had considered evidence before it and was not satisfied due to the insufficiency of the material provided. The Federal Magistrate stated that a lack of information is not information for the purposes of s 424A(1) of the Act. As the Tribunal had not reached a decision to affirm or set aside the decision under review, therefore no obligations under s 424A of the Act arose. His Honour held that the point of fixing a date for hearing was to obtain further information, particularly from the appellant, which may or may not result in affirming or setting aside the delegate's decision. 10 The Federal Magistrate held the view that s 424A obligations are not raised at this point and the appellant's assertions misconceive the nature of the test in s 425 of the Act. The Federal Magistrate further held that when the Tribunal considers that it cannot make a decision on the material before it, then the Tribunal must invite an applicant to provide better or more evidence or submissions; it is not information which the Tribunal will use to affirm the delegate's decision and the obligation under s 424A(1) of the Act does not arise until the Tribunal is deciding whether or not to affirm the decision of the delegate. Neither was the Tribunal obliged to exercise its discretion to defer its hearing. In addition, his Honour held that the fact the appellant was unaware of the hearing was of no legal relevance, nor was the Tribunal required to take into account the fact that the letter inviting him to attend the hearing (sent to the mailing address specified on his application to the Tribunal) was returned. Finally, the Federal Magistrate held that the Tribunal had not misunderstood its discretion and had made some efforts to contact the appellant by sending a second letter to his new residential address. That the Federal Magistrate failed to consider the appellant's oral claims during the final hearing that he provided his contact number to his migration agent yet the Tribunal had failed to contact him by telephone. 2. That the Federal Magistrate repeatedly ignored the appellant's claims that the Tribunal had information falling within s 424A of the Act, of which the Tribunal failed to give particulars to the appellant, failed to explain why it was relevant and failed to give the appellant an opportunity to comment on it. His Honour considered that there was no substance in the complaint as the telephone number was not provided to the Tribunal. As his Honour observed at [33] the Tribunal went to some effort to try to contact the appellant insofar as it was able to do so. At no stage has the appellant nominated a migration agent to act on his behalf, before either the Tribunal or the delegate. 13 In relation to the second ground, I reject the appellant's complaint that the Federal Magistrate failed to consider the appellant's claims in relation to s 424A of the Act. The Federal Magistrate did consider the appellant's complaint that the Tribunal had failed to comply with s 424A and I can find no error in his Honour's reasoning or conclusion. 14 His Honour dismissed that claim and stated at [22]-[23] that he considered that no obligation arose under that section given that at the time that the Tribunal notified the appellant that it was unable to determine the review in his favour on the material before it, the Tribunal had not reached any view on whether the adequacy of the material submitted to the delegate would be part of the reason for its decision. In support of his reasoning, his Honour indicated that he was bound to follow the decision of Heerey J in SZCJD v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCA 609 at [38] - [43] . 15 The reason for his Honour's focus upon whether the obligation under s 424A arose at the time that the Tribunal notified the appellant that it was unable to determine the review in his favour on the material before it was that this was how the appellant particularised the breach in his grounds in the amended application. His Honour did not go on to consider whether there was a breach of s 424A at any other time. 16 It is clear from the Tribunal's reasons for its decision that it found there was insufficient information to enable it to reach a level of satisfaction as to Australia's obligations to the appellant. The word 'information' in s 424A(1) imports at least some positive factual material and does not apply where the Tribunal has identified a lack of information: see SZBCS v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 1457 per Bennett J at [23]; MZWPK v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 1256 per Heerey J at [14]; and Tran v The Minister for Immigration & Multicultural Affairs [2002] FCA 1522 per Kenny J at [25]-[26]. Therefore, it is clear that s 424A(1) was not enlivened at the time it invited the appellant to the hearing and the Tribunal was not required to give the appellant notice pursuant to that section. 17 In exercising its discretion under s 426A of the Act, the Tribunal clearly considered all of the circumstances relating to the invitation to appear at the hearing and the appellant's failure to attend. There is no evidence that the Tribunal misunderstood the discretion given to it under s 426A , and, having complied with the statutory requirements, the Tribunal was entitled to exercise its discretion under s 426A. 18 One other matter needs to be noted. Before me today the appellant indicated that there may be some other material which he would put in support of his application on the merits. In my view, that is not a sufficient justification for remitting the matter back to the Tribunal and I am not able to receive that material in the circumstances of this case. 19 In an appropriate case it may well be permissible to tender evidence on review. However, whether it is an appropriate case will depend upon the grounds of review and the circumstances of the case. In principle, albeit with some reluctance (having regard to the additional time and costs taken up with such evidence), I can see no reason why, in an appropriate case, such evidence should not be admitted. If additional evidence is available, in cases reliant upon such grounds, there is no reason in principle why such evidence should not also be admissible where the ground is couched in terms of unreasonableness. Nor is there any basis for a conclusion that it can be admitted as of right. As Sackville J correctly observed, everything depends upon the grounds of review, and the circumstances of the case. Therefore I would not permit the material identified as going to the merits by the appellant to be tendered before me. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. | appeal from federal magistrate's decision to dismiss an application for review of refugee review tribunal decision non-attendance at tribunal hearing inadequacy of information was reason for tribunal's decision no breach of s 424a(1) whether additional evidence admissible in judicial review proceedings migration |
Although the applicant is comprised of a group of persons, I will refer to them collectively as the "applicant", reflecting the usage adopted in the Native Title Act 1993 (Cth) (the "Act"). Pursuant to s 63 of the Act, the Registrar gave a copy of the Application and supporting material to the Native Title Registrar (the "NT Registrar"). A delegate of the NT Registrar (the "Delegate") then considered the Application in accordance with s 190A of the Act but decided not to accept it for registration in the Native Title Register (the "Register"). Pursuant to s 190D(1) the NT Registrar notified the applicant accordingly. The applicant now seeks review of that decision pursuant to subs 190D(2) of the Act. Sections 61 , 61A and 62 prescribe the content and form of a valid application. However compliance with those requirements is not necessarily sufficient to secure registration of the claim. Registration is regulated by Pt 7 of the Act. The effect of registration is that, in advance of any determination as to the existence of Native Title, the applicant is entitled to participate in negotiations concerning proposed development affecting the relevant land. Thus the effect of the Delegate's decision is that parties proposing development upon the land included in the application will not be compelled to negotiate with the applicant. A claim may be accepted for registration only if the NT Registrar (or a delegate) is satisfied as to the conditions prescribed by ss 190B and 190C of the Act. For present purposes the requirements of subss 190B(3), (5), (6) and (7) are relevant. He gave detailed reasons for his conclusions to which I will refer at a later stage. The decision involved an error of law. That application is by the same applicant group and is in substantially the same terms as the present claim, save that it relates to a different area. That area lies within defined boundaries, but certain discrete areas within those boundaries have been excised from it. I understand that it was thought that Native Title over the excised areas may have been extinguished. This Application relates to those areas. Further given these particular circumstances and that the Delegate of the Registrar who decided to ... register [the Core Country claim] ... was in fact the same person who later refused to register [the Application] it is submitted that on making the first decision that Delegate became functus officio in respect of the second decision and it was not open to him to in effect reverse his own earlier decision. Firstly, if the NT Registrar or the Delegate were "functus officio" he or she could not have considered the Application at all. Of course there was a statutory duty to do so. Secondly, these submissions fail to take account of that statutory duty. The Delegate was obliged to act in accordance with law, not in accordance with his own previous decision. The Executive cannot by representation or promise disable itself from, or hinder itself in, performing a statutory duty or exercising a statutory discretion to be performed or exercised in the public interest, by binding itself not to perform the duty or exercise the discretion in a particular way in advance of the actual performance of the duty or exercise of the power. ... Accordingly, it has been said that "a public authority ... cannot be estopped from doing its public duty", ... . I have no doubt that the answer is: none. Judicial review provides no remedies to protect interests, falling short of enforceable rights, which are apt to be affected by the lawful exercise of executive or administrative power. If it were otherwise, the courts would be asserting a jurisdiction, in protection of individual interests, to override the law by which a power to affect those interests is conferred on the repository. A good illustration is Attorney-General (Hong Kong) v Ng Yuen Shiu ... in which the Privy Council appears to have accepted the proposition that "a person is entitled to a fair hearing before a decision adversely affecting his interest is made by a public official or body, if he has "a legitimate expectation" of being accorded such a hearing" ... . However, the justification for the proposition was said to be "primarily that, when a public authority has promised to follow a certain procedure, it is in the interest of good administration that it should act fairly and should implement its promise, so long as implementation does not interfere with its statutory duty ". There could be no question of his being bound to follow his own earlier decision in the Core Country claim if he considered that it incorrectly applied the Act. In any event, for present purposes the question is whether or not he was correct in his view of the Application. That question involves an assessment of the Application and such other material as may permissibly be considered. The Delegate's decision concerning the Core Country claim is irrelevant to my task. The claim appears to take two forms. On this basis the [applicant] seek(s) an order from the Court that the Decision be set aside. Such an argument confuses procedural fairness with errors in the decision-making process. Errors alone will not generally amount to a denial of procedural fairness although they may, in extreme cases, evidence a misunderstanding by the decision-maker of his or her relevant function. That has not been suggested in this case. Sub-section 190A(1) required the Delegate to consider the Application. In effect he had to decide whether to accept it for registration pursuant to s 190. The Act does not suggest that the NT Registrar is to receive submissions as to any proposed decision. If anything, subs 190A(5A) suggests to the contrary. To impose such a requirement would, in my view, imply a similar requirement in many other statutory registration schemes. This would be a considerable extension of the law. The applicant's case is probably a little more refined than that. It suggests that because of the previous acceptance of the Core Country claim, such an obligation may have arisen. The applicant seems to submit that as the same Delegate considered both applications, special requirements of procedural fairness arose. 16 I do not see why that, presumably fortuitous, fact should affect any requirement as to procedural fairness attending the decision-making process. The question must be whether any delegate would have been obliged to tell the applicant that he or she proposed to reach a decision which might be inconsistent with any earlier decision, by any decision-maker, involving the same applicant. Such a requirement would produce considerable practical difficulties, particularly in view of the absence of any apparent statutory provision to that effect. Unless a delegate had cause to refer to other earlier applications, he or she may not be aware of them, or may not realize that there is any arguable inconsistency. He or she could hardly be expected to review earlier applications "just in case". Further, there is no reason why such a requirement would apply only to serial applicants. Any applicant might choose to rely on the fact that an earlier application by another applicant had been registered and adopt it as a precedent. The applicant was aware of the relevant statutory requirements as to which it was obliged to satisfy the Delegate. It was not entitled to rely on past practices. 17 In any event the Delegate, having performed a preliminary assessment, informed the applicant that there were difficulties with the Application. In a letter dated 2 June 2006 to the applicant's solicitor, those difficulties were identified. It indicated that the Application "may satisfy" many of the requirements of the Act, but that it did not satisfy the requirements of para 62(e) and subs 190B(5). Those provisions concern the factual basis of the claim. The letter also indicated that further information was required in connection with the matters prescribed in subs 190B(3) (identification of the claim group) and 190B(7) (physical connection). It is up to the applicant to get independent legal advice about the application and the Registration Test. 20 The Delegate ultimately found that the Application did not satisfy the requirements of subss 190B(3), (5), (6) and (7). The applicant was expressly warned of possible inadequacies in connection with all of those provisions save for subs 190B(6). That subsection required the Delegate to consider whether some of the claimed rights and interests were prima facie capable of being established. Such consideration would usually follow consideration of the matters identified in the other subsections mentioned above. Failure to comply with one or other of them might well lead to failure to satisfy the requirements of subs 190B(6). The applicant can hardly complain that other identified inadequacies led to a consequential inadequacy in its purported compliance with that subsection. 21 In advising the applicant of the shortcomings in the Application, the Delegate was presumably exercising the power conferred by subs 190A(5A). However, he was not obliged to do so. To extend to the applicant an opportunity to re-formulate the claim before deciding whether or not to accept it for registration was a desirable, but not necessary, course. Even if the Delegate had not advised the applicant of all matters causing concern, that would not have led me to conclude that he was bound to proceed upon the basis that matters not addressed should necessarily be resolved in ways which were favourable to the applicant. The applicant was warned that it must satisfy the requirements of the Act. The Delegate directed attention to his major areas of concern. There is nothing in this point. This is a reference to various documents identified on p 25 of his reasons. The affidavits suffered similarly. In my view, it would be, to say the least, undesirable that the NT Registrar or a delegate take into account information derived from other applications without affording the applicant an opportunity to comment upon it. Whether there is a statutory obligation to do so, I need not consider. This is because the Delegate clearly did not treat the material as generally relevant to his task. At some points, he referred specifically to parts of the material. I will consider for myself the adequacy or otherwise of the information provided by the applicant, without regard to such other information. I will, however, refer to it at appropriate points in order to demonstrate the very limited use made of it by the Delegate. The alleged error was the Delegate's view that it was necessary that the applicant demonstrate that the apical ancestors identified in the description of the claim group constituted a society at some relevant time. I do not understand how alleged errors of law can be argued by "illustration". In the second round of submissions other alleged errors were addressed in connection with the various statutory criteria. It will be better if I discuss all legal issues as they arise in my examination of the Delegate's reasons. It is appropriate that I summarise certain aspects of their Honours' reasons. Most of what follows appears at [32] to [89] of those reasons. • Those rights and interests may be communal, group or individual rights and interests, but they must be in relation to land or waters. • Upon acquisition of sovereignty over a particular part of Australia, the Crown acquired a radical title to the land in that part, but Native Title survived such acquisition. • The surviving rights and interests are in relation to land or waters. • Those rights and interests owed their origin to a normative system other than the legal system of the new sovereign power, namely traditional laws and customs of the indigenous people concerned. • In seeking to identify surviving rights and interests in relation to land or waters, the laws or customs in which such rights or interests originate must be laws or customs having a normative content, being derived from a body of norms or normative system --- the body of norms or normative system that existed before sovereignty. • Rights and interests comprising Native Title may not, and often will not, correspond with rights and interests in land familiar to 'the Anglo-Australian property lawyer' . • Rights and interests under traditional laws and customs will often reflect a different conception of "property" or "belonging". • The relevant laws and customs must be rules having normative content. Without that quality there may be observable patterns of behaviour but not rights or interests in relation to land or waters. • Upon the assertion of Crown sovereignty the normative or law-making system which then existed could no longer validly create new rights, duties or interests. • Rights or interests created after sovereignty, owing their origins and continued existence only to a normative system other than that of the new sovereign power, will not be given effect. • The rights and interests in land or waters which the new sovereign order recognized included the rules of traditional law and custom dealing with transmission of interests in land or waters. • Account may be taken of alterations to, or developments in, traditional laws and customs occurring after sovereignty, at least to the extent that such changes and developments were contemplated by traditional laws and customs. • Because there can be no parallel law-making system after the assertion of sovereignty, the only rights or interests originating otherwise than in the new sovereign order, which will be recognized after the assertion of sovereignty, are those originating in pre-sovereignty law and custom. • The word "traditional" describes a means of transmission of laws or customs. A traditional law or custom is one which has been passed from generation to generation of a society, usually by word of mouth and common practice. In the context of the Act the word "traditional" conveys an understanding of the age of the traditions, namely that their origins lie in the normative rules of Aboriginal and Torres Strait Islander societies which existed before the assertion of British sovereignty. Only these normative rules are traditional laws and customs. • The normative system under which the relevant rights and interests are possessed must have enjoyed a continuous existence and vitality since the assertion of sovereignty. If the system has not existed throughout that period, the rights and interests which owe their existence to that system will have ceased to exist. Any later attempt to revive them will not reconstitute traditional laws and customs from which rights and interests within the definition of "Native Title" may arise. • Laws and customs arise out of, and go to define, a particular society, that is a body of persons united in, and by, its acknowledgement and observance of a body of laws and customs. • To speak of rights and interests possessed under an identified body of laws and customs is to speak of rights and interests which are the creatures of the laws and customs of a particular society existing as a group which acknowledges and observes those laws and customs. • If that society ceases to exist as a group which acknowledges and observes those laws and customs, those laws and customs cease to have continued existence and vitality. • The passing on of laws and customs from individual to individual may not be sufficient to render them traditional laws and customs if the society itself has ceased to exist. If the society ceases to exist, the rights and interests in land to which laws and customs gave rise also cease to exist. • If such laws and customs are adopted by some new society they then owe their new life to that later society and are laws and customs acknowledged by, and observed by, that later society. • The relevant rule of recognition of a traditional law or custom is a rule of recognition found in the social structure of the relevant indigenous society as those structures existed at sovereignty. • Any analysis of the traditional laws and customs of a society, having no well-developed written language, by using analytical tools developed in connection with very different organized societies, is fraught with difficulty. However that difficulty does not lead to denial of the importance of two facts. Firstly, the laws and customs and the society which acknowledges and observes them are inextricably linked. Secondly, the new sovereign order recognized only those Native Title rights and interests which existed at the time of change in sovereignty. • It is therefore necessary to enquire as to the relationship between the laws and customs now acknowledged and observed in a relevant indigenous society, and those which were acknowledged and observed before sovereignty, considering whether the laws and customs can be said to be the laws and customs of a society whose laws and customs are properly described as traditional laws and customs. • The word "traditional" means not only that which is transferred by word of mouth from generation to generation. It also reflects the fundamental nature of the Native Title rights and interests with which the Act deals. They are rights and interests rooted in pre-sovereignty traditional laws and customs. • In many cases the claimants will invite the Court to infer the content of traditional laws and customs at times earlier than those described in the available evidence. • Pursuant to s 82(1) the Court is bound by the rules of evidence except to the extent that it otherwise orders. • Where the laws or customs now said to be acknowledged and observed have been adapted in response to the impact of European settlement, it may be especially difficult to demonstrate the content of pre-sovereignty traditional laws and customs. • However demonstrated change to, or adaptation of, traditional law or custom, or some interruption of enjoyment or exercise of Native Title rights or interests, since the assertion of sovereignty, will not necessarily be fatal to a claim. The key question is whether the law and custom can be seen to be traditional law and traditional custom. • Exercise of Native Title rights and interests may constitute powerful evidence of the existence of such rights and interests and their content. • Evidence of non-exercise does not necessarily answer the relevant statutory question. The question is as to possession of the rights and interests, not their exercise. • In the definition of Native Title in subs 223(1) of the Act, the focus is upon rights and interests in relation to land or waters, which rights and interests are currently possessed under traditional laws and customs by claimants who, pursuant to such laws and customs, presently have a connection with the land or waters in question. • Those rights and interests must be possessed under traditional laws and customs observed by the peoples in question. The connection between the peoples in question and the land and waters must be by clear traditional laws and customs. The word "traditional" refers to a body of laws and customs acknowledged and observed by the ancestors of the claimants at the time of sovereignty. • Acknowledgement and observance of those laws and customs must have continued, substantially uninterrupted, since sovereignty. • In the last proposition the word "substantially" is of some importance. Proof of continuous acknowledgement and observance over the many years which have elapsed since sovereignty may be difficult. The qualification recognizes that European settlement has had the most profound effect on Aboriginal societies and that it is therefore inevitable that the structures and practices of those societies and their members will have undergone great change. Nonetheless it is necessary to demonstrate that the normative system out of which the claimed rights and interests arise is the normative system of the society which came under a new sovereign order when the British Crown asserted sovereignty. To that end it must be shown that the society, under whose laws and customs the Native Title rights and interests are said to be possessed, has continued to exist throughout that period as a body united by its acknowledgement and observance of the laws and customs. A person who demonstrated descent from one of the four identified ancestors would be a member of the claim group. However he considered that the first paragraph 'modifies the simplicity of the second by apparently introducing "criteria for membership" ' . The first paragraph asserted that membership of the group was in accordance with traditional laws and customs of Gudjala People traditionally connected to the land through physical, spiritual and religious associations, genealogical descent and processes of succession. However it said nothing about the content of such traditional laws and customs against which a claim to membership might be assessed. The expressions "physical, spiritual and religious association", "genealogical descent" and "processes of succession" suggest the general nature of such laws and customs but say nothing about their content. The Delegate concluded that their presence in the description suggested that membership of the claim group was not solely dependent upon descent from the apical ancestors identified in the second paragraph. 30 In his preliminary assessment of the Application, the Delegate referred to apparent inconsistencies between the claim group description and material in earlier applications 'involving the same or substantially the same group' . The applicant submits that his final decision was infected by error in that the adequacy of the description of the claim group must be assessed by reference only to the application. However the Delegate clearly demonstrated in his reasons that he understood that s 190B(3) addressed only the content of the Application. In support of this proposition he referred to the decision of Mansfield J in Northern Territory of Australia v Doepel [2003] FCA 1384 at [51] . The reasons make no reference to extrinsic material. 31 The Delegate accepted that the Application complied with subs 61(4) but found non-compliance with subs 190B(3). The two provisions seem to establish similar criteria. The first prescribes the content of an application. The second identifies the matters as to which the Delegate had to be satisfied if the Application were to be accepted for registration. The applicant submits that the Delegate erred in finding compliance with one provision and non-compliance with the other. The Act itself draws a distinction between the two provisions. Subsection 190A(6) asserts that s 190B 'deals mainly with the merits of the claim' , and that s 190C 'deals with procedural and other matters' . This suggests that when, pursuant to s 190B(3), the Delegate considered whether the claim group was described sufficiently to permit a decision as to whether a particular person was a member thereof, he or she was dealing with 'the merits' as that term is used in s 190A(6). When, pursuant to s 190C(2), he considered whether the Application contained all the details and other information required by ss 61 and 62, he was dealing with a matter of procedure. In other words, the distinction is not between subs 61(4) and subs 190A(3) but between ss 190B(3) and 190C(2) as they apply to s 61(4). 32 In considering s 61(4) pursuant to s 190C(2) the Delegate considered whether there appeared to be a description which satisfied the requirements of the Act, without ascertaining whether or not it operated effectively to describe the claim group. He undertook the latter exercise pursuant to s 190B(3). That seems to be the only way in which he could have given effect to the two requirements. It may not matter. In order to be entitled to registration it was necessary that the Application comply with the quite precise test prescribed in s 190B(3). Any apparent confusion in the Delegate's reasons simply reflected the rather ambiguous terms of the Act. 33 Although it is not easy to be sure, I believe that I have disposed of all of the applicant's arguments concerning the description of the claim group. However, in the end, it is for me to consider whether the Delegate should have been satisfied as to compliance with subs 190B(3). I must form my own view as to that matter. The question is not without difficulty. The better view is that the identification of the claim group as the descendants of the apical ancestors is the asserted outcome of the correct application of traditional laws and customs observed by the Gudjala People, although those laws and customs are not identified. It is curious that laws and customs concerning physical, spiritual and religious association, genealogical descent and processes of succession should lead to the outcome that the only people who have 'communal native title' in the area are the descendants of four apical ancestors. One would have thought it more likely than not that some such descendants, although satisfying the laws relating to genealogical descent, would fail in connection with physical, spiritual and religious association and/or processes of succession. As the laws and customs in question are not identified, this curiosity cannot be resolved. However subs 190B(3) requires only that the members of the claim group be identified, not that there be a cogent explanation of the basis upon which they qualify for such identification. 34 If the two parts of the description are read discretely, then the problem identified by the Delegate arises. However it is consistent with traditional canons of construction to read the paragraphs as part of one discrete passage, and in such a way as to secure consistency between them, if such an approach is reasonably open. The preferable construction of the description is that all members of the claim group are descendants of the four apical ancestors. Such membership, it is claimed, is based upon law and custom, but details are not given. Although I would not encourage a repetition of this approach to compliance with the requirements of subs 61(3), I am of the view that it sufficiently identifies the members of the claim group by reference to apical ancestors. I have already discussed identification of the claim group. The Delegate was satisfied that there was sufficient identification of the claimed Native Title rights and interests. That matter was dealt with in Sch E to the Application which schedule was in two parts. One related to land and waters where there had been no prior extinguishment of Native Title, or where s 238 of the Act applied. With respect to that land, the claimed rights were said to be 'the right to possession, occupation, use and enjoyment of the claim area as against the whole world, pursuant to the traditional laws and customs of the claim group but subject to the valid laws of the Commonwealth of Australia and the State of Queensland. I do not understand this rider to be in any way relevant for present purposes. I similarly do not understand the reference to s 238 to be of any present significance. 39 Subsection 190B(5) of the Act refers to the factual basis upon which it is asserted that the claimed Native Title rights and interests exist. This is clearly a reference to the existence of rights vested in the claim group. Thus it was necessary that the Delegate be satisfied that there was an alleged factual basis sufficient to support the assertion that the claim group was entitled to the claimed Native Title rights and interests. In other words, it was necessary that the alleged facts support the claim that the identified claim group (and not some other group) held the identified rights and interests (and not some other rights and interests). 40 The Delegate experienced difficulty in addressing this question, given his lack of satisfaction as to the adequacy of the description of the claim group. My view of the identity of the claim group relieves me of part of that difficulty. However the absence of any description of the basis upon which the apical ancestors were selected re-emerges in considering this aspect of the case. There may be many ways in which to describe a claim group, any one of which may be sufficient to satisfy the requirements of subs 190B(3). However that task is undertaken, it will eventually be necessary to address the relationship which all members claim to have in common in connection with the relevant land. 41 In some cases it will be convenient to describe the claim group by referring to particular people, either by name or, as in this case, by reference to apical ancestors. In other cases, it may be done by describing the relevant requirements of law and custom which must be satisfied in order that a particular person share in the claimed rights and interests. Identification of the claim group, the claimed rights and interests and the relationship between the two are not totally independent processes. The identified rights and interests must belong to the identified claim group. Subsection 190B(5) requires a description of the alleged factual basis which demonstrates that relationship. The applicant may not have been obliged to identify the relationship between the claim group and the relevant land and waters in describing the claim group for the purposes of subs 190B(3), but that step had to be undertaken for the purposes of subs 190B(5). 42 In assessing the extent of compliance with subs 190B(5), the Delegate relied primarily upon an affidavit of William Santo dated 24 January 2006, a further affidavit of Mr Santo dated 11 September 2006 and an affidavit of Stella May McLean dated 25 January 2006, together with other material in the application. This material included an anthropologist's report by Mr Rod Hagen dated March 2005. The Delegate also referred to reports by another anthropologist, Ms R Dawn Glass, dated March and May 1999. 43 It is appropriate to examine the evidence under each of the three specific headings identified in subs 190B(5). Her mother was born there in about 1903. Her grandmother was born there in the 1880s. Ms McLean's great-grandmother was Topsy Hann, one of the nominated apical ancestors. She was a young girl when the Maryvale Station was established. She worked there. If Ms McLean's grandmother (Sadie Jerry) was born in the 1880s, it is likely that Topsy Hann was born in the 1850s, 1860s or 1870s. Ms McLean says that her mother, grandmother and great-grandmother all lived in or near the claim area or in Charters Towers. Ms McLean's grandchildren reside in Charters Towers. 45 In his first affidavit, William Charles Santo claimed that Maggie Thompson (or Thomson), one of the named apical ancestors, was his grandmother. She was born in the mid 1800s at Lolworth Range within the claim area. Her "tribe" came from that area. It was subjected to a massacre in the 1860s. Maggie Thompson then went to Bluff Downs Station where she was taken in by the station owner's wife, Mrs Hann. All of Ms Thompson's four children were born at Bluff Downs Station. Mr Santo's grandfather, Willy Santo, was one of those children. He was born in 1882. His wife was born at Lockervale Station. He worked at Bluff Downs as a stockman/gardener until he moved to Toomba Station. He lived all his life in the claim area and died in Charters Towers in 1963. Mr Santo said that his father, Alan, was born in Charters Towers in 1930 and lived there until he was removed to Palm Island in 1953. He met Mr Santo's mother on Palm Island. Their first child was born there. The family returned to Charters Towers in the late 1950s. Alan Santo worked on stations in the area such as Dotswood and Toomba. Mr Santo was born in Charters Towers in 1962 and has lived there all his life. He has four grandchildren. In his later affidavit, Mr Santo said that Maggie Thompson was his great grandmother rather than his grandmother. His great grandfather was Charlie Ganny Cupid, born in Vanuatu. He died in Charters Towers in 1945. Ms Thompson died before him, perhaps in the early 1900s. 46 The primary anthropological evidence is Mr Hagan's report, attachment F to the Application. In much of the report it is unclear whether Mr Hagan is expressing opinions or stating facts. Further, some parts of the report seem to refer to views and opinions concerning Aboriginal culture and norms generally, rather than to those relevant to the present claim group and claim. 47 Mr Hagan says that the Santo and Boyd families trace their ancestry from Maggie Thompson, and that available documentary and oral historical information identifies her with the claim area, particularly Bluff Downs and the nearby Great Basalt Wall to the west/north-west of Charters Towers. The evidence, it is said, suggests a birth date around 1860. All of this may be an impermissible substitution of opinion for facts. However I pass over that problem. Mr Hagan asserts that members of those families continue to live in the vicinity of Charters Towers and that 'documentary and oral historical material obtained in the course of my work make it clear that this family has maintained a presence in the claim area at all times since non-indigenous occupation. ' This is at best a summary of relevant facts which have not otherwise been identified. 48 Mr Hagan says that the Reid and Masso families trace their ancestry from Topsy Hann who is also identified with the Maryvale/Bluff Downs/Sandy Creek area to the north of the Great Basalt Wall. Members of the Reid family may also be connected to the area through descent from Kitty Anderson, the mother of George Reid Jnr who was a partner of Topsy Hann's daughter, Sadie Jerry. It will be recalled that Sadie Jerry was Ms McLean's grandmother. Mr Hagan suggests that Topsy Hann was born around 1855-1860. 49 Mr Hagan says that the Huen family trace their descent from Alice Bluff or Alice Anning, a nominated apical ancestor, also from the Bluff Downs area, and that evidence suggests a birth date for her in the 1860s or 1870s. It is said that the Huen-Kerrs are also descended from Sissy McGregor who was born at St Paul's in about 1880. St Paul's Pastoral Station lay approximately 80 km to the east/south-east of Charters Towers on the south-western bank of the Burdekin River, some distance south of Ravenswood. I assume that the Huen-Kerrs are a separate family from the Huens, but related to them. I assume that the Huens and the Huen-Kerrs are all descended from Alice Anning, and that the Huen-Kerrs are also descended from Sissy McGregor. 50 The Delegate accepted that three of the four apical ancestors identified in the application had an association with the claim area, and that they were in that area at the time at which the first European settlers arrived. However he considered that there was no reliable information from which he could infer that Sissy McGregor or her descendants, as such, had any association with the claim area. Descent from Ms McGregor seems to have no relevance for present purposes as the Huen-Kerrs are also allegedly descended from Alice Anning. If so, then it means that Ms McGregor's inclusion as an apical ancestor serves no purpose. It neither extends nor limits the claim group. Further, as there is no evidence associating her with the claim area, her inclusion does not strengthen the claim in any way. 51 As I have observed, identification of the claim group was a necessary aspect in identifying the factual basis of the claim. The Delegate, in discussing this aspect of the matter, pointed out that in the absence of any evidence as to the size of the claim group or as to the number of predecessors over the years since the days of the apical ancestors, it was impossible to assess the group's association with the claim area or that of their predecessors. Even if it be accepted that all members of the claim group are descended from people who had an association with the claim area at the time of European settlement, that says nothing about the history of such association since that time. Some members of the claim group and their predecessors may be, or may have been, so associated, but that does not lead to the conclusion that the claim group as a whole, and their predecessors, were similarly associated. 52 Mr Santo and Ms McLean may demonstrate that they and their families presently have an association with the claim area. They may also show that their predecessors have had such association since European settlement. However they have not demonstrated that the claim group as a whole presently has such association. I do not mean that all members must have such association at all times. However there must be evidence that there is an association between the whole group and the area. Similarly, there must be evidence as to such an association between the predecessors of the whole group and the area over the period since sovereignty. Ms McLean and Mr Santo's evidence does not go so far. Mr Hagan's evidence provides opinions and conclusions rather than any alleged factual basis for such opinions and conclusions or for the claim. 53 The Delegate pointed out that he did not know when 'effective sovereignty' occurred. I take that to be a reference to the time of European settlement in the area. He seems to have accepted that there may be a reasonable basis for inferring that the position at such time more or less reflected the position as at 1788. He eventually inferred that European settlement probably occurred in or about 1850-1860. 54 The applicant submits that the Delegate, in his consideration of this aspect, wrongly referred to the reports of Ms Glass dated March and May 1999. The reference was for a very limited purpose, connected with his concern about the description of the claim group. The Delegate considered that those reports supported his view that on the proper construction of the Application, and in light of the evidence adduced in support of it, membership of the claim group was not regulated solely by descent. However, as the Delegate demonstrated, the material supplied by the applicant, including Mr Hagan's report, was to similar effect. In any event, for reasons which I have given, the Application does not demonstrate relevant association. Ms Glass's reports played no part in my reaching that conclusion. That they were referred to by the Delegate is no longer to the point. 55 I should say, however, that it is not clear to me that the reports were completely unconnected to this Application, as counsel for the applicant submitted. The March 1999 report referred to a claim over Porcupine Gorge National Park. The May 1999 report related to an application over White Mountain National Park. There is also a third report dated 11 October 1999 which dealt with an application over the Great Basalt Wall National Park. Reference to those various documents, with a little assistance from an atlas, demonstrates that there is an apparent relationship between them and this Application. 56 Porcupine Gorge National Park is an area to the south of the Core Country claim area. Its northern tip seems to be about 25 km from the southern boundary of that area. The report referred to the Kerr family. It seems likely that they are, in some way, related to the Huen-Kerr family group to which Mr Hagan referred. At para 4.5 of Ms Glass's report there was reference to a meeting at which David Allie spoke. He is a member of the current claim group. The apparent associations between the Porcupine Gorge claim and the current claim are not extensive, but it cannot be said that there is no such relationship. This is especially so when one remembers that the present claim has been artificially excluded from the Core Country claim area which lies quite near to the Porcupine Gorge claim. 57 As to Ms Glass's report relating to the White Mountain National Park claim, the area lies east/south-east of the Porcupine Gorge Claim and is south of the boundary of the Core Country claim. Again the distance is about 25 kms. The report referred to the Reid family, the Masso family and the Kerr family. All of those family names occur in Mr Hagan's report. 58 As to Ms Glass's third report concerning the Great Basalt Wall National Park, that area falls within the boundary of the Core Country claim and is one of the excised areas included in this Application. In the vicinity of that national park lie places such as Bluff Downs, Toomba, Maryvale Station and Lolworth, all of which feature prominently in the present application. The associated family names include Reid, Masso and Santo. In the report there was particular focus upon the association of the Santo family with the area. As detailed below three generations of the Santo family lawfully occupied Toomba Station (adjoining the claim area). However there can be no doubt that he has an interest in the Great Basalt Wall National Park. The Reid family, the Masso family and the Kerr family have similar interests. All of this suggests that there may well be familial connections between the Core Country claim and this Application on the one hand, and the Porcupine Gorge, White Mountain and Great Basalt Wall claims on the other. However, as previously indicated, I propose not to refer to documents concerning the latter claims unless they appear to support the present Application. 60 In this context counsel for the applicant made a further point in oral argument. She pointed out that the claim group for the Great Basalt Wall claim was described by reference to membership of the Inland Land Council Aboriginal Corporation. That body is an artefact of earlier versions of the Native Title Act . It is a corporation set up to facilitate Native Title claims. All of this goes only to the assertion by counsel for the applicant that there was no apparent connection between any of these various claims. That is simply incorrect. The applicant submits that this does not lead to the conclusion that the apical ancestors must have comprised a society. I accept that submission. I will say a little more about it at a later stage. 64 The Delegate concluded that "effective sovereignty" occurred at about 1850-1860. I infer that he meant that European occupation occurred at about that time. That conclusion was a step in the process of identifying established laws and customs as at the time of sovereignty. No doubt the applicant would argue that the position in 1850-1860 was probably much as it was in 1788. The Delegate noted that there had been massacres of Aboriginal people in the area subsequent to 1850-1860 so that the Gudjala People 'were subject to at least dislocation in, or disposition of, parts of their country. Nor is there any material from which I could safely draw inferences about their content or the society that existed at sovereignty. I take that to mean that such laws and customs must establish normal standards of conduct or, perhaps, be prescriptive of such standards. 66 There can be no relevant traditional laws and customs unless there was, at sovereignty, a society defined by recognition of laws and customs from which such traditional laws and customs are derived. The starting point must be identification of an indigenous society at the time of sovereignty or, for present purposes, in 1850-1860. The applicant criticizes the Delegate for seeking to find a society of which the three apical ancestors were members. It submits that it is not necessary to show that they were such members. That is correct. The apical ancestors are used only to define the claim group. However, as I have previously observed, at some point the applicant must explain the link between the claim group and the claim area. That process will certainly involve the identification of some link between the apical ancestors and any society existing at sovereignty, even if the link arose at a later stage. I infer that the Delegate understood it to be the applicant's case that the apical ancestors were members of the relevant society simply because no other society was identified in the Application. 67 The applicants' claim should be understood as relating to the larger Core Country claim area. The relevant society should be sought in that larger area. I commence with the evidence concerning the apical ancestors. Ms McLean associates Topsy Hann with Maryvale Station. Mr Hagan also identifies her with Bluff Downs and Sandy Creek, north of the Great Basalt Wall. Mr Santo associates Maggie Thompson with Lolworth Range. She went to Bluff Downs after European settlement. Mr Hagan also identifies her with the Great Basalt Wall. He identifies Alice Anning with Bluff Downs but offers no factual basis for that opinion. 68 Maryvale Station is about 50 or 60 km north-west of the Great Basalt Wall and about 60 km from Toomba. Bluff Downs is about 30 km north of the Great Basalt Wall, about 35 km from Toomba and about 50 km north of the Lolworth Range. As far as I am aware there is no evidence of any known connection between the three apical ancestors, save for their presence in this relatively large area. Obviously, none of these women lived in isolation. Each had parents and, apparently, children. One may infer that they had siblings and other members of extended families. Both Ms Hann and Ms Thompson seem to have lived on stations. There is no evidence as to the relationship between station owners and indigenous employees on the one hand, and any pre-existing indigenous society on the other. One is inclined to infer that, in 1850-1860, there were groups of indigenous people in the area, but there is no evidence concerning them. There is certainly no factual basis for inferring that there was a society defined by its acknowledgement and observation of laws and customs. Mr Hagan says that there is documentary evidence of Gudjala interest in the claim area, but the factual basis of that information is not given. 69 There is only scant evidence of contact in modern times amongst the family groups identified by Mr Hagan. Mr Santo says that his family 'has the closest contact on Country with other clan groups known as the Huen, Kerr and Masso families' . Apart from that statement there are two slight references to such contact. In an earlier affidavit Mr Santo referred to a woman called Lilly Smith whom he called "Granny Kerr", suggesting that she may have been connected to the Kerr family. There is also a suggestion of a link between Mr Santo's apical ancestor Maggie Thompson and Ms McLean's apical ancestor Topsy Hann. Mr Santo said that Ms Thompson was taken in by the wife of the owner of Bluff Downs station, Mrs Hann. It may be that Topsy Hann's name was derived from that source. 70 On the material presently available, I find no factual basis supportive of an inference that there was, in 1850-1860, an indigenous society in the area, observing identifiable laws and customs. For the purposes of subs 190B(5), it is not necessary to go further. However I should say something about the evidence concerning the broader question of whether there are now traditional laws and customs, acknowledged and observed by the claim group, which have their origin at or before European occupation of the area. Again, the evidence is scant. Ms McLean asserts that she helps to teach young people about 'ancestors, laws and customs' but does not identify them. She says, however, that she expects to be consulted about certain matters affecting the community. 71 In his earlier affidavit Mr Santo asserts that his Aunt Quinny took him, as a child, to places in the claim area. She taught him rules of conduct such as that he should not throw rocks into the water as it is disrespectful. She taught him how to fish using local plants to stun the fish. She told him not to take all of the fish home, but rather to leave some as an offering. He has been taught other skills such as finding mussels, collecting plants and fruit, following and cooking porcupines and catching and cooking turtles. He speaks of being frightened to enter bora rings. He has taken his nephews and other Gudjala children to visit old grave sites and to go fishing. 72 In his later affidavit Mr Santo refers to his people as Gurrdjalburra and his country as Gurrdjal. However I will continue to refer to the Gudjala people and Gudjala country. In that affidavit he identifies the land which he understands to be Gudjala country. I assume for present purposes that the description more or less fits that contained in the Core Country claim and the present Application. He also identifies "neighbours", namely the Mungbarra, the Mbara, the Gugu Badhun, the Nyawaigi, the Wulgurakaba, the Bindal, the Birri, the Jangga, the Wakel, the Yilba and the Yirandali centred around Hughenden. He says that he and the Gudjala People generally have close relations with the Yirandali and Gugu Badhun peoples, mainly by way of permitted inter-marriage. However the Yirandali have quite different customs and laws. Tribes on the eastern side of the Gudjala country have a completely different language and different customs. His knowledge of the boundaries of Gudjula country was derived from elders. It is passed on 'with paintings' . This seems to mean that each tribe or clan has its distinctive style of painting, depending on available ochre. Mr Santo's family has its closest contacts on country with the Huen, Kerr and Masso clans. In the Hughenden area his family has contacts with the Anderson, Major, Logan and Broome families. In the Mt Garnett area Mr Santo has had contact with the Morganson and Rose families. He has also had contact with the Gertz family in Townsville. 73 Mr Santo has learnt various aspects of folklore from the elders, including certain Aboriginal place names. He seeks to maintain and teach the culture of his people for the benefit of younger generations. He has also written books. As to laws and customs he says that there are certain areas where persons who are not Gudjala are not allowed to enter 'as much for their own safety as for the purposes of not damaging country or desecrating inadvertently our sacred sites. ' Each family is custodian of an area and has its own "business" (knowledge and responsibilities) in that area. He says that as a "Gurrdjal" he does not have to ask permission to be on, or walk on Gudjala country or to burn on country. The Queensland Parks and Wildlife Department consults the Gudjala people about burning. They have intimate knowledge of flora and fauna and the whereabouts of sacred and culturally valuable sites. They also supply manpower to assist in burning. 74 Mr Santo says quite a lot about food-gathering. Traditionally, only men may eat emu, and only after initiation. One may not eat one's totem animal or bird. Pregnant women and youths are not generally prohibited from eating various foods, save that women in certain clans may not eat pigeon. He also says a little about natural medicines and fishing methods. He claims to know many tracks which 'the old people used to walk' . He walked on them in his youth. Many of them lead to meeting places. 75 Mr Santo says that he received his claims to country through Maggie Thompson, his great grandmother but does not say how this occurred. He says that country is derived by everyone born on the land in the same way. The law requires that it be traceable through the full blood line. He says that every family is entitled to the whole of the country, but that traditionally, because of its vastness, each family is custodian of part of it. They come together for ceremonial business, including marriages within the clans. Marriage is undertaken strictly according to the 'skin rules' . He says that the acquisition of rights to country by reason of parents being buried there is not in accordance with traditional law. One must ask for permission to bury on country. Parents are buried on country in order to preserve their spirits. It is possible under traditional law to acquire rights to country by birth. However one must have lived there and be accepted as part of a clan group. Acceptance may be acquired by length of residence and initiation procedures formalizing acceptance into the clan. Acceptance needs to come from the elders. Certain obligations are imposed. Rules as to what is men's business and what is women's business must be understood, as well as all other cultural codes. This evidence suggests that rights to land are generally dependent upon descent, but that other factors may be relevant. 76 Men are hunters and protectors of country. Women are protectors of the domestic arrangements among the family - they keep the families together. Mr Santo claims to look after an important part of the country, namely the Basalt area. That is where the fire serpent lives. He has undertaken heritage surveys since 1978. He is required to protect White Mountain, the Great Basalt Wall, Lolworth Range, Fletcher Range, Dalrymple National Park and other less well-known areas. It is his and his people's duty to look after country in accordance with law and culture. When he is away, his extended family performs his obligations. It is not easy to know which persons belong to the country. Each family, alone, knows where it originated. The law requires that each family keep up its knowledge. In the olden days each group had a recorder, a person whose task it was to record or remember things concerning kinships. With the death of such recorders some history was lost, but much was maintained through oral history. Station owners also took photographs and kept diary notes and various administrative records. 77 Persons who are lawfully married into a claim group have the same rights and interests as other members of the claim group. If they are not married into the claim group, they have no rights or interests in the country. The ruling persons in Gudjala country are the elders. Each family has elders. Their decisions are binding and accepted by all. Conflicts are avoided or resolved, mainly by use of body language. If that fails then direct physical action may be used. Family meetings are held on a regular basis, usually weekly. Mr Santo also discusses family relationships, in particular methods of address, the practice of sharing food amongst family members and accommodation. There are rules regarding behaviour towards mothers-in-law. The old custom was that once initiated, a man might not speak to his mother-in-law. There are rules as to whom a person may or may not marry. Those rules were previously strictly enforced. Even today it is considered bad to ignore the skin rules. Under the old customs you would be punished and banished from the tribe. If the wife were pregnant she, the unborn child and the husband would all be killed. Currently, people may marry 'the wrong way' , usually because they do not understand the kinship relationship. Mr Santo gives information concerning ceremonies, initiation, myths and painting and about burial customs. 78 Although in connection with many of these matters Mr Santo refers to 'the old days' , the information generally seems to be descriptive of the current position. Much of it may well have been handed down to him as oral tradition, but there is nothing in the affidavit material which would link those laws and traditions to any particular time in the period since 1850-1860 or, in particular, to that period. A certain amount of Mr Santo's evidence might be said to describe laws and customs which are normative in nature. Although some of it asserts rights and interests in land, none of it identifies traditional laws and customs derived from a pre-sovereignty society, which support or justify the claim group's claims. It is impossible to understand why descendants of the identified apical ancestors have rights and interests in the land whereas others have not. 79 Mr Hagan asserts that it may reasonably be concluded that the claimed area belongs to the Gudjala People. The basis for this opinion is by no means clear. He commences his discussion of traditional laws and customs by reference to writings concerning north-west Queensland. He cites a passage from 1883 concerning that area. In it the writer asserts that tribal boundaries were sufficiently well-known to provide landmarks for people entering neutral or "debatable" ground. It was said that their understanding of such things evidenced a concept of priority and antiquity, a principle of the passage of such interests through descent or affiliation, principles of territoriality - that people belong in particular places, and a concept of shared interest or neutrality. This relates to the possibility of overlapping areas of interest. Mr Hagan also refers to the writings of WE Roth who speaks of the general government of the community lying in the hands of an assembly of elders. However there is no reason to believe that he was speaking of the Gudjala people. 80 As to the present situation in the claim area, Mr Hagan asserts that when speaking amongst themselves the members of the various families demonstrate the existence of contemporary laws which are important and generally observed. He refers to the view that ancestry provides the primary overtly expressed rule for recognition of membership of land-related groups. Whilst Mr Hagan may describe a society having apparently traditional laws and customs, there is no basis for inferring that they originated in any pre-sovereignty society. It may be that some or all of them have been handed down through two or more generations, but it is impossible to say any more than that. The real deficiencies in the Application are twofold. Firstly, it fails to explain how, by reference to traditional law and customs presently acknowledged and observed, the claim group is limited to descendants of the identified apical ancestors. Secondly, no basis is shown for inferring that there was, at and prior to 1850-1860, a society which had a system of laws and customs from which relevant existing laws and customs were derived and traditionally passed on to the existing claim group. This implies a continuity of such tenure going back to sovereignty, or at least European occupation as a basis for inferring the position prior to that date and at the time of sovereignty. The difficulty is the inability to demonstrate the existence, at that time, of a society observing laws and customs from which current traditional laws and customs were derived. This difficulty led the Delegate to conclude that this requirement has not been satisfied. I agree. 83 The Delegate elaborated upon this conclusion, referring to his view that the claim group appeared to be 'one of recent creation' , and thus more likely to fall into the category described in Yorta Yorta at [53] as a 'later society' . 84 The Delegate considered that 'the whole tenor' of the material in Mr Hagan's report suggested that he was describing a process whereby people, now living, have sought to find contemporary ways in which to assert claims to land. He also refers to other evidence from Ms Glass and to the fact that many members of the claim group do not now live on or near the country in question. It is not necessary that I consider these matters. Further, the connection which the peoples concerned have with the land or waters must be shown to be a connection by their traditional laws and customs. For the reasons given earlier, "traditional" in this context must be understood to refer to the body of law and customs acknowledged and observed by the ancestors of the claimants at the time of sovereignty. The Delegate also reached that conclusion. This seems to be consistent with the approach taken in Yorta Yorta . As I can see no basis for inferring that there was a society of the relevant kind, having a normative system of laws and customs, as at the date of European settlement, the Application does not satisfy the requirements of subs 190B(7). The application for review of the Delegate's decision should be dismissed. I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. | application for review of a decision by the native title registrar not to register an application no breach of procedural fairness based on a failure of the delegate to follow an earlier registration decision factual basis of the claim irrelevant considerations no error of law consideration of the principles expressed in yorta yorta identification of the claim group factual basis for claimed native title traditional laws and customs traditional physical connection native title |
2 The principal proceeding arises in these circumstances. 3 On 25 July 2003, NVS made application to register under the Trade Marks Act 1955 (Cth) ("the Act") a trade mark "LUCKY DRAW" (Application No. 963426) in respect of "cigarettes, cigarette filters, kretek cigarettes, cigarette papers, white cigarettes, ashtrays (not made of precious metal), cigars, tobacco, lighters, matches, smoker's articles" within Class 34 under the Act. NVS also applied on the same date to register a trade mark "LUCKY DREAM" (Application No. 963428) in respect of the same goods within Class 34. Both applications proceeded to acceptance. On 4 March 2004, BAT filed a Notice of Opposition in respect of the LUCKY DREAM trade mark. BAT filed a Notice of Opposition on 17 March 2004 in respect of the LUCKY DRAW trade mark. Each Notice of Opposition identified 11 grounds including questions going to whether the applicant was the owner of the mark; intended use; capacity to distinguish the applicant's goods; whether the trade mark would be likely to deceive or cause confusion contrary to s 43 of the Act; whether use involved a contravention of s 60 of the Act; use contrary to s 42(b) of the Act; use in a way likely to mislead or deceive or pass off the applicant's goods as those associated with the opponent having regard to the contended reputation the opponent enjoys in respect of particular registered trade marks; and whether the applicant's trade marks are substantially identical with or deceptively similar to BAT's registered trade marks "LUCKY STRIKE" and "LUCKIES" (Registrations 81899, 151409, 367392 and 482934). Thus, BAT contended that the applications ought to have been rejected. 4 On 31 July 2008 the decision of the delegate of the Registrar of Trade Marks was published. Although it is not necessary for present purposes to analyse the decision of the Registrar's delegate in any real detail, it is sufficient to note that the delegate concluded that "there is no apparent basis for any potential customer to entertain a reasonable doubt that LUCKY DREAM or LUCKY DRAW was a deliberate variation of either LUCKY STRIKE or LUCKIES and intended to indicate a common trade source". The delegate did not believe that there is any particular risk of confusion within the niche market of smokers of a packet of cigarettes bearing the trade mark LUCKY STRIKE with one bearing the mark LUCKY DREAM. However, the delegate considered that each of the applicant's trade marks is deceptively similar to BAT's LUCKIES trade mark in contravention of s 44 of the Act. The delegate did not find it necessary to consider the application of s 60 of the Act. The delegate did not accept that BAT had made out the elements of s 43 of the Act for the purposes of opposition. 5 In the result, the Registrar's delegate reached a decision under s 55(1) of the Act to refuse to register each of the applicant's trade marks on the ground that s 44 of the Act had been made out by the opponent. 6 On 21 August 2008, NVS appealed under s 56 of the Act from that decision to this Court. By its Notice of Appeal, NVS challenges the delegate's decision in relation to s 44 and seeks orders that the delegate's decision be set aside, the opposition dismissed and an order that each trade mark be registered. Fundamentally, NVS challenges the delegate's decision that each of its marks are deceptively similar to BAT's mark LUCKIES. A number of findings in the process of reasoning leading to that conclusion are challenged. Relevantly for present purposes, s 44(1) provides that the applications for registration of NVS's trade marks must be rejected if the either mark is substantially identical with or deceptively similar to either of BAT's registered trade marks. 7 On 12 September 2008, BAT filed a Notice of Cross-Appeal by which each of the unsuccessful contentions advanced by way of opposition are re-agitated. BAT seeks orders varying the delegate's decision so as to establish that ss 43 and 60 of the Act are made out as a basis for refusing registration of the applicant's trade marks, in addition to s 44 of the Act. BAT relies upon 21 grounds to support the cross-appeal. As to s 60, BAT says the delegate ought to have found that each of the applicant's marks are deceptively similar to BAT's LUCKY STRIKE trade mark and that before the priority date each of BAT's marks had acquired a reputation in Australia and by reason of the reputation, use by the applicant of its marks would be likely to deceive or cause confusion. In relation to s 43, BAT says that a number of findings ought not to have been made and others ought to have been made particularly having regard to the reputation in Australia subsisting in BAT's trade marks. BAT challenges the delegate's view that neither of the applicant's marks would be abbreviated to LUCKIES. BAT challenges findings concerning the attitude of casual smokers and their capacity to differentiate brands and findings concerning the meaning to be attributed to the applicant's marks and the contextual meaning to be attributed to BAT's marks. 8 Section 43 provides that an application for the registration of a trade mark in respect of particular goods must be rejected if, because of some connotation that the trade mark has, the use of the trade mark in relation to the goods would be likely to deceive or cause confusion. Section 60 provides a ground of opposition to registration on the footing that BAT's marks had before the priority date for registration of NVS's marks acquired a reputation in Australia and because of that reputation, use by NVS of its marks would be likely to deceive or cause confusion. 9 On the hearing of an application to the Federal Court by way of an appeal under s 56 of the Act from the delegate's decision, the Court may do any one or more of the following, admit evidence orally or on affidavit or otherwise; permit the examination and cross-examination of witnesses, including witnesses who gave evidence before the Registrar; order an issue of fact to be tried as it directs; affirm, reverse or vary the Registrar's decision or direction; give any judgment, or make any order, that in all the circumstances it thinks fit; order a party to pay costs to another party (s 197 of the Act). The appeal proceeding is a hearing conducted "afresh" or de novo on material properly placed before the Court ( Rowntree plc v Rollbits Pty Ltd (1986-1988) 10 IPR 539 per Needham J at 545; Registrar of Trade Marks v Woolworths Ltd [1999] FCA 1020 ; (1999) 93 FCR 365 at 377; [1999] FCA 1020 ; 45 IPR 411 422-3 per French J; Pioneer Electric Corporation & Anor v Registrar of Trade Marks [1977] HCA 56 ; (1977) 17 ALR 43 per Aickin J at 46; Blount Inc. v Registrar of Trade Marks [1998] FCA 440 ; (1998) 83 FCR 50 at 59 per Branson J; Kowa Company Ltd v NV Organon [2005] FCA 1282 ; (2006) 223 ALR 27 per Lander J at [7]; Pfizer Products Inc. v Karam [2006] FCA 1663 ; (2007) 237 ALR 787 per Gyles J at [5]; and Scotch Whiskey Association v De Witt (2008) 75 IPR 280 per Jessop J at [18]). Although the appeal is conducted as a de novo hearing, the scope of the controversy to be resolved in the appeal is determined by the issues framed by the parties. Order 58, r 5(2) requires a party initiating an appeal to identify each ground relied upon to support the orders sought and particulars of each ground. Similarly, by Order 58, r 5A(2) a cross-appellant must state and thus frame the specific grounds relied upon in support of the orders the cross-appellant seeks. In that sense, an appeal from the Registrar's decision is not simply at large. In this case, NVS seeks to vary the decision by agitating the merits of the matters raised by s 44 of the Act. BAT seeks to agitate all of the matters on which it was unsuccessful. 10 The application for security for costs is supported by an affidavit sworn by the solicitor for BAT, Stephen Stern, on 7 October 2008. Mr Stern is an experienced lawyer with 30 years of professional litigation experience. By that affidavit, Mr Stern exhibits a copy of the delegate's decision and a copy of a statutory declaration in support of the application before the delegate declared by Timin Bingei, a director of NVS. By that declaration, Timin Bingei describes NVS as a company incorporated under the laws of Indonesia in 1952. NVS has a business address of Jalan Pattimura, No. 3 Pematang Siantar, Sumatera, Utara in Indonesia. Timin Bingei declares that NVS is a leading manufacturer of cigarettes and tobacco products in Indonesia and has been engaged in the manufacture, sale and distribution of many world-renowned brands of cigarettes since its incorporation in the early 1950s. Timin Bingei declares that LUCKY DREAM was first registered as a trade mark in Indonesia in 1986 and LUCKY DRAW in 1995. The marks have been registered, it is said, in 25 countries. 11 Accordingly, the first point is that there is no controversy that the applicant is an Indonesian company conducting its business from its Indonesian address. Secondly, Mr Stern by para 10 of his affidavit says that to the best of his knowledge NVS has no title to any property in Australia nor any Australian assets. Based on my litigation experience, my best estimate of the party-party costs which may be recoverable by the Respondent in this proceeding, if successful, for the step in the proceeding of the preparation of the respondent's evidence (which is likely to include on or two different experts), is approximately $75,000. We therefore request that the Court make Orders requiring the Respondent to lodge security for the Respondent's costs of the first stage in the proceeding in an amount of $75,000. BAT also relies upon an affidavit sworn by Chrystal Dare on 7 October 2008, a lawyer employed by the solicitors for BAT. Ms Dare deposes to a conversation she had with the solicitor for NVS concerning the absence of a reply to the letter of 11 September 2008. Ms Dare contends that the solicitors for NVS said they had "nothing to say" in relation to the question of security of costs. Ms Dare also deposes to title searches of real property to determine whether NVS owns real property in Australia. No such property is held. 13 BAT relies upon the broad unfettered discretion conferred upon the Court by s 56 of the Federal Court of Australia Act 1976 to order an applicant to give security for the payment of costs that may be awarded against that party. The jurisdiction is not delimited by Order 28, r 3 ( Bell Wholesale Co. Ltd v Gates Export Corporation (No. 2) (1984) 2 FCR 1 ; Chapman v Luminis Pty Ltd [2002] FCA 496 ; James v Australia & New Zealand Banking Group Ltd (No. 1) (1985) 9 FCR 442). In exercising the discretion under s 56 , the practice in Australia for a very long time has been that a party who is not ordinarily resident in this country and has no assets within the jurisdiction, is normally ordered to give security for costs. These two factors are regarded as circumstances of "great weight" in determining whether such an order should be made ( Chellaram & Co. Ltd v China Ocean Shipping Co. [1991] HCA 36 ; (1991) 102 ALR 321 ; (1991) 65 ALJR 642). The qualification upon the weight to be attributed to these factors was put by McHugh J in Chellaram at p 323 (ALR) and at p 643 (ALJR) in these terms, "... unless that party can point to other circumstances which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction". These well established principles have been applied more recently in Logue v Hansen Technologies Ltd [2003] FCA 81 ; (2003) 125 FCR 590 at [38] and [39]; Tan Kah Hock v AWAP SGT 26 Investment Ltd [2008] FCA 540 [7] and [8]; Cheng XI Shipyard v The Ship "Falcon Trident" [2006] FCA 759 at [9] . 14 The underlying principle is this. 15 The purpose of ordering security for costs against a party ordinarily resident outside the jurisdiction is to ensure that a successful party will have "a fund available within the jurisdiction of this Court against which it can enforce the judgment for costs, so that the respondent does not bear the risk as to certainty of enforcement in the foreign country and as to the time and complexity of the action there which might be necessary to effect enforcement" ( Energy Drilling Inc. v Petroz NL (1989) ATPR 40 --- 954 per Gummow J at 50, 422). The reference to a "fund" within the jurisdiction seems to suggest that a reference to "no assets within the jurisdiction" within the general principles is to be treated as a reference to no assets which are readily accessible to enforcement and satisfaction of the costs order. In Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40 --- 972, Hill J identified a number of factors, adopted by Kenny J in Mijac Investments Pty Ltd v Graham [2008] FCA 1251 at [9] which inform the exercise of the discretion. They include the nature of the risk that NVS will not be able to satisfy a costs order if made; the nature of NVS's claim including its chances of success; whether an order for security would shut NVS out of pursuing its claim; whether any contended impecuniosity on the part of NVS arises from conduct the very subject of the proceeding; and any discretionary matters peculiar to the relevant case, such as delay. 16 As to those factors, BAT says this. First, BAT has enjoyed initial success before the Registrar, having regard to the application of Australian law. It says that NVS's success in other jurisdictions in respect of its applications for registration of the subject marks ought not to carry any particular weight in this jurisdiction. Secondly, in the absence of evidence to be filed, the Court is not in a position to undertake the task of assessing the prospects of success more generally. Thirdly, there is no suggestion that an order for security for costs would prevent NVS from pursuing its claim. Fourthly, there is no application in this case of the principle that an applicant's contended impecuniosity arises from the conduct the subject of the proceedings. Fifthly, there has been no delay on the part of BAT in bringing the application for security. 17 Therefore, it follows it is said that applying these principles an order for security ought to be made and the amount of the security ought to be $75,000. 18 NVS relies upon an affidavit sworn by Claude Anese on 10 October 2008 in reply to the above affidavits. Mr Anese is a member of the firm Cullen & Co who are the trade mark attorneys in Australia and New Zealand for NVS. Mr Anese says that the applications for registration by NVS of the subject trade marks and the opposition by BAT in respect of each mark (and the consequential appeal proceedings in this Court) are simply part of international disputation between these entities in various jurisdictions. Mr Anese also refers to the statutory declaration of Timin Bingei. By para 13 of that declaration, for example, the deponent refers to decisions of the Japanese Patent Office and the Taiwan Intellectual Property Office rejecting BAT's opposition to application for registration of the LUCKY DREAM and LUCKY DRAW trade marks in those jurisdictions. Similarly, BAT mounted opposition proceedings to NVS's applications for the subject marks in New Zealand in respect of which BAT has now appealed. Mr Anese also refers to paragraphs of Timin Bingei's declaration by which NVS is said to be a leading manufacturer of cigarettes and tobacco products in Indonesia of world-renowned brands since the early 1950s. The inference invited is that both NVS and BAT are substantial companies that historically have committed significant resources to contesting the registerability of these marks in various jurisdictions and dealing, in an orthodox way, with the discharge of costs orders made arising out of any particular proceeding. 19 Mr Anese says that Mr Stern's assertion that NVS has no assets within the jurisdiction is not right. Mr Anese says that NVS is the registered proprietor in Australia of 29 trade marks and is the applicant in respect of a number of pending trade mark applications. Many of the marks are registered in Class 34 and some are registered in related classes. Accordingly, NVS says that there are assets within the jurisdiction. Moreover, the assets are registered trade marks which each company regards as significant items of intellectual property and worth fighting for and over. Therefore, an important element of the general principle influencing the exercise of the discretion is not satisfied as NVS has assets within the jurisdiction. 20 However, the question is whether the registered trade marks represent assets of sufficient liquidity so as to constitute a realistic fund against which a successful respondent might enforce an order for costs. A party seeking to enforce a costs order might consider whether a receiver might be appointed to stand in possession of the registered trade marks and the rights conferred by registration so as to realise those marks and convert the assets into a fund of money. However, such a process, if available, is one which bears a risk of certainty and complexity even within the jurisdiction. Although no doubt the registered trade marks have a value which can be calculated by reference to the discounted cash flows referable to the exclusive rights conferred by registration to sell goods bearing the marks, determining that value and effecting a sale might not be easy. 21 Accordingly, I would not regard the presence of registered trade marks within the jurisdiction in NVS, at least in this case on the evidence before me, as assets within the jurisdiction against which an order for costs might easily be enforced. Moreover, I do not regard the international disputation which has taken place as an "other factor" in terms of McHugh J's qualification in Chellaram which overcomes the circumstance that the applicant is resident out of the jurisdiction and has no readily isolated assets of any utility within the jurisdiction, easily converted to a fund to satisfy a costs order. 22 However, the real difficulty is that BAT's evidence upon which an informed decision might be made by the Court as to any security to be ordered, is scant. The only evidence put on by BAT in the application is the statement by Mr Stern set out at [11]. The further difficulty is this. NVS has commenced a proceeding by filing a Notice of Appeal which is confined to the question of whether s 44 of the Act prohibits registration of each mark on the footing that the mark is deceptively similar to BAT's mark identified by the Registrar's delegate. BAT has cross-appealed and puts in controversy all of the matters upon which it was unsuccessful and in respect of which it would seek to call evidence, including expert evidence of reputation and other consumer survey evidence. BAT estimates the party and party costs recoverable by BAT in the proceeding as $75,000 which necessarily assumes costs both in relation to the appeal and the cross-appeal. 23 NVS contends that in an appeal from a decision of the Registrar's delegate not to register an accepted trade mark, the opponent should be characterised as the aggressor and instigator of the controversy with the result that when an appeal is taken to the Federal Court from the delegate's decision, the opponent to registration should be equally regarded as the principle contradictor and aggressor in the proceeding. Thus, it is not appropriate to make any order for security for costs. However, says NVS, in a proceeding which is characterised by an appeal by NVS confined to the question it raises and a cross-appeal by the opponent in which a broader field of issues are agitated as part of the controversy, it is not appropriate to order security for costs of the proceeding at large. Any order for security for costs should be confined to responding to the matters put in issue by the appellant. NVS says that it is for BAT to isolate the steps to which it would be put in dealing with the appellant's contentions; identify the evidence it would need to call to do so; and identify the likely costs to be incurred associated with taking responsive steps. 24 Mr Bennett, the solicitor for NVS who appeared in response to BAT's motion, says that it is not possible for NVS to be responsive to any assertion of a right to security for costs unless and until BAT isolates the evidence it needs to gather referable to NVS's grounds of appeal and the quantum of costs associated with dealing with evidence relevant to those grounds. Mr Bennett says that the costs incurred by BAT in proving up and making out its grounds of cross-appeal are not matters in respect of which NVS should provide security for costs to BAT. In the course of the hearing, BAT seemed to accept the force of that submission. 25 The notion that NVS is a corporation outside the jurisdiction with no relevant assets within the jurisdiction provides a compelling basis for making an order for security. However, the security ought to be confined to the costs BAT will incur in dealing with the grounds of appeal advanced by NVS. Secondly, the evidence put on by BAT fails to isolate the relevant costs and fails to provide a ready foundation to enable the Court to assess the quantum of reasonable security. The Court is then left in a position where it must to some extent speculate as to the quantum of those costs. 26 During the course of the hearing of the motion I requested counsel for BAT to inform the Court whether any process in the nature of reciprocal enforcement of judgments or orders was available pursuant to which a party with the benefit of a costs order in Australia might be able to enforce that order in Indonesia and whether the Foreign Judgments Act 1991 (Cth) was of any assistance to BAT should it obtain an order for costs. I invited counsel for BAT to file and serve supplementary submissions in relation to that question. I provided the solicitors for NVS with an opportunity to respond to those submissions. It is common ground between the parties that there is no mechanism by which an Australian judgment or order for costs might be enforced in Indonesia. The availability of an opportunity to enforce a judgment in a foreign jurisdiction under relevant instruments is not of itself decisive of the question of whether security should be ordered in this jurisdiction, although the consideration is relevant to the exercise of discretion especially in circumstances where the appellant has some assets within the jurisdiction although not readily convertible to a fund of money. 27 In addition to submissions concerning the enforcement of an order of this Court for costs in the jurisdiction of Indonesia, BAT put on further submissions in the matter generally supported by a further affidavit from Mr Stern sworn 13 October 2008. BAT seeks leave to rely upon the further affidavit of Mr Stern in support of its application generally. The solicitors for NVS oppose the granting of leave to read and file the further affidavit of Mr Stern and contend that BAT is, in effect, seeking to re-open its application and adduce further evidence. NVS opposes BAT's reliance upon any further submissions other than submissions directed to the potential for enforcement of an Australian costs order in Indonesia. 28 By the further affidavit Mr Stern says that until receipt of Mr Anese's affidavit, NVS had not disputed the entitlement of BAT to security for costs. Further, until the hearing on Monday, 13 October 2008, NVS had not disputed the amount of security sought by the respondent and thus BAT acted on the assumption that NVS did not challenge the amount of security being sought. Nor did NVS's solicitors, it is said, inform Mr Stern that NVS intended to oppose BAT's application. Mr Stern says that in the light of that emergent challenge, he has elected to set out the evidence he would have put on had that challenge emerged earlier. Having been involved in the preparation of survey evidence in a large number of trade mark matters over the last few years, it is my experience that if survey evidence is necessary and is prepared for this proceeding on behalf of the Respondent, the costs of working with a suitable survey expert and of arranging for an independent survey company to carry out that survey are likely to be significant. 9. As appeals from the Trade Marks Office in trade mark oppositions are hearings de novo , all of the evidence that needs to be put by the Respondent in the opposition will need to be re-run before this Honourable Court. Accordingly, there is, in my view, no evidence on which the Respondent might wish to rely that is necessitated solely by reason of its cross-appeal. 10. In other words, my estimate of $75,000 in my first affidavit relates to evidence which the Respondent will rely upon in defence of the Applicant's appeal. 11. If the Applicant in this proceeding had not filed its appeal, the Respondent would not have filed any Notice of Cross-Appeal. Further, if the Applicant discontinues its appeal, the Respondent will discontinue its cross-appeal. Mr Anese at para 7 of his affidavit says that BAT's opposition to registration of NVS's subject marks in New Zealand has been dismissed by the Commissioner of Trade Marks (NZ) and that BAT has appealed that decision and the appeal is pending. Mr Anese says that BAT has not paid the costs order made against it in the opposition proceedings in New Zealand. Mr Stern says that the New Zealand dispute involved British American Tobacco (Brands) Inc. ("BATI") which is not BAT; BATI has been ordered to provide security for the costs of the appeal; and BATI has taken steps to pay NVS the costs ordered against it in the unsuccessful opposition proceedings in New Zealand. 30 Mr Stern also deposes to a conversation with Mr Bennett in relation to directions in the matter generally. In the course of the hearing a question arose as to whether security for costs ought to be made in circumstances where it was not clear that further evidence would be put on in the present proceeding. It emerged that discussions had taken place about a time frame for filing and exchanging further material between the parties. Mr Stern deposes to a conversation with Mr Bennett in which he said that BAT would file fresh evidence; BAT would not limit itself to the evidence before the Trade Marks Office; and, arrangements were reached in relation to a broad time frame for the parties to exchange evidence in the present proceeding. 31 In response to the application for leave to read the supplementary affidavit of Mr Stern on the motion, Mr Bennett says that Mr Stern's primary affidavit simply did not make any distinction between the issues to be advanced on the appeal and those to be advanced on the cross-appeal and that further submissions were to be confined to the jurisdictional point of enforcement. Mr Bennett says that Mr Anese's affidavit was served on 10 October 2008 in response to BAT's affidavits of 7 October 2008 served at 4.15pm that day; BAT filed its motion because security for costs had not been agreed and thus it is unrealistic for BAT to think that the application would not be resisted; BAT ought not to be allowed to cure deficiencies in its primary material relied upon in the application as heard and closed, for determination. 32 Mr Bennett says that if leave is given to read the supplementary affidavit of Mr Stern, Mr Bennett would say this: the supplementary affidavit also fails to distinguish between evidence proposed to be filed in relation to the appeal (confined to s 44 issues) and evidence to be assembled in relation to the issues raised by the cross-appeal (dealing with ss 43 and 60 issues); para 7 of Mr Stern's affidavit demonstrates that all of the matters upon which evidence is to be called by BAT goes to the grounds of cross-appeal; there remains no real quantification of the costs; Mr Stern makes references to possible survey evidence yet there is no real specificity of the survey purpose, issues, topics and methodology which might enable an estimate of the costs to be made; whether security for costs to be incurred in undertaking survey evidence, ought to be ordered, is a matter to be considered once the respondent identifies the scope and content of the proposed survey evidence; such survey evidence is likely to be relevant to reputation under s 60 rather than deceptive similarity under s 44 which is an issue for the Court to determine. Further, Mr Bennett says that the appropriate course is to defer the issue of security for costs until the respondent has filed its evidence. A subsequent order, if made, might then include security for the costs already incurred by BAT in respect of the preparation of evidence responsive to NVS's grounds of appeal. 33 The parties have had the benefit of a hearing before the Registrar's delegate. A decision has been reached which is now subject to challenge. The appellant raises defined grounds of appeal and the cross-appellant raises a broader range of grounds which, in the judgment of the cross-appellant, calls for a particular class of evidence to be assembled. It seems to me inappropriate to characterise the cross-appellant as an aggressor which has put the applicant for the trade marks in a position before this Court in any way analogous to the circumstances in Willey v Synan [1935] HCA 76 ; (1935) 54 CLR 175 or Re Travelodge Australia Ltd (1978) 21 ACTR 17 as discussed by Wilcox J in Amalgamated Mining Services Pty Ltd v Warman International Ltd (1988) FCR 324. In this case, NVS has elected to appeal from an adverse decision of the delegate and the cross-appellant has elected to formulate broader grounds upon which the delegate's decision was correct. Each party has had the benefit of a hearing before the delegate and each party has chosen to take a course of appealing aspects of that decision. 34 It seems to me that it ought to have been apparent to BAT that NVS by not responding to the application for security was not consenting to either an order for security or an order for security in the amount claimed. The affidavit of Ms Dare makes that plain. Therefore, BAT ought to have put on comprehensive evidence of the likely evidence to be called in order to answer NVS's appeal and evidence, preferably from a costs assessor, of the likely costs of assembling that evidence. The primary evidence relied upon by BAT in the application is not sufficient to justify an order for security in the amount sought. 35 It seems to me as a matter of principle that it is correct to say that since NVS is a corporation located outside the jurisdiction with no relevant assets in the sense described above, within the jurisdiction, an order for security ought to be made. The order for security ought to be confined to security for the costs BAT will incur in responding to the matters put in issue by NVS. The election on the part of BAT to cross-appeal and put in issue a range of other matters is entirely a matter for the cross-appellant. BAT might have elected to respond to NVS's appeal by simply dealing with the grounds raised by NVS. In that event, BAT would be entitled to security for costs of the litigation generated by NVS. BAT has, understandably, elected to go beyond that question by embarking upon a re-hearing of the grounds it put in issue and in respect of which it would formulate and seek to call new evidence going to reputation and other matters. The costs of those professional activities are entirely a matter for BAT. 36 It seems to me that BAT ought to have put on all of its evidence in relation to the steps and the quantum of costs, as part of its primary application. I propose to refuse leave to read the supplementary affidavit of Mr Stern and I propose to confine the supplementary submissions of BAT to the question of the enforcement of a costs order of this Court in the jurisdiction of Indonesia. 37 It seems to me that the absence of NVS within the jurisdiction and no assets of any utility against which a costs order might be enforced provides a compelling basis upon which a security order ought to be made in the exercise of the discretion under s 56 of the Federal Court of Australia Act . The difficulty is the very limited evidence upon which the Court might act. Nevertheless, the Court in my view, ought to make some assessment of the costs. The Court has the benefit of the delegate's decision before it as well as the appeal and cross-appeal framing the issues. Having had the benefit of reading the delegate's decision and the scope of the issues in controversy before the delegate which are now the subject of the re-hearing, the Court is in a position to make some assessment of the steps involved in responding to NVS's grounds of appeal. It seems to me that an order for security ought to be made in an amount of $20,000. 38 Accordingly, I propose to order that N.V. Sumatra Tobacco Trading Company provide security in an amount of $20,000 by way of an Australian bank guarantee or bond in a form acceptable to BAT or fixed by the Court for the costs incurred by BAT of and incidental to responding to NVS's grounds of appeal up to and including the completion of the preparation of statements of evidence. I propose to order that the security be provided within 30 days. If NVS's contention that NVS is a significantly resourced company engaged in a range of international disputation with BAT in respect of which there can be no serious concern that NVS will not meet any costs order made against it, is sound, NVS will be in a position to provide security promptly and within 30 days. I propose to order that the action be stayed until security is provided. The parties have liberty to apply generally. 39 Having regard to the way in which the application emerged and the limitations in the evidence which BAT sought to cure by supplementary evidence, it seems to me that the most appropriate order is that there be no order as to costs. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application for security for costs under s 56 of the federal court of australia act 1976 in relation to an appeal from a decision of the delegate of the registrar of trade marks under the trade marks act 1995 (cth) consideration of the implications of a cross-appeal by the opponent to the applicant's application for registration of its trade marks in the making of an order for security for costs consideration of the evidence relied upon by an applicant seeking an order for security for costs under s 56 of the federal court of australia act 1976 in the context of an appeal from a decision of the delegate of the registrar of trade marks under the trade marks act 1995 (cth) intellectual property practice and procedure |
The respondent, Tristar Steering and Suspension Australia Limited (Tristar), is accused of contravening a section of the Workplace Relations Act 1996 (Cth) (the Act) that is designed, so far as is relevant to this case, to protect freedom of association, because it victimised or discriminated against employees by not dismissing them. However, on any view, its provisions were remarkably generous, particularly to long-serving employees who are involuntarily retrenched. 3 The gist of the applicant's case, although spelled out in different ways, is that there was a substantial surplus of employees of Tristar once manufacturing effectively ceased in 2006 and that Tristar thereafter managed the shedding of that surplus labour so as to minimise the obligation to pay severance pay through compulsory redundancy. In particular, the nominated employees were retained without any meaningful work to do with a view to the expiration of the Certified Agreement before their dismissal, because they were long serving employees who would be entitled to a considerable severance payment if made redundant. The gist of Tristar's case is that the shedding of labour was done in accordance with the Certified Agreement. The employees in question were retained because their skill and experience was suited to the work of remanufacturing and to work which might arise from the overseas joint ventures. The purpose of avoiding large redundancy payments was denied. 4 I am satisfied that the efforts by Tristar to obtain remanufacturing work, and the pursuit of the overseas joint ventures, were each genuine. It was reasonable to retain some labour to carry out that work if it were obtained. Most, if not all, of the retained employees had skill and experience that would be useful in carrying out that work. On the other hand, I am satisfied that the terms of cl 21.5 of the Certified Agreement were a factor in deciding how many employees to retain, and who they should be. Length of service was undoubtedly a significant reason for the retention of particular employees. To the extent that the evidence of the witnesses for Tristar was to the contrary, I reject it. The number of employees retained was greater than necessary to cope with the work that might have reasonably eventuated in the short to medium term. It is difficult to find an objective basis for the retention of at least some of the employees apart from length of service. The redundancies that followed the extension of the operation of the Certified Agreement point in the same direction. The evidence of the Tristar decision makers was not impressive. 5 There is no doubt that the retained employees were seriously underemployed with a number having no work to do or no work of the kind for which they were qualified and previously employed. I am satisfied that most, if not all, of the retained employees found the experience disturbing and stressful and some of them suffered some lasting psychological trauma. However, it cannot be overlooked that Tristar was a union shop, and there was an industrial campaign on foot between the unions and Tristar with political implications. The dispute as to whether the employees could be directed to undertake remanufacturing work was one aspect of that campaign. That took many months to resolve. The retained employees did not work during that period by choice. In one sense, they were foot soldiers who were the victims of the wider campaign being conducted by the generals. It was certified pursuant to s 170LJ of the Act, as it stood in 2003 and 2004. 6.2 This agreement shall remain in force until the 30 September 2006. Three months prior to the end of the life of this agreement, the parties agree to commence negotiations with the aim of formulating a new agreement before the expiry date of this agreement is reached. 6.3 This agreement shall apply to each of the parties referred to in clause 4 in respect of the employment by Tristar Steering and Suspension Australia Limited of employees covered by the Metal Engineering and Associated Industries Award, 1998 Parts 1 and 2 . Where there is any inconsistency between this agreement and the Award, this agreement shall apply. The Company will not during the life of this Agreement offer employees an Australian Workplace Agreement. 11. 11.2 Both parties accept that they have a responsibility for creating and maintaining a consultative working environment and will work together to create such a culture. 11.4 "Significant effects" include termination of employment, major changes in the composition, operation or size of the workforce or in the skills required, the elimination or diminution of job opportunities, promotion opportunities or job tenure; alteration of hours of work, the need for re-training or transfer of employees to other work or locations and the restructuring of jobs. Provided that where the Award makes provision for alterations of any of the matters referred to herein an alteration shall be deemed not to have significant effect. The Company shall give prompt consideration to matters raised by the employees and/or their union in relation to the changes. 11.6 The discussions with employees affected and their union shall commence as early as practicable after the activities referred to in paragraph 11.4 hereof. 11.7 For the purposes of such discussion, the Company shall provide to the employees concerned and their union all relevant information about the changes, including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees. Provided that the company shall not be required to disclose confidential information the disclosure of which would be damaging to the company's interests. 11.8 Where requested the employer shall provide information in languages other than English for employees of non-English speaking background. 21.3 For the purposes of the discussion the company shall, as soon as practicable after making a decision but before any terminations, provide in writing to the employees concerned and their union, all relevant information about the proposed terminations. Provided that the company shall not be required to disclose confidential information, the disclosure of which would be inimical to the company's interests. Employees aged over 45 years with at least 2 years service shall be entitled to 1 extra weeks notice as per clause 4.3.1 (b) of the Metal Engineering and Associated Industries Award, 1998. 21.6 Loading of 17.5% to be applied to full pro-rata Annual Leave entitlements on retrenchment. 21.7 Subject to satisfactory evidence of an arranged job interview, employees will be given up to 1 day during each worked week of notice without loss of pay to attend such interviews. 21.8 All employees will be supplied with a Certificate of Service and Separation Certificate at the time of the retrenchment. An itemised Statement of Entitlements will be supplied to all retrenched employees. The Company will attempt to accommodate requests for voluntary retrenchment; however, the final decision on acceptance or rejection of the request will lie with the Company. The Company will nominate those employees they wish to be made redundant. In this event, the employee will be paid only for the period of notice he/she worked, and the severance entitlement under the redundancy provision. 21.11 Retrenched employees will receive payment of all accumulated sick leave. 21.12 An employee who elects for voluntary redundancy and who has untaken RDOs at the date of termination shall be paid in lieu for such days at ordinary rates. In the event of compulsory retrenchment the employee shall receive payment in lieu for untaken RDOs and such payment will be at penalty rates (each day to stand alone) to a maximum of 3 days. In the event that untaken RDOs exceed 3 days then such additional days shall be paid at ordinary rates. In the case of compulsory retrenchment where an employee is required to take RDOs during the notice period and is unable to do so because of absence or other exceptional circumstance the employee shall be paid for up to 3 days at penalty rates (each day to stand alone). Untaken days in excess of 3 shall be paid at ordinary rates. 21.13 Long Service Leave for forcibly retrenched employees will be paid based on prorata years of service from the commencement of employment. 21.14 Shift allowance will be used in calculations only when the employee at the date of termination has been on afternoon or nightshift (including rotating shifts) for at least 6 months in the immediate 12 months prior to termination of employment. 21.15 In the event of an employee under notice of retrenchment, dying prior to the actual date of termination, all benefits payable in relation to provisions of this agreement shall apply and will be paid into the employee's estate. 21.16 In the event of redundancies the Company agrees to make available suitable financial counseling and/or outplacement services, provided that the cost to the company of providing such services shall not exceed $300 per employee. Division 4 deals with conduct by employers or persons engaging independent contractors --- I will come back to that division which is central to the case. Division 7 deals with conduct in relation to industrial instruments and consists of s 804 --- discrimination against employer in relation to industrial instruments. Division 8 deals with false or misleading representations about bargaining services, fees etc, and is constituted by s 805. Division 9 deals with enforcement, two parts of which I shall return. Division 10 deals with objectionable provisions --- s 810 defines objectionable provision. Division 11 is miscellaneous. Section 813 deals with freedom of association not being dependent on whether a person is the holder of a conscientious objection certificate. 12 Part 8 of the Act deals with workplace agreements. Division 10 deals with prohibited conduct. Section 400 prohibited, at the relevant date, action with intent to coerce another person to agree or not to agree to make, approve, lodge, vary or terminate a collective agreement, an Australian Workplace Agreement and some other instruments. Section 401 prohibits false and misleading statements causing a person to make, approve, lodge, vary or terminate a workplace agreement or not to make, approve, lodge, vary or terminate a workplace agreement. Part 10 deals with awards. Part 12 deals with the minimum entitlements of employees and Div 4 deals with termination of employment. Part 14 deals with compliance. Div 2 deals with penalties and other remedies for contravention of applicable provisions and Div 3 deals with general provisions relating to civil remedies. Part 22 deals with sham arrangements in connection with purported independent contracting arrangements. (3) For the purposes of paragraph (1)(d), an employer does not refuse to employ another person if the employer does not intend to employ anyone. (4) An employer does not contravene subsection (1) because of paragraph 793(1)(i) unless the entitlement described in that paragraph is the sole or dominant reason for the employer doing any of the things described in paragraphs (1)(a), (b), (c), (d) and (e) of this section. These authorities need to be approached with considerable caution as few of them take into account the significant changes introduced, firstly, by the 1996 Commonwealth Act and none with the Act as it stood at the time of these events following the so-called "Work Choices" legislation in 2005. By and large, they do not relate to situations like the present and none dealt with comparable facts. Many are single judge decisions on their own facts. Indeed, the existence of this body of authority can distract from the task of construing the Act as it now stands. I will only refer to those decisions that are of most relevance to this case. 18 Part 16 deals with the freedom of association aspect of the principal object (s 3(j)) and, as set out above, has its own objects. The aspects of the principal object identified in s 3(d), (e) and (f) are dealt with in other Parts of the Act --- in particular, Pt 8, Pt 10, Pt 13 and Pt 14. The structure of the Act in general and the objects of Pt 16, dealing with freedom of association, are quite different from those which pertained for most of the history of industrial relations in Australia post Federation. Regulation was by way of award negotiated by trade unions with employer representatives and arbitrated by an industrial tribunal. They have a legislative history which extends back to the turn of the century when the trade union was a more fragile institution than it is today and when it stood in need of a large measure of protection from employers. That extended to employees who were members of the union and took advantage of union negotiated awards. 19 The Act as it stood in 2006 did not contain any vestige of special protection for trade unions or the members of trade unions compared with employers, organisations of employers or, more particularly, those who do not belong to a trade union. Nonetheless, the benefits of freedom of association are afforded to those who wish to belong to trade unions as well as to those who do not. 20 It will be observed that object (b) of s 778 picks up the words "discriminated against" or "victimised" that have traditionally been used in this field. In my opinion, as the provisions now stand, taken in context, s 792 can have no sensible operation unless it involves discrimination against, or victimisation of, an employee on some basis connected with union membership, no matter how broadly. (a2) In respect of those Relevant Employees who have been compulsorily retrenched, the respondent did not compulsorily retrench those Relevant Employees during the period on and from about June 2006 until their respective Termination Dates, notwithstanding the facts and matters set out in paragraph 5A of this second further amended statement of claim, and contrary to the expectations of the Relevant Employees. (c) The respondent has not provided or, in the alternative, has ceased to provide, Relevant Employees with any work, or, in the alternative, any meaningful or productive work. (d) The respondent has not provided, or, in the alternative, has ceased to provide, Relevant Employees with the opportunity to perform any work, or, in the alternative, any meaningful or productive work. (g) The respondent has, in the case of each Relevant Employee, made the changes referred to in subparagraph 5B(f) of this second further amended statement of claim unilaterally and without the consent of the Relevant Employee. (i) The respondent has failed or neglected to consult, counsel or assist any Relevant Employees in relation to any of the facts or matters referred to in subparagraphs 5B(b), (c), (d), (e), (f) or (h). By the Respondent's Conduct, either collectively or, in the alternative, any one or more of the separate instances of the Respondent's Conduct set out in paragraph 5B of this second further amended statement of claim, the respondent has injured all or any one or more of the Relevant Employees in their employment within the meaning of paragraph 792(1)(b) of the Act. 5D. Further, or in the alternative, to paragraph 5C of this further amended statement of claim, by the Respondent's Conduct, either collectively or, in the alternative, any one or more of the separate instances of the Respondent's Conduct set out in paragraph 5B of this second further amended statement of claim, the respondent has altered the position of all or any one or more of the Relevant Employees to their prejudice within the meaning of paragraph 792(1)(c) of the Act. 5E. The respondent has engaged in the Respondent's Conduct, either collectively or, in the alternative, any one or more of the separate instances of the Respondent's Conduct set out in paragraph 5B of this second further amended statement of claim, for the reason, or, in the alternative, for reasons which include the reason, that the Relevant Employees have been and are entitled to the benefit of the Certified Agreement, and in particular to the Redundancy Provisions, and will continue to be so until termination of the Redundancy Provisions as set out in subparagraphs 3(e) and (f) of this second further amended statement of claim. 6. In the premises, the respondent has contravened, and continues to contravene, subsection 792(1) of the Act. 7. In the premises, the Relevant Employees, or any or more of them, have suffered, and, in respect of each of the Relevant Employees who have not been compulsorily retrenched, continue to suffer, damage as a result of the respondent's contravention of subsection 792(1) of the Act as aforesaid. In my opinion, that case cannot succeed. The problem underlying these circumstances was the loss of business rather than any operative decision of Tristar. In 2000, 370 persons were employed and by January 2006 the number was reduced to 177. When major manufacturing ceased, it was obvious that there would be the need for further significant reduction in employees. Clause 21 of the Certified Agreement was designed to cope with that situation, particularly cl 21.9, which dealt with the selection of redundant employees where surplus staff existed. It is obvious that the purpose of the clause was to avoid unnecessary involuntary retrenchments and then to manage the process. The clause makes it clear that, ultimately, it is at the employer's discretion as to which employees would be subject to compulsory redundancy. By August 2006 the numbers were reduced to 50 production employees and 19 staff employees. By August 2007, the production employees had been reduced to 19 and the staff positions to 13. There is no allegation in this case that Tristar breached cl 21 in any respect. 23 The applicant's contention is tantamount to treating cl 21.5 as a conditional contractual benefit for an affected employee like long service leave or superannuation. The unstated premise of the contention is that the employer had a duty to dismiss. That is a misconception as to the purpose and effect of cl 21. No complaint is made in this proceeding about failure of Tristar to follow the procedures laid down by cl 21. If there had been, that could have been the subject of a dispute referred to the Australian Industrial Relations Commission or possibly of a proceeding in this Court to compel compliance. So far as this aspect of the case is concerned, Tristar simply maintained the employees in their position. The status quo remained. That did not "do" anything to "injure" an employee or "alter the position" of an employee. 24 A "before and after" test is usually applied to see whether there has been any injury to, or prejudicial alteration of, the position of the employee by reason of any act of the employer (eg per Evatt J in Blair v Australian Motor Industries Ltd (1982) 61 FLR 283 at 289, 3 IR 176; per Branson J in Commonwealth Bank of Australia v Finance Sector Union of Australia [2007] FCAFC 18 ; (2007) 157 FCR 329 at [127] ). The same questions must be asked. Here, there should be a negative answer to each limb. 25 Tracey J usefully summarised the authorities as to the former s 298K in Australian and International Pilots Association v Qantas Airways Ltd [2006] FCA 1441 , (2006) 160 IR 1 at [13] ---[22]. "Injury" is concerned with an adverse effect upon an existing legal right, or "compensable" injury. Prejudicial alteration of position goes beyond that concept. There are many examples in the cases. It is sufficient to refer to Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30 ; (1998) 195 CLR 1 per Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ at [37] and [38]; Community and Public Sector Union v Telstra Corp Ltd [2001] FCA 267 ; 107 FCR 93 at [17] ---[22]; Greater Dandenong City Council v Australian Municipal, Administrative, Clerical and Services Union [2001] FCA 349 ; (2001) 112 FCR 232 ; and Commonwealth Bank of Australia v Finance Sector Union of Australia [2007] FCAFC 18 ; 157 FCR 329. 26 The decision in Maritime Union of Australia v Geraldton Port Authority [1999] FCA 899 ; (1999) 93 FCR 34 is a good illustration of where the dividing line might be drawn. Cases on the non-contravening side of the line include Burnie Port Corp Pty Ltd v Maritime Union of Australia [2000] FCA 1768 ; (2000) 104 FCR 440 and Australian Workers' Union v BHP Iron-Ore Pty Ltd [2001] FCA 3 ; 106 FCR 482. A case with some similarities to the present is National Union of Workers v Qenos Pty Ltd [2001] FCA 178 ; (2001) 108 FCR 90. It dealt with a situation where there was a surplus of employees for genuine business reasons. A "spill and fill" selection and retrenchment process was held not to be capable of giving rise to an injury to any particular employee in his or her employment and could not be said to have altered the position of any individual employee to his or her prejudice. (See also Australian and International Pilots Association v Qantas Airways Ltd [2006] FCA 1441 , (2006) 160 IR 1 at [29] and [31]. The argument seems to be that Tristar owed a duty to every employee covered by the Certified Agreement to dismiss that employee during the course of 2006 when major manufacturing ceased. However, manufacturing and remanufacturing work continued for some time thereafter and, as I have said, Tristar was genuine in seeking that and other business. It was entitled to retain employees to carry out that actual and potential work. Once the employer has that choice, then no individual employee could claim that there was any obligation upon Tristar to dismiss that employee in order to trigger cl 21.5. As I have said, I accept that many of the employees who gave evidence found the experience unpleasant and some psychological damage was done to some of them. Again, the difficulty for the applicant's case is that Tristar was essentially passive so far as the particular employees are concerned. The work available was constrained by commercial considerations --- there is no suggestion that it was contriving not to win work for some ulterior purpose. The decisions which it took in relation to premises, plant and equipment were the result of the commercial realities. The same can be said concerning the arrangements with the continuing employees. They were given such tasks as were available. None of the affected employees was obliged to stay. If conditions were intolerable, then none was the subject of a long-term contract. No doubt, voluntary redundancy would have been available to most, if not all, of them. 29 There is a respectable argument that an employee cannot be indefinitely denied work to do if work of an appropriate kind is available ( Blackadder v Ramsey Butchering Services Pty Ltd [2005] HCA 22 ; (2005) 221 CLR 539 , particularly per Callinan and Heydon JJ at [80]; Squires v Flight Stewards Assn of Australia (1982) 2 IR 155 at 164; Downe v Sydney West Area Health Service (No 2) [2008] NSWSC 159 at [410] ---[431]). No such appropriate work was available here. 30 There may be circumstances where the conduct of the employer towards an employee is such that the employee, upon leaving, can assert that he or she has been constructively dismissed, triggering whatever rights the employee may have upon dismissal ( Westen v Union des Assurances de Paris (1996) 88 IR 259 at 261; Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 142 ALR 99 at 106; in the case of position redundancy see Commonwealth Bank of Australia v Finance Sector Union of Australia [2002] FCAFC 193 ; (2002) 125 FCR 9 at [27] ; cf Martech International Pty Ltd v Energy World Corp Ltd [2007] FCAFC 35 at [19] ). In the present case, that may have included a claim pursuant to cl 21.5. That case could have been pursued by or on behalf of these employees. That course was adopted in Finance Sector Union of Australia v Commonwealth Bank of Australia [2001] FCA 1613 , (2001) 111 IR 241 (although set aside in the result on appeal Commonwealth Bank of Australia v Finance Sector Union of Australia [2002] FCAFC 193 ; 125 FCR 9). Rather, the choice was made here to seek to use the freedom of association provisions to, in effect, act as a means of specific enforcement of cl 21.5. 31 In short, whatever the employees suffered by way of psychological distress was not caused by any act of Tristar. Rather, the choice they made to continue in employment was the operative reason for the prejudice ( Maritime Union of Australia v CSL Australia Pty Ltd [2002] FCA 513 , (2002) 113 IR 326 at [53] and [54]). In my opinion, none of these employees was injured, nor was the position of any of them prejudicially altered by any act of the employer as required by s 792. The selection of employees for retrenchment had no scintilla of connection with freedom of association. All employees covered by the Certified Agreement had the benefit of that agreement without discrimination between them. There is no suggestion that selection for retrenchment was made for any reason associated with union membership or non-membership, or union activity or non-activity, or because these employees were covered by the Certified Agreement and other potential persons affected were covered by some other agreement. There is simply no basis for suggestion of discrimination or victimisation in any relevant respect. The employees the subject of this proceeding are only a proportion of the workforce as it stood in 2006. 33 So far as s 793(1)(i) is concerned, the affected employees were, or are, entitled to the benefit of the Certified Agreement in common with all production employees. There is no discrimination between employees in that respect. There is no suggestion that persons with the benefit of the Certified Agreement were being discriminated against as compared with people who did not have the benefit of that Agreement. The fact that the employer was, or may have been, advantaged by not dismissing particular employees because of the way in which cl 21.5 worked, is not pertinent to this statutory obligation. The content and effect of an agreement may not always be irrelevant --- for example, if the way a particular clause operates is related to some relevant form of discrimination. The decision of the Full Court in Greater Dandenong City Council [2001] FCA 349 ; 112 FCR 232 may provide an example of that, although it is a difficult decision --- as Branson J said in CSL Australia Pty Ltd [2002] FCA 513 , 113 IR 326 at [54] , it is not easy to derive a ratio decidendi. The decision in Commonwealth Bank of Australia v Finance Sector Union of Australia [2007] FCAFC 18 ; 157 FCR 329 may be another. In each case, the employer had work to be done by those employed pursuant to an industrial instrument. The proposed change meant that the work would be done by those who were willing to take alternative employment pursuant to different industrial instruments or perhaps no industrial instrument. That is not the case here. This is one of the obvious cases which sec. 9 was designed to cover. 35 Early in the history of these provisions it was established that they could not be used to restrict genuine business decisions by an employer, notwithstanding that the objective of the provisions then was the protection of unions and collective action ( Connington v Municipality of Kogarah [1913] AR (NSW) 40 at 44; Grayndler v Broun [1928] AR (NSW) 46 at 49; Klanjscek v Silver (1961) 4 FLR 182 at 187; Moss v Fantil Pty Ltd t/as Central Coast Security Services (1994) 58 IR 118 at 127). The underlying principle is that a decision that may affect an employee or a class of employee does not discriminate against or victimise that employee or those employees if it is taken for a sound business reason. This principle has been applied in various situations in more recent times in considering a prohibited reason within the meaning of s 793 and similar provisions. Examples include Qenos Pty Ltd [2001] FCA 178 ; 108 FCR 90 at [119] ---[126]; Australian Collieries' Staff Association v BHP Coal Pty Ltd [2000] FCA 318 ; (2000) 99 FCR 137 , particularly at [66]---[67]; CSL Australia Pty Ltd [2002] FCA 513 , 113 IR 326, particularly at [55]---[60]; BHP Iron Ore Pty Ltd v Australian Workers' Union [2000] FCA 430 ; 102 FCR 97 at [48] ; and Geraldton Port Authority [1999] FCA 899 ; 93 FCR 34 , particularly at [294]---[302]. 36 There is no causal link between any injury or alteration of position which might be found to have been incurred and the alleged prohibited reason in this case. On one view, s 809 has no work to do in those circumstances (cf CSL Australia Pty Ltd [2002] FCA 513 , 113 IR 326 at [56] ---[60]). In any event, the evidence that was led for Tristar is inconsistent with the existence of any particular reason or intent connected with s 793(1)(i) notwithstanding that I accept that the length of service of the employees was a factor taken into account in not dismissing them because of the size of the severance payment which would have to be made. As I have endeavoured to show, that does not establish that any conduct of Tristar was for a prohibited reason. The manner in which the particular clause in the Certified Agreement worked out in practice does not fall within s 793(1)(i) as construed in the context of the rest of s 793(1), the rest of Pt 16 and the objects and structure of the Act as a whole ( Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 29 ; (1998) 194 CLR 355). There is no necessity to further consider the position of the "staff" employees who were not directly entitled to the benefit of the Certified Agreement, or to distinguish between the named employees in any other way. There will be no order as to costs. I do not find that the proceeding was instituted vexatiously or without reasonable cause, although, in the end, I concluded that there is no basis for the relief claimed. That conclusion was only arrived at after evidence, argument and analysis. 27 March 1962 John Anderson commenced employment with the respondent. November 1964 James Parsons commenced employment with the respondent. 1965 Charles Schofield commenced employment with the respondent. 28 February 1970 Peter Bitmead commenced employment with the respondent. November 1971 Malcolm Brabant commenced employment with the respondent. 22 January 1973 John Gosano commenced employment with the respondent. 28 January 1974 Cecilia Maiolo commenced employment with the respondent. 7 April 1975 Simeon Kokinovski commenced employment with the respondent. October 1975 Greg Rutherford commenced employment with the respondent. 1 June 1976 Jone Tui Vukici commenced employment with the respondent. 7 March 1977 Antonia Karabasis commenced employment with the respondent. 10 October 1977 George Kaloustian commenced employment with the respondent. 6 February 1978 Keith Sayles commenced employment with the respondent. 11 September 1978 Jordanka Brsakovska commenced employment with the respondent. 19 November 1979 Katerini Georganda commenced employment with the respondent. May 1983 Toula Sousalis commenced employment with the respondent. 20 June 1983 Mitre Mitrevski commenced employment with the respondent. 27 October 1983 Michael Rutherford commenced employment with the respondent. 2 October 1984 George Stojcevski commenced employment with the respondent. July 1986 James Hoose commenced employment with the respondent (for the second time following a three year break). 11 November 1986 Milos Sajinovic commenced employment with the respondent. 15 July 1987 The Da (Jason) Duong commenced employment with the respondent. 11 April 1988 Veselin Balovski commenced employment with the respondent. 27 April 1988 Van Nhan Lam commenced employment with the respondent. 29 May 1989 Nicolas El-Hawi commenced employment with the respondent. 1 September 1990 Gavin Avery commenced employment with the respondent. 1993 Respondent acquired steering gear business owned by James N Kirby Products Pty Ltd. 5 December 1995 Timothy White commenced employment with the respondent. 1 November 1996 Othman Jasmani commenced employment with the respondent. 1997 Respondent sold remanufacturing business. 3 February 1997 Huuson (Sunny) Nguyen commenced employment with the respondent. 27 October 1997 Blagojce (Bill) Kotevski commenced employment with the respondent. 7 June 1999 Respondent informed its staff employees of their entitlements on redundancy. 8 July 1999 Respondent offered to guarantee its employees' redundancy entitlements as an inducement to enter into the 1999 certified agreement. 16 August 1999 The Australian Industrial Relations Commission (AIRC) certified respondent's 1999 certified agreement. 20 December 1999 Arrowcrest Group Pty Limited purchased all issued shares in respondent. 20 December 1999 Respondent employed 390 employees at the time Arrowcrest acquired all the issued shares in the respondent. 6 January 2000 Respondent changed its name from TRW Steering & Suspension Australia Limited to Tristar Steering and Suspension Australia Limited. 6 January 2000 Cheng Hong commenced in role of Managing Director of the respondent. 17 March 2000 Respondent entered into insurance bond with National Australia Trustees Limited in respect of its employees' redundancy entitlements. 15 December 2000 Mr Hong intended to terminate insurance bond on expiry of bond on 1 March 2001. 2001 Cheng Hong directed Vincent Kong that cores returned under warranty should be retained for further use, as they were an asset which could be remanufactured. 30 April 2001 Respondent entered into five year agreement with Holden. December 2001 Respondent entered into five year agreement with Ford for steering gears. 14 February 2002 Respondent entered into insurance bond agreement with National Australia Trustees Limited. 2002 Respondent's contract with Ford came to an end. 6 March 2002 The AIRC certified respondent's 2002 certified agreement. 13 March 2002 Respondent informed its staff employees of their entitlements on redundancy after the certification of the 2002 certified agreement. 18 April 2002 Mr Hong reported to the Directors that he believed that the respondent's forging business was dying out. Hong also reported that new business had been obtained from Mitsubishi and that a new quotation had been submitted to Holden. 13 June 2002 Mr Hong advised the directors of Arrowcrest of the respondent's loss of the Toyota and Dana business. 1 July 2002 Mr Vincent Kong became a director of the respondent. 20 February 2003 Mr Hong advised Directors that he and Mr Kong would be visiting China in early March to follow up business opportunities and believed there was a high growth market there for automotive products. March 2003 Mr Hong and Mr Kong visit China to follow up business opportunities. 22 October 2003 Mr Hong reported to directors of Arrowcrest on his visit to China to meet with representatives from Nanjing Auto Group (who had expressed interest in a joint venture for the manufacture of steering gears) and Hefei Winking Assets Co Ltd. 6 January 2004 Respondent entered into three year lease with option to renew for three years over Marrickville factory. 19 February 2004 Mr Hong reported to directors of Arrowcrest that Nanjing Auto Group had accepted heads of agreement, however they had requested the equity be 50/50. 1 April 2004 Mr Gwinnett reported to directors of Arrowcrest that a joint venture agreement had been signed with Nanjing Automotive Company. May 2004 Mr Hong and Mr Kong visit China. 6 May 2004 Respondent entered into insurance bond agreement with National Australia Trustees Limited. 24 May 2004 Respondent's 2003 certified agreement (Certified Agreement) certified by the AIRC. Nominal expiry date of Certified Agreement 30 September 2006. 19 August 2004 Mr Hong reported to directors of Arrowcrest that negotiations with Nanjing Automobile Group had reached a deadlock. Mr Hong also reported that discussions had been held with another Chinese company, Shanghai Shenzhen 19 August 2004 Cheng Hong reported to directors of Arrowcrest that the current profit could not sustain the rental costs, and that the respondent would have to move from the site. 7 September 2004 Respondent revised amount of insurance bond to $17,057,312. December 2004 Respondent closed forge 1. 2005 A pilot run of 30 remanufactured gears was conducted. 1 March 2005 Respondent announced rationalisation of Tool Room and Die Shop into a new department to be known as Tool and Die Support. Applications for voluntary redundancy sought. 1 March 2005 Spicer Axle Australia terminated its supply contract for forged axles with the respondent. As a result, the respondent sought applications for voluntary redundancies. March 2005 Respondent's contract with Spicer Axle came to an end. April 2005 Managing Director of Ningbo Yongxin and Mon Forging Limited India visited Tristar to discuss possible forging joint venture. May 2005 Mr Hong and Mr Kong visit China to continue negotiations with Nanjing. July 2005 Respondent commenced working on a batch of remanufactured steering gears as a trial. August 2005 Respondent entered into heads of agreement with Ningbo Yongxin Company Ltd for a joint venture to manufacture forging components in China. October 2005 Mr Hong and Mr Kong visit China for further negotiations with several companies. 5 December 2005 Respondent entered into joint venture agreement with Ningbo Yongxin to set up a forging manufacturing business in Ninghai. December 2005 Respondent closed forge 2. January 2006 --- March 2006 Respondent's contract with Mitsubishi came to an end. January 2006 Respondent employed 177 employees following redundancies in 2005. 1 January 2006 --- 1 April 2006 Respondent commenced discussions with Australian Power Steering in relation to a possible acquisition by the respondent of a part or the whole of Australian Power Steering. March 2006 Respondent sold 30 remanufactured steering gears made during pilot program to Power Steering Parts Australia for $150 each. 12 April 2006 Respondent postponed March 2006 salary reviews due to uncertainty as to future business. May 2006 Respondent's discussions with Foshan Hengwei Steering Gear Company come to a halt. May 2006 Respondent continued discussions with Australian Power Steering in relation to possible acquisition by respondent of part or whole of company. May 2006 Respondent's ball joint assembly department ceased substantive operations. May 2006 Vincent Kong wrote to the Australian Manufacturing Workers' Union (AMWU) to inform it that the respondent was pursuing business opportunities in China and Australia for the after-market business. June 2006 Mr Kong asked Mr Sayles whether he wanted to "head up" a forge in China as part of a proposed joint venture --- Mr Sayles declined. June 2006 Amit Misra had discussions with AMWU official, Martin Schutz, and union delegate, Colin Williams, about the respondent's desire to do remanufacturing work. Schutz said he would speak to employees about this. June 2006 A meeting was convened in the canteen with 50 to 60 of the respondent's workers present. Shortly after the meeting, Schutz advised Misra the employees did not want to do remanufacturing work. June 2006 Respondent made contact with Repco in relation to the potential sale of remanufactured steering gears. June 2006 Respondent made contact with Burson Auto Parts in relation to potential sale of remanufactured steering gears June 2006 --- July 2006 Mr Misra told Cecilia Maiolo that she had been employed by the respondent for too long to get a redundancy (not admitted by respondent). June 2006 Most of the respondent's business manufacturing original equipment had come to an end. June --- August 2006 Respondent's production department ceased its substantive operations 22 June 2006 Respondent notifies employees that all afternoon shift employees will be required to work day shift from 31 July 2006. 27 June 2006 The respondent planned to have only 68 employees by the end of August 2006. 27 June 2006 Respondent decided not to pursue acquisition of Australian Power Steering. July 2006 Respondent made first contact with Coventry in relation to potential sale of remanufactured steering gears. July 2006 Respondent made first contact with Supercheap Auto in Brisbane in relation to the potential sale of remanufactured steering gears. July 2006 Respondent's contract with Holden came to an end. 4 July 2006 Mr Morelli, Mr Koorey and Mr Kong met with Graeme Heine of Repco to explore opportunities to supply remanufactured steering gears. 4 July 2006 Respondent knew that Australian Power Steering had secured Repco's agreement for the exclusive supply of remanufactured steering gears for three years from 1 March 2006. July 2006 --- December 2006 Respondent removed from its Marrickville premises all equipment from its four steering gear assembly lines, two input shaft assembly lines, pinion line, sleeve line, rack line, plating line and tie rod line. 13 July 2006 Mr Kong and Mr Morelli met with Martin Farrell of Bursons. 13 July 2006 Respondent made presentation to Repco. 19 July 2006 Planning meeting at which the feasibility of remanufacturing steering gears was discussed by the respondent's managerial and supervisory employees, including Mr Duong, Mr Hirdle, Mr Kong, Mr Misra, Mr Greg Rutherford, Mr Haschynski, Mr Hodson and Mr Koorey. At that meeting Mr Kong said "if we do not get the business from Repco that is it". 22 July 2006 One of the joint ventures being pursued by the respondent in China came to a halt. 25 July 2006 The dispute, which was the subject of arbitration before SDP Cartwright, was notified on behalf of the respondent's employees to the AIRC. 27 July 2006 Vincent Kong and George Koorey met with Product Category Manager of Supercheap Auto. July --- August 2006 The union invoked the status quo clause in the enterprise agreement. Misra understood this to mean the company could not require the remanufacturing employees to perform remanufacturing or packing work until the dispute was resolved. 1 August 2006 --- 30 September 2006 Vincent Kong ceased to work in the role of General Manager of the respondent. As a result, Mr Misra became the respondent's most senior manager in NSW. 18 August 2006 Repco identifies shortcomings in the respondent's proposal to supply remanufactured steering gears. August --- September 2006 Respondent's tool room ceased substantive operations save for a couple of jobs. September 2006 Respondent's electrical maintenance department ceased substantive operations. 1 September 2006 --- 1 October 2006 Respondent decided to remove all the excess equipment not required for remanufacturing from its Marrickville premises to Caringbah. September 2006 --- October 2006 Respondent completed production of parts and accessories for car manufacturers, save for 5,000 tie rod assemblies to be produced by the Respondent for Toyota. 1 September 2006 Mr Kong and Mr Morelli met with Mr Heine to discuss Repco's concerns. 1 September 2006 Respondent intended to replace 2003 union Certified Agreement with employee certified agreement. September 2006 --- January 2007 Respondent instructed its electricians to disconnect machines in the Marrickville factory. 7 September, 15 September, 16 October, 27 October and 1 December 2006 Hearing of dispute before SDP Cartwright in AIRC. 7 September 2006 Martin Schutz of the AMWU gave evidence in the AIRC that employees held the view that it was not their job to do packing work which was formerly undertaken by employees who had been made redundant by the respondent. 8 September 2006 Respondent made offer to supply remanufactured steering racks to Repco. September 2006 During the hearing in the AIRC, Aron Neilson of AMWU advised Amit Misra that if the respondent agreed to extend the EBA, all of the disputes could be off and that remanufacturing work would be performed without issue. September 2006 Vincent Kong ceased to be the respondent's General Manager. September 2006 Amit Misra took over the work of the panel to: (a) consider the question of which employees should be made redundant; and (b) make recommendations as to that to Cheng Hong. September 2006 --- October 2006 Vincent Kong left Sydney to work from Adelaide on the China joint venture project. 4 October 2006 Respondent applied to AIRC to terminate Certified Agreement. 17 October 2006 Respondent put to its landlord a proposal for a new lease. 19 October 2006 Respondent confirmed that it did not need all of the space leased by it. October --- November 2006 Toyota placed an order with the respondent for 5000 ball joints. In connection with that order, the respondent outsourced the forging work and part of the machining work to third parties because it did not have the capability to do that work in-house. October --- November 2006 Respondent ceased inspection of parts. November 2006 Respondent's maintenance department ceased substantive operations. 10 November 2006 Submission by the respondent that it wanted to terminate the Certified Agreement in order to enhance the prospect of maintaining a viable business. November 2006 --- February 2007 Respondent met with unions on a number of occasions to attempt to negotiate a new redundancy package. 1 December 2006 Respondent confirmed that one of the important criteria in deciding who would be made redundant was the employee's length of service with the respondent. 1 December 2006 Respondent confirmed that it presently had no contracts to remanufacture steering gears. Early December 2006 Mark Morelli told George Koorey that the respondent's efforts to try to get Repco's business had failed 4 December 2006 Martin Schutz of the AMWU gave evidence to the AIRC that the dispute before Senior Deputy President Cartwright concerned whether the respondent could transfer employees from afternoon shift to day shift, whether the respondent could transfer employees into positions that had been made redundant and whether the respondent had the ability to direct employees to carry out duties that they had not previously performed and that do not form part of their contract of employment, being remanufacturing duties. Schutz indicated that the respondent had sought that the employees perform remanufacturing work and in response the employees had indicated that if there was such work and if the company would continue to guarantee their current conditions of employment as set out in the certified agreement then the employees would be prepared to have discussions with the respondent about those duties. Early December 2006 Respondent completed work on Toyota tie rod end contract. 15 December 2006 John Anderson accepted a voluntary redundancy and stopped working for the respondent. December 2006 Vincent Kong handed over responsibility to Amit Misra for finding customers for the respondent's remanufactured steering gears 31 December 2006 Respondent has 15 staff employees and 29 shop floor employees left. December 2006 Respondent's warehouse ceased substantive operations. Late December 2006 Respondent shut down for Christmas break. Late December 2006 --- early January 2007 Remaining machines moved from respondent's premises. January 2007 --- February 2007 Respondent shipped all forging equipment sold to India. 5 January 2007 Respondent's lease over the Marrickville factory expired. 6 January 2007 Respondent entered into a new one year lease in respect of a 1,400 square metre part of the Marrickville factory, being about 10% of the size of the factory formerly leased by the respondent. 9 January 2007 Senior Deputy President Cartwright handed down his decision requiring the respondent's employees to comply with the respondent's direction to "undertake duties remanufacturing steering gears and such other tasks as may be within their skills, competence and training". 15 January 2007 Respondent's employees returned to work after the Christmas shutdown. 15 January 2007 Senior Deputy President Cartwright's decision took effect. 15 January 2007 Amit Misra advised Aron Neilson of AMWU that the respondent would now require employees to perform remanufacturing work. 16 January 2007 Amit Misra held a tool box meeting to inform employees that the AIRC had delivered a decision confirming that the respondent was able to direct them to perform remanufacturing work. 16 January 2007 Gavin Avery accepted a voluntary redundancy and ceased employment with the Respondent. 17 January 2007 --- February 2007 Amit Misra absent from work for three weeks due to family circumstances. January 2007 Amit Misra took over responsibility for the management of the respondent's Marrickville operations. 22 January 2007 Senior Deputy President Marsh handed down her decision terminating the 2003 Certified Agreement 30 January 2007 Orders made by Marsh SDP by which: (a) the Certified Agreement was terminated with effect from 6 February 2007; and (b) the redundancy provisions of the Certified Agreement were preserved in operation until 6 February 2008. Early February 2007 Cheng Hong became aware that Marsh SDP had ordered the termination of the Certified Agreement, and that the redundancy provisions would come to an end early in 2008. February 2007 Respondent sold 100 cores to Australian Power Steering. 19 February 2007 Applicant commenced proceedings in the Federal Court of Australia. 23 February 2007 Mitre Mitrevski accepted voluntary redundancy and his employment with the respondent came to an end. 23 February 2007 Veselin Balovski accepted a voluntary redundancy and his employment with the respondent came to an end. 28 February 2007 Vincent Kong approached Jason Duong about being a liaison person for a China joint venture based in an office in "Brownbuilt" in Caringbah --- Mr Duong declined saying he was employed to work as a product engineer, not a translator. March 2007 --- April 2007 Amit Misra became desperate about the respondent's lack of any customers for remanufactured steering gears. Mr Hong then gave Mr Misra authority to go out and look for prospective customers. 15 March 2007 Mr Misra offered Mr Duong a new job as the Operations Manager for China --- Mr Duong declined saying he did not have the skills for the job and was not keen on travelling to China all the time because of his family responsibilities. 23 March 2007 Timothy White accepted voluntary redundancy and his employment with the respondent came to an end. 23 March 2007 Huuson Nguyen accepted voluntary redundancy and his employment with the respondent came to an end. 28 March 2007 Respondent confirmed that it had not had any orders for remanufactured equipment. 28 March 2007 Respondent confirmed that it was not presently a party to any joint venture in which manufacturing was being undertaken. April 2007 Mr Kong asked Mr Parsons if he wanted to become involved in a joint venture in China --- Mr Parsons declined because he was not in a position to be able to travel to China in light of his wife's health. April 2007 Respondent expected China joint venture building to be completed by the third week of June 2007. 3 April 2007 Respondent offered to sell remanufactured steering gears to Power Steering Parts of Australia Pty Limited following expression of interest. April 2007 Mark Morelli left the respondent's employ. April 2007 Vincent Kong left the respondent's employ. 7 May 2007 Peter McMahon of Power Steering Parts of Australia informed the respondent that he was having trouble selling the respondent's remanufactured steering gears into its rebuilder market but was still talking to customers in an attempt to sell the gears. 15 June 2007 --- 15 July 2007 Mr Misra met with representatives of Sree Lakshmi Industrial Forge in India. 21 June 2007 Full Bench of AIRC handed down its decision to set aside the previous decision (by Marsh SDP) terminating the Certified Agreement. The effect of the Full Bench's decision, together with the amendments to the Workplace Relations Act , was to terminate the Certified Agreement and to extend the operation of the redundancy provisions in the Certified Agreement to 21 June 2009. 22 June 2007 Proposed commencement date of new certified agreement intended to cover the respondent's remaining employees. June 2007 Cheng Hong became aware that the redundancy provisions in the Certified Agreement would continue to apply until the middle of 2009. July 2007 --- August 2007 The respondent's attempts to secure remanufacturing business from Motospecs had come to nothing. 15 July 2007 Cheng Hong and Amit Misra commenced discussions about making further employees redundant. July 2007 Amit Misra first attempted to make contact with Repco. 27 July 2007 Amit Misra sent an email to Cheng Hong attaching a proposal to make further employees redundant. 30 July 2007 Amit Misra commenced discussions with the unions in an attempt to cut a deal on redundancies. 15 August 2007 Amit Misra told Cheng Hong that his negotiations with the unions were probably not going to come to a conclusion that was satisfactory to the respondent. 30 August 2007 Respondent announced further redundancies. 31 August 2007 Peter McMahon of PSPA visited Amit Misra. 31 August 2007 Telephone discussion between Amit Misra and Cheng Hong in which Mr Misra told Mr Hong of Peter McMahon's visit. 31 August 2007 Cecilia Maiolo, Antonia Karabasis, Michael Rutherford, James Hoose, Malcolm Brabant, Charles Schofield, Jordanka Brsakovska, Katerini Georganda, Nicolas El-Hawi, Derek Gentle, George Kaloustian and Peter Bitmead made redundant. 3 September 2007 Cheng Hong told Amit Misra that remanufacturing work was to cease at least for the time being. 3 September 2007 Respondent announced further redundancies. 30 November 2007 Date by which all relevant employees were made redundant. 21 June 2009 Redundancy provisions in Certified Agreement will expire. I certify that the preceding thirty-seven (37) numbered paragraphs and the Schedule are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | conduct by employer alleged breach of s 792 of the workplace relations act 1996 (cth) employer's business substantially ceased where redundancy clause in certified agreement included generous redundancy provisions if long term employees involuntarily retrenched where no breach of redundancy clause alleged whether employer's failure to dismiss some employees was conduct of the employer whether failure to dismiss caused injury to, or prejudicial alteration to, the position of those employees whether failure to dismiss for prohibited reason proceeding dismissed industrial law |
At the request of the first appellant, on 9 February 2007 I gave leave to amend the notice of appeal to add Maria Dimasi as the second appellant. An amended notice of appeal reflecting that grant of leave was filed on 21 February 2007. The amount claimed in the bankruptcy notice was a judgment debt arising from orders made in civil proceedings in the Magistrates' Court at Mildura on 9 July 2003. A certified extract dated 27 October 2005 of the judgment recited that an order for costs was made against F & M Dimasi (A Firm) in the amount of $7,217.68. A copy of the bankruptcy notice was served upon the first appellant on 22 November 2005 and on the second appellant on 24 or 28 March 2006. 3 On 18 April 2006 the appellants filed an application in the Federal Magistrates Court. The bankruptcy notice dated 2 November 2005 served by the Respondent, Nangiloc Colignan Farms Pty Ltd (ACN 008 447 603) on the applicants be set aside. The time in which to comply with the said bankruptcy notice be extended to a date after the hearing of this application. The Respondent, Nangiloc Colignan Farms Pty Ltd (ACN 008 447 603) pay the costs of this application. It refers to the second applicant as Michelina Dimasi when her correct name is Maria Dimasi. On that ground alone I am satisfied that the bankruptcy notice as against the second applicant should be set aside. He also rejected the argument that service on the first appellant had been defective because the first appellant was referred to in the affidavit of service as "Frank Dimasi", rather than "Frank Dimasi trading as F and M Dimasi (A Firm)", as named in the extract of the order of the Magistrates' Court at Mildura. His Honour found that the first appellant had been properly identified by the process server who served the bankruptcy notice. 6 His Honour dealt at length in his reasons with the substantive issue of whether the debt had been paid. It is not necessary for the purposes of the present appeal to canvass that issue in any detail. It suffices to say that his Honour found that the debt had not been paid, and rejected the evidence brought by the appellants to the effect that one K Davis on behalf of the respondent had, on 8 June 2004, accepted $3,500.00 in cash in full satisfaction of the judgment debt. I do not accept there is any defect in the bankruptcy notice of a kind dealt with in the recent High Court decision of Adams v Lambert [2006] HCA 10 ; (2006) 225 ALR 396 . The Bankruptcy Notice No. VN2484/05 against the Second Applicant is declared void and be set aside. The Application filed 18 April 2006 be otherwise dismissed. In his reasons published on 24 October 2006 he expressed himself as satisfied that an order for indemnity costs was warranted against both appellants, as he had found that the written receipt of payment of the judgment debt relied upon by the appellants in evidence was fraudulent. His Honour made an order for indemnity costs against the second appellant as well as the first appellant, as she had sworn an affidavit supporting her husband's claim to have made a cash payment of $3,500.00. His Honour was influenced to make the costs orders that he did by the amount of the time which had been devoted at trial to the factual dispute and the appellants' reliance on the fraudulent receipt. The Respondent Creditor be granted leave in Application number MLG754 of 2006 to amend the Creditor's Petition filed on 13 June 2006 by deleting the Second-named Respondent Debtor therein. Liberty to apply within 14 days of the date of this order is granted to the Second-named Respondent in Application number MLG754 of 2006 in relation to the question of costs. Reservice of the Creditor's Petition as amended in Application number MLG754 of 2006 be dispensed with. The Applicants shall pay the Respondent's costs of and incidental to the Application filed 18 April 2006, including any reserved costs, on an indemnity basis pursuant to the Federal Court Rules . The learned Federal Magistrate correctly found that the Bankruptcy Notice was defective because it refers to a "Michelina" Dimasi when the co-debtor named in the Bankruptcy Notice with Frank Dimasi was "Maria" Dimasi. However, the Federal Magistrate was wrong in law in proceeding to hear the application before him (to set aside the Bankruptcy Notice) on the basis that a bankruptcy notice can be bad against one debtor but remain valid as against another debtor named in the same bankruptcy notice. His Honour ought to have found that the Bankruptcy Notice was capable of misleading a debtor because it failed to name one of the two joint judgment debtors and instead stated as the name of one of one of the two joint judgment debtors "Michelina Dimasi" which is not the name of either judgment debtor. As the learned Federal Magistrate correctly found that the Bankruptcy Notice was defective against Maria Dimasi he could not validly then find she was liable in costs to the Creditor. His Honour should have found that the Second Appellant was entitled to her costs on a party party basis against the Respondent. The appeal be allowed. Bankruptcy Notice No VN2484/05 be set aside. Moreover, they submitted that it was not open to his Honour to set aside the bankruptcy notice only as against the second appellant. It was submitted that a bankruptcy notice identifying joint debtors cannot be valid as against one of the judgment debtors named in it, but invalid as against another. In the same way, it was contended that an irregular notice must be set aside in its entirety, rather than being void against only one of the debtors named in it. 13 The appellants also submitted that a bankruptcy notice naming a person who was not a party to the proceedings in which the foundational judgment was pronounced, can be capable of misleading, not only the misnamed debtor, but also the correctly named debtor. In this case, it was said, the first appellant would have been equally as confused by the indication in the notice that he was jointly liable on a debt with a person described in terms tending to suggest that she was not a joint debtor. 14 Although it was conceded by the appellants that a bankruptcy notice that does not quite "follow the judgement" may survive, they contended that a completely mistaken description in a bankruptcy notice which results in its failure to comply with a requirement made essential by the Act should result in the invalidation of the notice. The appellants also argued that it was open to his Honour to find that the present notice failed to comply with a requirement made essential by the Act , as neither debtor could have been confident as to what was required for him or her to comply with the notice. It was submitted that the notice was not only confusing, but failed to state unequivocally what was required of the persons upon whom it was served. 15 In the course of oral argument on the hearing of the appeal, Mr Bigmore QC for the appellants noted that the test of whether an error in a bankruptcy notice can reasonably mislead a debtor as to what is necessary to comply with the notice is an objective one. 17 Mr Bigmore also sought to bring the present case within the second category of defective bankruptcy notices identified by the High Court in Adams [2006] HCA 10 ; 225 ALR 396 as recently applied by a Full Court of this Court in Malek v Macquarie Leasing Pty Limited [2007] FCAFC 14. That second category comprises those bankruptcy notices involving a failure to meet a requirement made essential by the Act . 18 The appellants relied heavily on the fact that the learned Federal Magistrate had set aside the bankruptcy notice as against Maria Dimasi which was said to entail a finding that it was objectively capable of misleading any debtor. That finding in respect of Maria Dimasi was not the subject of a cross-appeal or any other challenge by the respondent. 19 Also in the course of oral argument, Mr Bigmore disputed the contention advanced on behalf of the respondent that a separate bankruptcy notice could be issued to each of two or more joint debtors. It is acknowledged by counsel for BFC that prior to such judgment the applicants were not jointly indebted to BFC: the causes of action against them respectively in the Supreme Court proceedings were not the same. Prior to s46(1) being enacted a petition against two or more joint debtors was required to be dismissed against all but one of them ( Re Myers; Ex parte Mulholland (1932) 5 ABC 128 and Re Meiklejohn & Anor; Ex parte Barnard [1961] Qd R 70). a single bankruptcy notice may not, in my view, issue against several debtors. The bankruptcy notice in this case asserts joint liability in the applicants based upon the single judgment obtained against them in the Supreme Court proceedings. The pre-existing obligation, which the judgment is intended to enforce, merges in the new obligation so created and, for most purposes as between the parties, it is conclusive evidence of the existence of the obligation which it creates. It may in some circumstances be set aside by the court which entered it, but, unless and until it is set aside that is, generally speaking, its effect. It has, however, been well settled for very many years that in a court having jurisdiction in bankruptcy a judgment has no such conclusive effect. The court will in many cases, as it is commonly said, "go behind" the judgment and inquire into the existence of the debt upon which it is said to be founded. It does not always represent itself as the relevant debt of the petitioning creditor, even though under the general law, the prior existing debt has merged in a judgment. The court will go behind the judgment for the purpose of considering whether it was founded on a real debt. The fact that the judgment may be irregular or wrong in form is no sufficient reason for dismissing the petition ..... The object of going behind a judgment is not to inquire whether the proper procedure was followed to obtain it, but to determine whether the debtor in reality owed to the creditor the moneys which the judgment held that be owed. ..... I say nothing as to the case in which, although the existence of a real debt is established, it is shown that the court which gave the judgment had no jurisdiction to pronounce it. The Supreme Court of New South Wales had jurisdiction to give judgment for the company for the amount which it claimed, even if the form of the action and the form of the judgment should have been different. However, once the existence of the debt is found, it cannot be sufficient cause for refusing to make a sequestration order that a judgment for the correct amount, given by a court having jurisdiction, was obtained by the wrong procedure or given in the wrong form. The liability of the applicants pursuant to such judgment is joint. It is accepted that the judgment is based upon real debts, and as to each of the applicants is in the correct amount and was given by a court having appropriate jurisdiction. In my view the authorities show that this Court in its bankruptcy jurisdiction is concerned with the reality of the debtor/creditor relationship between the parties, as to which it may, but need not, accept a judgment as conclusive. In this case the reality as to the underlying debtor/creditor relationships between BFC and the applicants respectively is not in dispute. It is that the liabilities of the applicants respectively to BFC arose from different causes of action with the consequence that their respective underlying liabilities to BFC were several. In such circumstance I do not consider that I should accept the judgment of the Supreme Court of New South Wales as conclusive as to the debtor/creditor relationships between the parties. I conclude that BFC was not entitled to issue a single bankruptcy notice against the applicants. BFC must elect as to which of the applicants they propose to proceed against. The bankruptcy notice will be set aside against the other of the applicants. That was said to be particularly so as the first appellant had vigorously asserted before the learned Federal Magistrate that he had paid the debt claimed in the bankruptcy notice. That fact was said to aid an objective conclusion that the first appellant had been under no misapprehension about what had to be done in response to the bankruptcy notice. 21 It was also argued on behalf of the respondent that the mistaken reference to "Michelina Dimasi" was incapable of invalidating the notice as far as it was addressed to Frank Dimasi. In respect of him it was, at worst, a mere formal defect or irregularity. Accordingly, it attracted the operation of s 306 of the Act because the Court could not form an opinion that substantial injustice had irremediably been caused to Frank Dimasi by the defect or irregularity. Like the error discussed by the High Court in Adams [2006] HCA 10 ; (2006) 225 ALR 396, the error in respect of the second debtor's name did not consist in a failure to meet a requirement made essential by the Act . 22 The respondent also contended that no reason of principle or practice precluded a Court from setting aside a bankruptcy notice as against one only of two debtors named in it. It is open to a creditor to serve a separate bankruptcy notice on each of two or more joint debtors. 23 Finally, it was submitted on behalf of the respondent that it was open to McInnis FM to have made the order for costs which he did against the second appellant. That was a proper exercise of discretion because of her having sworn an affidavit, found to be false, in support of the assertion that the foundational debt had been paid by the first appellant. 25 It is well established that the Court has the power to set aside a bankruptcy notice; see Re Sterling; Ex parte Esanda Ltd (1980) 30 ALR 77 per Lockhart J; Re Briggs; Ex parte Briggs v Deputy Commissioner of Taxation (WA) (1986) 12 FCR 310 per Toohey J. Regulation 4.02 provides that, for the purposes of s 41(2) of the Act , a bankruptcy notice must be set out in Form 1 as prescribed. Form 1 appears in Schedule 1 of the Regulations , and paras 1---4 provide for the identification of the debtor, the creditor and the time and place for payment. 28 Section 40(1)(g) of the Act identifies the act of bankruptcy as depending upon the service of "a bankruptcy notice under this Act ". Given the serious consequences attached to service of a bankruptcy notice and non-compliance with it, judgment creditors are required to comply strictly with the requirements governing bankruptcy notices, which, as well as effective service, include that they be in the correct form and have the specified contents. If it is, then it becomes necessary to consider whether substantial injustice has been caused by the defect or irregularity, and whether the injustice cannot be remedied by an order of the court. The questions whether the defect or irregularity is a formal defect or irregularity, and whether substantial injustice has been caused and cannot be remedied, are separate and distinct, the latter question arising only if the former is answered in the affirmative. It was open to McInnis FM to find that the misdescription of the second appellant was a defect that warranted the setting aside of the bankruptcy notice against that appellant, as the defect was capable of misleading the person so misdescribed on whom it was served so as to cause substantial injustice. 31 There was considerable discussion on the hearing of the appeal about the nature of a partnership debt. By force of s 13 of the Partnership Act 1958 (Vic) "every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while he is a partner ..." The debt in the present case was created by an order of the Magistrates' Court at Mildura in respect of costs awarded against the partnership, F & M Dimasi (a firm). The liability of each of the partners was therefore joint but it does not follow that a bankruptcy notice issued in respect of it can only be effective if it is validly addressed to both partners as joint debtors. In that case her Honour held that a single bankruptcy notice cannot issue against two or more several debtors. However, that does not entail the corollary that, because a bankruptcy notice may permissibly issue against two or more joint debtors, if it is ineffective or invalid against one or more of them it must be set aside against all. Indeed, her Honour's decision, in reliance on Re Myers; Ex parte Mulholland (1932) 5 ABC 128 and Re Meiklejohn; Ex parte Barnard [1961] Qd R 70, to allow the petitioning creditor to preserve the validity of a petition as against one only of more than two several debtors, points in the opposite direction. Nor does her Honour's reasoning in Re McLeod contradict the proposition advanced by Mr Sifris SC for the respondent that separate bankruptcy notices may issue addressed to each of two or more joint debtors. 38 Similarly, neither of the two propositions which I have just identified is contradicted by Hubner v Australia and New Zealand Banking Group Ltd [1999] FCA 385 ; (1999) 88 FCR 445 to which I was referred by Mr Bigmore QC. He refers to three cases. In the first, Re Ward; Ex parte R W Brown & Co Pty Ltd (1991) 28 FCR 329, one of two joint debtors made an application to set aside a bankruptcy notice addressed to both of them. Hill J, on an appeal from the Registrar, did not express any doubt about the validity of the bankruptcy notice addressed to joint debtors in that case. In Emerson v Wreckair Pty Ltd (1992) 33 FCR 581, the Full Court heard an appeal in relation to a bankruptcy notice addressed to joint debtors. None of the three judges on appeal nor the primary judge raised any doubt as to the validity of the notice to joint debtors. In a more recent decision, McLeod v Beneficial Finance Corporation Ltd (unreported, Federal Court, Branson J, No 789 of 1995, 5 October 1995), her Honour considered whether a bankruptcy notice could be issued to several debtors. Her Honour observed (at p 13) that the right to issue a bankruptcy notice cannot be wider than the right to present a creditor's petition, and because s 46(1) of the Act expressly authorised the presentation of a creditor's petition against joint debtors, her Honour concluded that a bankruptcy notice could be addressed to joint debtors but not to several debtors. There is no requirement that a bankruptcy notice in which two debtors are named must be served at the same time, nor is there any requirement where two debtors are named in the one bankruptcy notice that a creditor's petition may not be presented against one even though the bankruptcy notice has not been served on the other (see Re Ward; Ex parte R W Brown and Company Pty Ltd (1991) 28 FCR 329). Ex parte Gibson [1895] 1 QB 734. In that case an action had been brought against the debtor and five other persons but judgment was recovered only against the debtor and three of his co-defendants. A bankruptcy notice served on the debtor erroneously stated that judgment had been recovered against him and all five co-defendants. That defect, it was held, did not invalidate the notice as against the debtor. As well, it was held that a bankruptcy notice may be drawn up against, and served on, only one of a number of judgment debtors. It is said that where the judgment is a joint one against several defendants, a bankruptcy notice cannot be effective except it is drawn up against all the defendants, although it need only be served on the one whom it is desired to make bankrupt. I fail to see what good it can do that one to have the names of the others put in the notice when there is absolutely no necessity for serving it on them. This is a technicality to which we ought not to listen. No authority has been produced for that proposition and, as I have already indicated, there does not seem to be any foundation for it in the terms of the Bankruptcy Act . Having regard to the facts of this case, it is unnecessary to express an opinion about the proposition advanced by Mr Sifris that a separate bankruptcy notice may be addressed to, and served upon, each of two or more joint debtors. The defect in the notice relied on by the first appellant is the misdescription or misnomer of the second appellant. In Malek [2007] FCAFC 14 , a Full Court of this Court held that the omission of the note to para 7 in the prescribed form of the bankruptcy notice was a formal defect or irregularity, and did not have the consequence that the notice could reasonably have misled a debtor as to what was necessary to avoid the commission of an act of bankruptcy. However, it is not contentious that s 306 has an operation in respect of bankruptcy notices. Some defect in a bankruptcy notice will therefore be compatible with the validity of the notice. Where, as in this case, it is not contended that any injustice has been caused by the defect, a defect compatible with validity is a defect which, having regard to the intention of the legislature and the significance of the defect seen in the context of the notice read as a whole, is appropriately characterised as "a formal defect or an irregularity". A defect will not be characterised as "a formal defect or an irregularity" if it could reasonably mislead a debtor as to what is necessary to avoid the commission of an act of bankruptcy. I am not persuaded that the reference to the second appellant, in the bankruptcy notice, as "Michelina Dimasi" instead of "Maria Dimasi" would reasonably have misled the first appellant as to what was necessary to avoid the commission of an act of bankruptcy. I do not agree with the submission of Counsel for the appellants that the first appellant would have been as confused and misled as the second appellant by the indication in the notice that he was jointly liable on a debt with a person who was not the second appellant correctly named. My perception of the objective effect on the mind of the first appellant of the contents of the bankruptcy notice is reinforced by what he and his solicitor did in response to its service. There is no indication in the letter that Mr Dimasi was confused by the mistaken reference in the bankruptcy notice to "Michelina" Dimasi or was under any misapprehension about what he had to do to comply with the notice. 46 It was submitted in reply by Mr Bigmore that the bankruptcy notice in the present case indicated that it was necessary for the first appellant to pay an amount jointly with a person wrongly named as "Michelina Dimasi. " That indication was said to be confusing and to create an inability to comply with the notice. That submission, in my view, misstates what was required in order to comply with the bankruptcy notice. What the bankruptcy notice required of each of the persons to whom it was addressed was that he or she pay to the judgment creditor the amount of the judgment debt particularised in the Schedule, or secure or compound for it to the satisfaction of the creditor, or seek, within 21 days of service, to have the bankruptcy notice set aside. The misnomer of the second of those persons as "Michelina Dimasi" was not capable of misleading the first appellant as to what he had to do under any of the three alternative modes of complying with the notice. Each of those modes was capable of being implemented by the first appellant without reference to the other judgment debtor by whatever name she might have been identified in the bankruptcy notice. 47 Section 306(1) clearly provides that bankruptcy proceedings are not invalidated by a formal defect, unless it be shown that "substantial injustice" has been caused by the defect or irregularity. In my view, no "substantial injustice" has been caused in the present case. He did not press the contention that his Honour's discretion miscarried in awarding costs on an indemnity basis against the second appellant even if the bankruptcy notice were not set aside as against the first appellant. 49 In view of my conclusion that the bankruptcy notice was effective as against the first appellant, it is unnecessary to consider the contention which was pressed as to costs. The second appellant was successful below in having the bankruptcy notice set aside as against her and so was in a position analogous to that of a non-party in relation to costs. However, Mr Bigmore candidly conceded that the validity of the bankruptcy notice in relation to the second appellant had not been argued or determined as a separate or preliminary point and most of the evidence and argument before the learned Federal Magistrate had been directed to the appellants' assertion that the judgment debt had been paid and a receipt issued by the respondent. That assertion was supported by an affidavit sworn by the second appellant and was rejected by his Honour as fraudulent. In these circumstances, I can detect no error of principle, mistake of fact, reliance on an irrelevant matter or failure to take into account some material consideration which, in accordance with the well-known statement in House v The King [1936] HCA 40 ; (1936) 55 CLR 499 at 504-505, can warrant an appellate court in exercising for itself a discretion like that involved in the present order for costs. Accordingly, the appeal by the second appellant also fails. The appeal will therefore 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 Ryan. | bankruptcy notice issued against two partners jointly liable on a judgment debt one debtor incorrectly named in bankruptcy notice which federal magistrate set aside as against that debtor whether bankruptcy notice effective as against other joint debtor whether defect, if any, was curable by resort to s 306 of bankruptcy act 1996 (cth) whether misnomer of second debtor was capable of confusing or misleading the other, correctly named, debtor whether magistrate's discretion miscarried in awarding indemnity costs against both appellants notwithstanding that bankruptcy notice had been set aside against second, incorrectly named, appellant. bankruptcy |
In certain circumstances, the Minister for Agriculture, Fisheries and Forestry (the Minister) must first agree to the giving of such consent by the Authority. This proceeding concerns related decisions of the Authority and the Minister regarding the proposed export of wheat by OzEpulse Pty Ltd (OzEpulse) and OzEgrain Pty Ltd (OzEgrain) for which the Authority has refused to give the necessary consent. Before stating the issues, it is desirable to say something about the legislative framework within which the issues arise, including some legislative history. 2 Under s 4 of the Act, the Australian Wheat Board (the Board), which was established under the Wheat Marketing Act 1984 (Cth) (the 1984 Act), was continued in existence as the Authority. Section 5 provides that the functions of the Authority include the controlling of the export of wheat from Australia. Under s 5A, in performing that function, the Authority must seek to complement any objective of AWB (International) Limited (AWB) to maximise net returns for pools operated by AWB, while at the same time seeking to facilitate the development of niche and other markets where the Authority considers that that may benefit both growers and the wider community. 3 Part 4 of the Act, which consists of ss 57 to 59, deals with the control of wheat exports. Under s 57(1), a person must not export wheat unless the Authority has given its written consent to the export of the wheat and the export of the wheat is in accordance with the terms of that consent. There are penalties for contravention of that prohibition. However, the prohibition in s 57(1) does not apply to AWB. Further, s 57(3A) provides that, before giving a consent, the Authority must consult AWB and, s 57(3B) provides that, unless a consent is limited to export of wheat in bags or containers, the Authority must not give a consent without the prior approval in writing of AWB. Those provisions reflect the policy of maintaining AWB as a single desk for the export of wheat from Australia. 4 Section 58 of the Act provides that the Authority may vary a consent given under s 57 on request by the person to whom the consent was given. If the Authority makes a variation, the variation must be in accordance with the request or, if it is not in accordance with the request, the variation must not be less favourable than the consent to which the request relates. Before making a variation, the Authority must consult AWB. Under s 58(7), a consent cannot be varied otherwise than in accordance with s 58. 5 When Part 4 was originally enacted in 1989, s 57 provided that a person other than the Board must not export wheat unless the Board had given its written consent to the export and the export was in accordance with the terms of that consent. There was no express power to vary such a consent. 6 The Wheat Marketing Amendment Act 1997 (Cth) (the 1997 Amendment) was enacted to put in place the first phase of a Government plan to restructure the Board from a statutory marketing authority to a grower owned company. The 1997 Amendment established AWB and other companies as privately owned bodies to take over the commercial activities of the Board. No amendment was made to s 57 by the 1997 Amendment. 7 The Wheat Marketing Legislation Amendment Act 1998 (Cth) (the 1998 Amendment) amended s 4 to provide that the Board was to continue in existence as the Authority and s 57 was amended to substitute references to the Authority for references to the Board. However, s 57(1A) was inserted to exempt AWB from the need to obtain the Authority's consent. The provisions that require the Authority to consult with AWB before giving consent under s 57 and the provisions that prohibit the Authority from giving consent without the prior approval in writing of AWB were inserted in the Act by the 1998 Amendment. Even after those changes, however, there was no express power conferred by the Act to amend a consent given by the Authority. 8 Section 58 of the Act was inserted by the Wheat Marketing Amendment Act 2003 (Cth) (the 2003 Amendment). The 2003 Amendment also introduced s 5A into the Act. The 2003 Amendment was part of arrangements that were intended to provide a funding mechanism for the wheat industry to meet the operational costs of the Authority. The explanatory memorandum published in connection with the Bill for the 2003 Amendment stated that, at the time of the privatisation effected in 1999, the Authority was established as a regulatory body to control the single desk wheat export arrangements, including the issuing of export consents to persons other than AWB, and AWB became the manager of the single desk. The explanatory memorandum said that the Bill included provisions to simplify the process to make minor variations to export consents and strengthen the Authority's powers to monitor compliance by exporters of wheat under consents. 9 In his speech on the second reading of the Bill for the 2003 Amendment, the then Minister said that the Government had repeatedly confirmed its support for a single desk for the export of wheat while ever there was a benefit to Australian wheat growers and Australia's export performance. He said that, at the same time, it was recognised that there needed to be flexibility to allow other exporters to take advantage of market opportunities and that was an important function of the Authority through its consent system. The Minister said that those principles, as they were to apply to that function of the Authority, would be spelt out through the 2003 Amendment. 10 Part 5 of the Act, which consists of ss 60 to 65, creates special rules concerning the application of Part 4 during a temporary period that commenced on 9 December 2006 and presently continues up to 30 June 2008. During the temporary period, the Authority must not make a decision under s 57 to give a consent that is not limited to export in bags or containers, unless the Minister has agreed in writing to the giving of the consent. Further, the Authority must not make a decision under s 57 to refuse to give such a consent unless the Minister has agreed in writing to the refusal to give the consent. During the temporary period, the prohibition on the Authority giving a consent without the prior approval in writing of AWB does not apply. Further, during the temporary period, the Minister may direct the Authority to give a consent to a person who has made an application to export wheat under s 57 and may direct the Authority to refuse to give a consent to a person who has made such an application. Section 63 provides that, for the purposes of deciding whether to agree or to refuse to agree to the giving of a consent, or deciding whether to give a direction, the Minister must have regard to the public interest. Nothing in Part 5 otherwise restricts the considerations that the Minister may take into account in making such a decision. 11 Part 5 of the Act was inserted by the Wheat Marketing Amendment Act 2006 (Cth) (the 2006 Amendment). The explanatory memorandum published in connection with the Bill for the 2006 Amendment stated that the purpose of the Bill was to effect the transfer from AWB to the Minister, on a temporary basis, of the right to veto bulk wheat export applications. The explanatory memorandum said that the changes did not amend the functions or objectives of the Authority or AWB's authority to engage in export activities and that the Authority would continue to control the export of bulk wheat. However, the Authority would need to seek the agreement of the Minister before approving or rejecting an application for bulk export by any person other than AWB. The Minister was to have a broad ranging discretion to permit the Government to assess whether allowing bulk exports by traders other than AWB would be in the public interest. 12 Under s 57(3E) of the Act, which was introduced into s 57 by the 1998 Amendment, the Authority is required to issue guidelines about the matters that it will take into account in exercising its powers to give consent to the export of wheat. Further, unless a variation of a consent to the export of wheat is of a minor nature, the Authority must take into account the matters included in any guidelines issued by it before making the variation. In accordance with s 57(3E), the Authority has published guidelines. 13 The guidelines provide, first, that the Authority will consider the Eligibility Criteria , namely, whether the applicant is a suitable person to be granted a consent with regard to the need to maintain effective control over the export of wheat from Australia, and Australia's reputation in overseas markets as a reliable supplier of wheat. The guidelines state in more detail what the Authority may look at when applying the Eligibility Criteria. 14 Next, the Authority will consider the Market Assessment Criteria in relation to four different markets, being Niche markets, Non-Niche markets, Seed Wheat and Minimally Processed Wheat. 15 Finally, the Authority will consider the Allocation Criteria in relation to the four markets. Two are applications to vary consents to export wheat already given by the Authority. The other is an application for consent to export wheat to Yemen. 17 On 1 November 2006, the Authority gave its written consent to OzEgrain for the export to Italy of 10,000 tonnes of wheat in containers during the period 1 January 2007 to 31 December 2007. On 28 November 2006, OzEgrain made a request to the Authority to vary that consent to allow OzEgrain to export the wheat in containers or in bulk . On 22 December 2006, the Authority notified OzEgrain that it had been unsuccessful in its application to have the export consent varied. 18 On 1 November 2006, the Authority gave its written consent to OzEpulse for the export to Bangladesh of 6,000 tonnes of wheat in containers during the period 1 January 2007 to 31 December 2007. On 6 December 2006, OzEpulse made a request to the Authority to vary that consent by increasing the tonnage by 44,000 tonnes and to vary the shipping method from export in containers to export in bulk . On 22 December 2006, the Authority notified OzEpulse that it had been unsuccessful in its application to have the export consent varied. 19 On 6 December 2006, OzEpulse requested the Authority to give its consent to OzEpulse for the export to Yemen of 50,000 tonnes of wheat in bulk during the period 1 January 2007 to 31 December 2007. On 22 December 2006, the Authority notified OzEpulse that it had been unsuccessful in its application for the grant of consent for the export of wheat to Yemen. 20 There were a number of benefits for OzEpulse and OzEgrain in being able to supply wheat in bulk as opposed to bags and containers. It meant that they could isolate wheat of particular variety and could take it straight to port and load it into a bulk vessel, which could potentially have a significant advantage for OzEpulse and OzEgrain and the farmers that supply them. Mr Peter Malcolm Howard is an executive director of both OzEpulse and OzEgrain and an experienced grain trader and grain exporter and the relevant mind and decision maker of OzEpulse and OzEgrain. Mr Howard accepted that the applications for consent to export in bulk were made for purely economic considerations. In the proceeding, OzEpulse and OzEgrain seek judicial review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the Judicial Review Act) of the decisions of the Minister in declining to agree in writing and of the Authority in refusing to give its consent. There are three grounds. 22 First, in relation to each of the applications, each of OzEpulse or OzEgrain asserts that it was denied procedural fairness in so far as the Minister had regard to submissions made by AWB and to specific public interest factors without giving them the opportunity of commenting on and responding to AWB's submissions or the specific public interest factors. Mr Howard gave evidence of the submissions that he would have made in relation to the adverse factors taken into account by the Minister, had he been given the opportunity. In addition, Mr Howard said that, had he been provided with the AWB submissions, he would have sought the urgent advice of Mr Mark Barber of ACIL Tasman Pty Ltd. Mr Howard said that he would have used that advice in preparing submissions to the Minister and to the Authority. 23 Second, in relation to the applications for variation of the consents to the export of wheat to Bangladesh and Italy, each of OzEpulse and OzEgrain also contends that the decision of the Authority in relation to its request was flawed because the Act does not require the agreement in writing of the Minister to a variation of consent and the Authority refused to vary the consents simply because of the failure of the Minister to agree to the variation. 24 Third, in relation to the application to vary the consent for the export of wheat to Italy, OzEgrain says that the Minister had regard to certain matters and considerations in making his decision that could have no bearing on the decision and that, accordingly, the Minister had regard to irrelevant considerations. That involves reference to steps taken by the Minister in late 2006 to invite applications as a matter of some urgency and the response from AWB following consultation under s 57(3A) of the Act. The press release also encouraged those organisations with applications currently before the Authority to provide any supplementary information they thought appropriate by that date. The press release said that the Government's aim was to provide early certainty to Australian wheat growers, particularly to growers in Western Australia, who do not have the same range of marketing options available to growers in the eastern states. In particular, the press release said that those growers who had warehoused their wheat needed to know what was going to happen so that they could get on with their businesses. 27 The Minister said that it was essential that applicants provide as much information as possible to allow adequate assessment on public interest grounds. He said, specifically, that information about maximising returns to the industry and Australia's wheat growers, both inside and outside the National Pool, would be of assistance. 28 Following receipt of that press release, Mr Howard forwarded an email to the Authority providing additional information in support of OzEpulse's application for the export of wheat to Yemen. In his email, Mr Howard stated the OzEpulse intended to source wheat directly from grower sellers outside the National Pools operated by AWB. He said that all attempts by OzEpulse to obtain offers of wheat from AWB had been rejected in recent years and that he had been told that day that AWB only dealt with one merchant in Yemen and that it would not offer wheat to OzEpulse for shipment to Yemen. Mr Howard submitted that the granting of a bulk export permit to Yemen would increase the returns for farmer sellers and increase the market share of Australian wheat to Yemen, both of which he said were in the public interest. Mr Howard said that there were many growers in Western Australia and South Australia who no longer wanted to deal with AWB and that those growers should be given the freedom to deal with buyers other than AWB. Finally, Mr Howard said that the blocking of bulk export applications was a restraint of trade that had limited OzEpulse's ability to earn income. Mr Howard accepted in the course of cross examination, that, in his email, he put forward all matters of public interest that he wanted the Minister to consider in relation to the applications for consent. 29 On 15 December 2006, Mr Howard sent a further email to the Authority concerning the price that OzEpulse was offering to Western Australian sellers of wheat, as compared to the current estimate by AWB of the return to growers who supply to the National Pool. The difference was about $83 per tonne. In that email, Mr Howard said that the giving of consent to OzEpulse to export wheat to Bangladesh would greatly enhance returns to growers. Mr Howard asserted that OzEpulse was a regular supplier of grain to Bangladesh and was well known in the market. Various other applications for consent were also referred to AWB. AWB was not provided with particulars of the names of particular applicants, although it was furnished with particulars of the quantities of wheat to be exported in bulk and the proposed destinations. 31 On 15 December 2006, AWB replied in relation to the application for consent to export to Yemen, recommending that the application for consent be denied. On 18 December 2006, AWB wrote to the Authority recommending that the application for variation of the consent to export to Bangladesh be denied. On the same day, AWB also wrote to the Authority recommending that the application to vary the consent to export wheat to Italy be denied. Each of AWB's letters was accompanied by detailed comments for consideration by the Minister and the Authority as to why AWB considered that the consents were not in the public interest and did not complement the objective of maximising pool returns. AWB's responses were not provided to OzEpulse or OzEgrain before the relevant decisions were made. In each response, AWB said it had reviewed the relevant application in the context of whether consent would be in the public interest. The three responses followed similar patterns and quite substantial parts of the responses were identical for each of the three applications presently under consideration. 32 Each of AWB's responses began with an executive summary concerning the public interest. The executive summary stated that AWB considered that approval of the application was not in the public interest as it would result in a number of consequences. The first consequence was that there would be a reduction in estimated pool returns. Each response stated an amount per tonne to a stated base rate, with potentially greater effect on growers who have delivered to the pool for the grades in question. The figures in each response were specific to the reduction in estimated pool returns that AWB said would result from the particular application. The responses stated that that impact would be magnified if the export were approved in conjunction with other export applications. The rates were calculated by reference to the tonnage of wheat that was the subject of each application. All other consequences were identical for each application. 33 The executive summary then referred to a negative financial impact on approximately 3,000 individual growers who had already committed to the National Pool in the reasonable belief that their estimated pool returns would not be subsequently undermined by the granting of bulk export permits. The executive summary asserted that growers who had warehoused their wheat would be very reluctant to deliver to the pool when estimated pool returns fall and there was continuing uncertainty as to whether further bulk permits may be granted, thereby creating additional risk to the estimated pool returns. Under that rubric, AWB said that it was providing information regarding public interest for consideration by the Minister in assessing the applications. AWB said that that information was also relevant to the Authority's obligation under the Act to consider the impact on the National Pool of growers and the wider community. Where a price premium above the Estimated Pool Return has been quoted, confirmation of that premium and its basis. 2. Where a price premium above the Estimated Pool Return has not been specified in the application, a statement as to whether a price premium is expected to be paid to growers or not and, if so, its size. 3. Where a price premium above the Estimated Pool Return is claimed, a statement as to whether that would translate into a higher net price to growers than the National Pool's Estimated Silo Returns. 4. Whether OzEpulse and OzEgrain had quantified the impact that their proposals would have on the estimated pool return for the National Pool, how that impact could be minimised and what measures were contained in their applications to minimise that impact. Mr Howard referred to the information that OzEpulse had already provided to the Authority regarding various elements of public interest. He pointed out that the Department would have an exact mechanism to compare purchase prices by OzEpulse with returns from AWB. Mr Howard then dealt with the specific points raised in the letter of 18 December 2006. First, Mr Howard indicated that the current AWB pool estimate was $89.41 per tonne less than the current bid that OzEpulse held from its Bangladeshi clients. He said that, in relation to Yemen, the OzEpulse price was $29.41 per tonne higher than the AWB current estimated pool return. He also gave details concerning the premium in relation to wheat to be exported to Italy. Mr Howard asserted that, if OzEpulse and OzEgrain were granted consent, growers would be paid a significantly higher net price compared to Estimated Silo Returns for the National Pool. 40 Mr Howard also asserted that the granting of consents would lead to a significant increase in competition within Australia and at the farm gate and that that was very much in growers' interests, as new export participants would compete amongst themselves to buy from growers and other domestic sellers. Mr Howard said that he did not believe that the argument put forward by AWB, that the marketing costs would increase for existing pool participants if private traders were granted permits, had any relevance. He observed that AWB should only be charging marketing fees commensurate to the tonnage in the pool and asserted that, if the pool attracted a lesser tonnage than first expected, then AWB should lower its fees further. The only measure that Mr Howard could offer to minimise the impact on the pool return was for OzEpulse and OzEgrain to disclose to the Government the price at which they sell wheat and the price at which they purchase the wheat from growers or merchants. He said that the Government would then have some basis to compare the performance of AWB. The Authority recommended that OzEpulse be given consent for the bulk export of 10,000 tonnes of wheat, being 4,000 tonnes more than the original consent but 40,000 less than the consent sought. On 19 December 2006, the Authority referred to the Minister, OzEpulse's application for consent to export wheat to Yemen. The Authority recommended that OzEpulse be given consent for 10,000 tonnes. Also on 19 December 2006, the Authority referred to the Minister, OzGrain's application for variation of the consent to export wheat to Italy. The Authority recommended that the application be consented to. 42 The three applications presently in issue were referred to the Minister in conjunction with 43 other bulk export applications, being a total of 46 applications from 18 organisations for 22 countries. While there were 46 separate applications, there were only 18 different applicants. That is to say, as with OzEpulse and OzEgrain, several organisations made multiple applications. The Authority recommended that 22 applications for a total of 536,000 tonnes be approved. Most of the recommended approvals were for less than the requested tonnage. The Departmental Minute pointed out that the Authority had received comments from AWB and that AWB objected to all bulk export applications. It said that the key arguments from AWB were the sensitivity of pool returns to reductions in pool volumes, the need to maintain core markets, the threat to pool returns should Australian wheat exports compete in the same market and the potential for postponement of pool distributions due to capital finance issues. The Departmental Minute also stated that the total tonnage applied for exceeded the expected exportable surplus for the year. 45 The Departmental Minute pointed out the need for the Minister to balance the public interest in approving or rejecting each application and stated that the Minister had a discretion in doing so. The Departmental Minute stated that the issues for consideration in assessing public interest elements of an application were as follows. What impact would approving or rejecting an application have on industry harmony? 2. What impact would approving or rejecting an application have on returns to growers? 3. What impact would approving an application have on the National Pool? 4. The capacity of the applicants to maximise returns to growers. 5. The balancing of competing interests. 6. What impact would issuing consents have on Australia's trading performance? 7. Wider impacts. In the event, the Minister consented to one application in full, for export of 300,000 tonnes of wheat to Iraq, and consented to another application in part, for export of 500,000 tonnes of wheat to Indonesia by Agracorp Pty Ltd/CBH (CBH). The Minister rejected all other applications. 47 On 22 December 2006, the Minister wrote to the Authority saying that he had considered the applications having regard to the public interest and that, as a result of his considerations, the Authority was directed to give bulk export consents in respect of two applications. The Minister said, however, that he considered that it was in the public interest for the Authority to reject all other applications, including those from OzEgrain and OzEpulse. That led to the Authority writing to OzEpulse and OzEgrain refusing their applications in the terms to which I have already referred. 48 The Minister subsequently provided, pursuant to s 13(1) of the Judicial Review Act, statements of his reasons for his decisions in relation to the three applications in question. In each Statement of Reasons, the Minister stated that the evidence and other material on which his findings of fact were based included the applications by OzEpulse or OzEgrain, as the case may be, additional information provided by OzEpulse and OzEgrain concerning the public interest aspects of their applications and the AWB's recommendations. In each case, the Minister stated those public interest factors that he considered supported the relevant application together with those public interest factors that he considered were against approving the application. The factors were similar, but not identical, in each of the three cases. 49 The public interest factors that were considered by the Minister to be against approving the applications were as follows. Grower ownership and control in the relevant applicant. 2. The expertise and experience of the applicant in exporting bulk wheat to the market concerned. 3. The development of long term value adding opportunities for wheat growers. 4. Whether the benefits from potentially higher prices outside the National Pool would be delivered, in full, to growers. 5. Possible impacts arising from the application to the Australian wheat industry as a whole. 6. The potential impact on the stability of the single desk while growers are consulted on possible future marketing arrangements. 7. Possible benefits arising from the application to the Australian public more broadly. 8. Which growers would benefit and what part of the wheat industry that represented. 9. Whether the net revenue growers would receive for their wheat would increase and by how much if a bulk consent were granted. 10. Other marketing options available to growers in different regions and how the applications would affect that. 11. The expertise and experience of the applicant in selling and exporting Australian wheat to the market in compliance with regulatory arrangements (since the inception of the Authority) --- for example in bags and containers. In relation to Italy, the Minister considered factors 1, 2, 3, 4, 7, 8, 9 and 10 to be against agreeing to that application. In relation to Yemen, the Minister considered factors 1, 2, 3, 4, 5, 6, 7 and 11 to be against agreeing to that application. 51 Having outlined the factors both in favour and against consent in relation to each of the three applications presently in question, the Minister's reasons then said that a key consideration in his decisions for all of the applications was the potential impact on growers, in particular those that had delivered, or would deliver, to the National Pool. Thus, the Minister's primary consideration was the interests of growers and making sure that growers who had delivered to the National Pool in good faith were not adversely affected. 52 The impacts on the National Pool that the Minister took into account were its ability to supply and maintain key markets, the impact on established customer relationships, the returns to growers who had delivered or will deliver to the National Pool and the per tonne costs that participants would have to pay for the management of the National Pool. The Minister considered that the impact of those factors on the National Pool and its participants would become increasingly damaging, the greater the volume allowed outside the National Pool, particularly during the current drought affected harvest. The Minister considered that the potential impacts were unacceptable for volumes greater than the 800,000 tonnes that the Minister approved in total. 53 Having observed that the 46 applications were made by 18 companies and covered 22 countries and covered 5.3 million tonnes in total, the Minister said that the two applications that he approved were those that he considered were, on balance, the strongest applications when assessed against the consideration just outlined. The Minister said that a further consideration was the maintenance of an Australian presence in the Iraq market, where AWB was currently excluded. The Minister said that it was in the interests of wheat growers and Australia as an exporting nation to maintain a presence in that longstanding market for Australian wheat. In relation to the application by CBH for consent to the export of 500,000 tonnes to Indonesia, the Minister took into account factors that included that CBH is a co-operative, owned and operated by growers, that the export will provide a price premium to Western Australian growers, that the wheat will be supplied to Australian part owned flour mills in Indonesia and that there was a long term commitment to Australian wheat growers arising from the proposal. A legislative intention to exclude the rules will not be assumed or spelt out from indirect references, uncertain inferences or equivocal considerations. In particular, such an intention should not be inferred merely from the presence in the relevant statute of rights that are commensurate with some of the rules of procedural fairness. The rules may be excluded because the power in question is, of its nature, one that is to be exercised in circumstances of urgency or emergency. However, urgency will not of itself exclude the right to procedural fairness, although it may, in particular circumstances, reduce the content of the right to procedural fairness ( South Australia v Slipper [2004] FCAFC 164 ; 136 FCR 259 at [93] ). 55 The requirement for procedural fairness does not require a decision maker to disclose what the decision maker is minded to decide, so that parties affected may have a further opportunity of criticising the mental processes of the decision maker before a final decision is reached. A decision maker is generally not obliged to invite comment on the evaluation of the subject's case. On the other hand, procedural fairness requires that a party affected by a decision be given the opportunity of ascertaining the relevant issues and to be informed of the nature and content of adverse material. Thus, the subject of a decision is entitled to have his or her mind directed to the critical issues or factors on which the decision is likely to turn in order to have an opportunity of dealing with it and is entitled to respond to any adverse conclusion drawn by the decision maker on material supplied by or known to the subject that is not an obvious and natural evaluation of that material. 56 Where the requirements for procedural fairness apply, a person likely to be affected by the decision is entitled to put information and submissions to the decision maker in support of an outcome that supports that person's interests. That entitlement extends to the right to rebut or qualify, by further information and comment, adverse material from other sources that are put before the decision maker. The decision maker is required to identify to the person affected any issue critical to the decision that is not apparent from its nature or the terms of the statute under which it is made. The decision maker must advise of any adverse conclusion that has been arrived at that would not obviously be open on the known material. On the other hand, a decision maker is not obliged to expose his or her mental processes or provisional views for comment by an affected person before making the decision in question ( Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd 127 ALR 699 at pp 714-715). 57 In the ordinary case, an opportunity should be given to a person affected by a decision to deal with adverse information that is credible, relevant and significant to the decision to be made. While procedural fairness does not normally require the decision maker to disclose his or her thinking processes or proposed conclusions, it may be that an adverse conclusion of a type that could not reasonably be expected by a person affected by a decision ought to be brought to that person's attention, as a matter of fairness ( Minister for Local Government v South Sydney City Council [2002] NSWCA 288 ; 55 NSWLR 381 at [260] and [261]). 58 If the rules of procedural fairness require disclosure of information to a person affected by a decision, it will be immaterial that the person might not have successfully negated the significance of the information so disclosed or persuaded the decision maker to make the favourable decision. It will be sufficient that the denial of natural justice deprived the person affected of the possibility of a successful outcome. That is to say, it is not a question of whether a court engaged in judicial review would have been persuaded by the response of the person affected: the question is whether the decision maker might possibly have been persuaded by the response of the person affected ( Pfizer Pty Limited v Birkett [2001] FCA 828 ; 112 FCR 305 at [63] ). 59 The content to be given to an obligation to accord procedural fairness must accommodate the particular provisions made in the enactment that regulates how the decision maker is to go about the task of decision making. The application of principles of procedural fairness in a particular case must always be moulded to the particular circumstances of that case ( Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; 225 CLR 88 at [10] and [25]). 60 An executive or administrative decision of a kind that affects a person as a member of the public or a class of the public may properly be characterised as a " policy " or " political " decision. In such a case, there will be no entitlement to procedural fairness in relation to the making of the decision vested in a member of the public or a member of a class of the public affected by the decision ( Salemi v Mackellar No 2 [1977] HCA 26 ; 137 CLR 396 at 452). A minister is not bound to hear an individual before formulating or applying a general policy or exercising a discretion in a particular case by reference to the interests of the general public, even where the decision affects an individual's interests. A minister may determine general policy or the interests of the general public free of procedural constraints. A minister will be confined only by the limits otherwise expressed or implied by statute ( South Australia v O'Shea [1987] HCA 39 ; 163 CLR 378 at 411). He was aware that, under s 63 of the Act, there was a public interest criterion that the Minister would have to consider in deciding whether to exercise the veto that was effectively transferred to the Minister from AWB. From 6 December 2006, Mr Howard turned his mind to the submissions that he wished to make on the question of the public interest. He read the Minister's press release of 12 December 2006 and understood that the Minister was seeking applications and supplementary information by 15 December 2006. Mr Howard also understood that one of the matters upon which the Authority and the Minister were seeking assistance was information about maximising returns to wheat growers who delivered to the National Pool. 62 When he read the press release, Mr Howard determined to put forward to the Authority and to the Minister his arguments concerning the public interest as best he could. In particular he tried to address the topic of maximising returns to growers who delivered to the National Pool. His contention was that there would be no effect on parties within the pool if OzEpulse and OzEgrain were given consent to export: the growers within the pool would not be affected because OzEpulse and OzEgrain were buying from outside the pool and were not dealing with people within the pool. Mr Howard put that forward to the Minister and the Authority as an argument about the public interest concerning that topic. 63 Another argument that Mr Howard put forward was that it was in the public interest to allow the applications of OzEpulse and OzEgrain because that would be good for the wheat growers from whom they were buying, because those growers would get a better price. He also agreed that he advanced the argument that it would be good for the overall Australian wheat market to obtain more of the Yemen market. He also put forward an argument that it would be good for Australia if small businesses such as OzEpulse and OzEgrain were given a chance to obtain further business. In putting that argument forward, he was attempting to make submissions on the various aspects of the public interest that he wanted the Authority and the Minister to consider. 64 Mr Howard understood that information was being sought on the question of whether he could quantify the impact that his export proposals would have on the growers in the pool and whether he could suggest any measures to minimise that impact. Mr Howard also understood that, if AWB insisted on their contractual rights, the effect of his export proposals would be to reduce the return for the growers in the pool. His contention, however, was that his companies were dealing outside the pool. 65 Mr Howard's position was that AWB should lower its fee in order to negate the impact that his export proposals would have had on the growers who delivered to the pool. He reiterated in cross-examination that, if OzEpulse and OzEgrain were buying from outside the pool, that could not affect someone within the pool. Nevertheless, he accepted that someone within the pool had a direct link to the fees charged by AWB, so that, if AWB lessened its charges, there would be no effect. Mr Howard knew that that was one of the matters upon which he was being asked to provide information and what he said in reply to the letter from the Department represented what he wanted to put to the Authority and the Minister. He accepted that he had ample opportunity to put the submission that he wanted to put on that question. 66 Mr Howard expressly accepted that there was nothing he was denied the opportunity of putting on the topic that the Minister identified as the primary or key consideration. Mr Howard accepted that he could have retained Mr Barber in December to deal with the question that was subsequently identified as the key or principal consideration of the Minister. 67 Mr Howard also accepted that the question of what effect his proposals would have on the growers in the pool if accepted was one that was asked and one to which he had replied as best he could. He did not claim that he was denied a chance in December 2006 to put a submission on the question whether his proposals, if accepted, would have a negative effect on people in the pool. 68 Mr Howard accepted that OzEpulse and OzEgrain were given the opportunity to provide as much information as they wished to enable the Minister to make an adequate assessment of the public interest. He understood that the assessment of the public interest would include maximising returns to industry and wheat growers both inside and outside the National Pool. He also accepted that they were also given the opportunity to provide a quantification of the net benefit to their sellers and the detriment to wheat growers in the National Pool together with possible measures to minimise the impact. He accepted that, in response to the Minister's and the Authority's invitation, OzEpulse and OzEgrain had made the submissions on the question of the public interest that they wished to make. He then commissioned a report from Mr Barber responding to the AWB submissions. Mr Barber's report, which was received some six weeks after it was requested, is highly argumentative and addresses matters of Government policy. The executive summary in Mr Barber's report begins by asserting that the AWB submissions were unreliable because they did not provide an accurate assessment of the effect on participants in the National Pool and the Australian public, of giving bulk export consents. 70 Mr Barber asserted that there were inaccuracies in so far as AWB made assertions as follows. • Growers who had already delivered to the National Pool would experience a reduction in their pool equity because pool management fees per tonne would rise : Mr Barber said that AWB had presented no evidence that sales to Yemen and Bangladesh would have diverted grain away from the pool, the management fee is fixed and payable by the pool irrespective of the amount of grain delivered and the pool management fee is entirely at the discretion of AWB and could be reduced. • It would be unviable for AWB to continue to be the buyer of last resort : Mr Barber said that the buyer of last resort function does not depend on the size of the pool and the applications were made when domestic demand was exceptionally strong due to reductions in domestic wheat production. • Issuing licences would increase financing, credit and cash flow uncertainty for growers and make harvest finance more difficult or expensive to secure : Mr Barber said that OzEpulse's applications were based on a fixed price and cash payment and having access to fixed price cash selling options removes the need for growers to draw on loans secured by their equity in the National Pool. • Australia's international trade reputation could be harmed by numerous suppliers offering Australian wheat : Mr Barber said that OzEpulse's applications introduced new buyers that increased demand and competition for Australian wheat and the introduction of new sellers of Australian wheat would not diminish Australia's international trade reputation, which has not been well served by AWB as the monopoly wheat exporter. Thus, he expressed the view that public interest is generally defined as broad community benefit, including enhanced income and wealth, social cohesion, freedom of individuals to make choices which best suit their aspirations and circumstances, public security and confidence in the integrity of public institutions. He asserted that, notwithstanding its current prohibition on competition in the export of bulk wheat, the Australian Government had promoted competition policy reforms in the broader economy on the grounds that removing restrictions on competition are in the public interest. He asserted that, while the intention of the Act was to protect the interests of growers and to advance the prospects of the Australian wheat industry, the Act contained several serious flaws that have resulted in an outcome opposite to the outcome intended. He asserted that marketing costs and other service charges had increased and growers had borne the costs. He asserted, further, that growers were also facing uncertainty over their current equity in the National Pool and the reputation and competitiveness of the Australian wheat industry had been seriously diminished. He concluded that those problems could best be resolved by opening up the wheat export market to competition. That is to say, Mr Barber was postulating propositions of Government policy: he was not responding to specific considerations relating to OzEpulse's and OzEgrain's particular applications. One is the decision by the Authority as to whether or not it will give its consent to a proposed export. There has been no complaint about the Authority's provisional recommendations that qualified consent should be given to the applications under consideration. The other is the decision by the Minister as to whether he will agree to the consents recommended by the Authority. It is the Minister's decisions in relation to the three applications that are in issue so far as alleged denial of procedural fairness is concerned. 74 That framework has some bearing on the extent to which the Minister must afford procedural fairness in deciding whether to agree to the Authority giving consent. Thus, it may be consistent with the principles outlined above that the Minister is obliged to give to an applicant for consent the opportunity to make a submission on whether the giving of consent to the proposed exports is in the public interest. Further, it may be that, to the extent that the Minister was to take into account, in determining what was in the public interest, a factor that would not have been reasonably apparent to an applicant, procedural fairness may require that the applicant be given the opportunity of commenting on such a factor. However, having regard to the nature of the function that the Minister is performing, namely, deciding whether to agree to a consent that might be given by the Authority, procedural fairness would not require the Minister to give each applicant the opportunity of commenting on submissions made by any other person on the public interest, except in so far as submissions made by another person were specific to the applicant in question. 75 The factors that were considered by the Minister to be against consent to the exports proposed by OzEgrain and OzEpulse were obvious aspects of the public interest and involved evaluative judgments. They did not turn on the submissions from AWB. More significantly, the factors were not critical to the Minister's ultimate decisions. The critical part of the Minister's reasoning involved propositions that Mr Howard endeavoured to address in his communications with the Authority and the Department. 76 The Minister's conclusion was that, after considering all of the factors and having balanced the interests of all applicants, growers in the National Pool, other growers, the broader wheat industry and the wider community, no application for consent should be approved, save for the exports to Iraq and Indonesia. It is clear enough that the Minister's decision was one of overall policy that, apart from the exports to Iraq and Indonesia, there should be no bulk exports otherwise than through the National Pool conducted by AWB. That possibility was made clear in the letter from the Department to Mr Howard of 18 December 2006. 77 OzEpulse and OzEgrain were not prepared to endeavour to quantify that impact of their proposed exports on the National Pool. Their response was that any impact could be minimised by AWB lowering its fees for the services it provided in relation to the National Pool. AWB's submission provided an answer to the Minister's enquiry as to the possible quantification of the impact of all of the proposed exports on the estimated return for growers who delivered wheat into to the National Pool. 78 The Authority's guidelines set out in some detail the criteria to be taken into account by it in making decisions concerning consents. Addressing the guidelines constituted a significant part of AWB's submissions. OzEpulse and OzEgrain had ample opportunity to make submissions in relation to the criteria set out in the guidelines. There is no suggestion that the decisions were made without having regard to those matters. 79 There was nothing in the AWB submission or in the adverse factors considered by the Minister that went beyond the criteria set out in the Authority's guidelines, the matters addressed by the Minister in his press release and the matters specifically raised with Mr Howard in the letter that he received from the Department. Further, the factors that were taken into account by the Minister as being contrary to the grant of consent should have been apparent to Mr Howard as a consequence of the Authority's guidelines, the Minister's press release and the letter from the Department. The critical matter taken into account by the Minister was the effect of the exports on the National Pool. That matter was clearly drawn to the attention of Mr Howard by the Department's letter. 80 In so far as Mr Barber's report addresses the question of public policy and the legislative purpose of the Act, it was always open to Mr Howard to advance those contentions to the Authority and the Minister. Mr Barber's report does not respond to any of the submissions by AWB that were in fact taken into account by the Minister. Mr Barber's criticism of the AWB's submissions does not address matters specific to the applications by OzEpulse and OzEgrain. 81 Mr Howard had every opportunity that he wanted to make submissions concerning the public interest. It would have been impracticable to invite every applicant to comment on every other applicant's submissions. The Authority was the decision maker. However, the Minister was empowered to intervene, on the basis of the public interest, to prevent, or require, an export in bulk. The Minister was not required to do more than invite comment on the public interest, which he did. 82 I do not consider that the Minister was required, in the circumstances, to afford to applicants any greater opportunity to comment than was given to them. There was no denial of procedural fairness on the part of the Minister in deciding not to agree to the Authority giving the consents sought by OzEpulse and OzEgrain. OzEpulse and OzEgrain contend that the Authority wrongly acted under the dictation of the Minister in failing to consent to the variations for that reason. They say that the Minister did not have jurisdiction to agree or not to agree to the giving of consent by the Authority to those variation applications. That contention depends upon the proper construction of the Act. 84 OzEpulse and OzEgrain contend that a consent, once given, cannot be varied otherwise than in accordance with s 58 and there is no requirement in s 58 calling for the agreement of the Minister to a variation by the Authority under s 58. They point out that Part 5 speaks only of a decision under s 57 to give or to refuse a bulk export consent. Thus, they say, once a valid consent has been given, s 58 is an exhaustive source of the power to vary the consent and the power conferred by s 58 is not subjected to any restriction dependent upon the Minister's agreement under Part 5. 85 The Minister and the Authority, on the other hand, point to the legislative history of Part 4 of the Act in order to support their contention that there is an implicit power to make variations to be found in s 57, which is the source of the power: s 58, they say, does no more than regulate the exercise of that power. Thus, they say, although Part 5 refers only to s 57, the exercise of the power to vary involves a decision under s 57 to give a consent. Accordingly, s 60 requires that such a decision must not be made without the Minister's agreement in writing. It would be a curious construction of the Act to conclude that the giving of consent to the export of wheat requires the agreement of the Minister, during the temporary period, but that any variation of a consent could be made without the agreement of the Minister, notwithstanding how extensive the variation may be. 86 I consider that there is inherent in the power conferred by s 57, a power to vary a consent given under s 57. That power existed prior to the enactment of s 58. The enactment of s 58 did not remove the power. On the other hand, s 58 must have work to do. It should therefore be treated as regulating the way in which the inherent power to vary a consent may be exercised. That is to say, if the prerequisites of s 58 are not complied with, it may be that the variation will be ineffective. I express no view about that question, since it has not been suggested that there was a failure to comply with s 58. 87 The effect of a variation of a consent given under s 57, whether under an inherent power or an express power conferred by s 58, is that a new consent is given. That is to say, where the Authority has granted consent to the export of wheat and is requested by the grantee to vary the consent, the effect is that, following the variation, the original consent must be taken to have ceased to be effective and a new consent must be taken to have been given in terms of the original consent as varied: each variation constitutes a new giving of consent and s 60 must be construed in that light. Thus, during the temporary period described in Part 5 of the Act, the giving by the Authority of a new consent to an export of wheat, by varying an existing consent, is to be subject to the agreement of the Minister. 88 On that analysis, the consent that had previously been given by the Authority to the export of wheat to Italy and take export of wheat to Bangladesh would, if a variation becomes effective, cease to be effective and there would be a new consent from the time when the variation would become effective. The giving of that new consent, by the variation of the original consent, is subject to the operation of s 60. It follows that the refusal by the Authority to give its consent to the variation of the consents already given in respect of the export of wheat to Bangladesh and Italy was the necessary consequence of the refusal of the Minister to agree to the grant of such new consents, by varying the existing consents. That is to say, there was to be no change in the quantity of wheat, only to the method of its transport. OzEpulse says that the considerations that were taken into account by the Minister as being contrary to the public interest could have no possible bearing on the question of whether that export should be by container or by some other means of transport. However, OzEpulse does not allege that the Minister's decision was so unreasonable that no reasonable decision maker could have made it. Rather, its contention is limited to the proposition that the Minister took into account considerations that he was not permitted to take into account. 90 There is nothing in the Act that prevents the Minister from having regard to any of the factors that were taken into account in relation to the proposed variation of the consent to the export of wheat to Italy. There may be rational considerations concerning the manner of transport. OzEpulse did not attempt to adduce evidence concerning the possible different considerations that might arise according to the manner of transport. I do not consider that OzEpulse has established that the Minister took into account considerations that he was not permitted to take into account. I do not consider that there was a denial of procedural fairness on the part of the Minister in making a policy decision that had the effect of preventing bulk export other than by AWB, save for the two exceptions for Iraq and Indonesia. Further, I consider that the variation of the consents already given in respect of the export of wheat to Bangladesh and Italy required the agreement of the Minister before the Authority could give its consent to export in accordance with the proposed varied terms. Finally, I do not consider that the Minister can be said to have taken into account considerations that he was not permitted to take into account, in deciding to refuse to agree to the variation in relation to the manner of export to Italy. It follows that the proceeding should be dismissed. OzEpulse and OzEgrain should pay the costs of the respondents. I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | review of related decisions of the minister for agriculture fisheries and forestry and the wheat export authority regarding the proposed export of wheat by the applicants procedural fairness public interest factors whether applicants notified whether factors not obvious whether minister required to afford applicants greater opportunity to comment irrelevant considerations. administrative law |
The Torres Strait Island communities on whose behalf the application is brought comprise the relevant native title claim group. The area covered by the application is approximately 44,000 square kilometres in the Torres Strait and the Coral Sea, seaward of the high water mark around islands in the Torres Strait. The land and waters the subject of the claim are divided into parts designated Part A and Part B. Part A claims land, waters, reefs, sand banks, shoals and seabeds and subsoil on the seaward side of the high water mark contained within described external boundaries. These include the outer limits of the territorial sea of various islands and cays. Part B claims are the waters on the seaward side of the high water mark but not the seabed or subsoil exclusive of the territorial seas of Aubusi, Boigu, Moimi, Dauan, Kaumag and Saibai within that external boundary. There are two classes of native title rights and interests claimed. The first class covers areas which are not subject to certain types of 'public rights' or 'previous acts'. In those areas the claim is for exclusive possession. In relation to other areas the native title rights and interests asserted include rights to control the access to, and use and enjoyment of the land and waters and the taking of resources by others subject to various exceptions. The application was referred by the Court to the National Native Title Tribunal (the Tribunal) for mediation on 4 February 2003. The respondents then joined included the Commonwealth of Australia, the State of Queensland, the Australian Maritime Authority, other indigenous interests, the Torres Strait Regional Authority, various fishermen, the Queensland Rock Lobster Association and some nationals of Papua New Guinea (PNG). Cooper J, who had been managing the application as Docket Judge, died in March 2005. The applicants were granted leave to amend their application on 27 June 2005 and motions were subsequently filed for the joinder of various parties including the Torres Shire Council, MG Kailis Pty Ltd and certain PNG nationals. At a general case management directions hearing convened on Thursday Island on 7 July 2006 the joinder motions were argued. Orders were made for the joinder of MG Kailis Pty Ltd. A motion for the joinder of the Torres Shire Council was heard on that day and dismissed on 18 August 2006 --- Akiba v State of Queensland (No 1) [2006] FCA 1102. A further motion by Mr Pende Gamogab for the Dangaloub-Gizra group at Kupere Village sought his joinder on their behalf. For the reasons that follow, although I consider that Mr Gamogab has an interest which would render him eligible for joinder as a party, I am of the opinion that as a matter of discretion he should not be joined and his motion will be dismissed. The reasons informing the exercise of my discretion in that respect may also affect the position of other PNG nationals who are currently parties to these proceedings. He asserted, on behalf of a group he called the Dangaloub-Gizra, traditional rights of movement and ownership and use of resources in the Torres Strait region which is now subject to the Torres Strait Regional Seas Claim. Mr Gamogab set out some Dangaloub-Gizra oral history and what he called the Myth of Origin passed orally from generation to generation, from time in antiquity to the present. According to this myth the Gizra (Dangaloub and Gizra), the Siepam (Torres Strait Islanders) and the Abarsen (Malig and Gudang Aborigines) were all created together. They initially lived together in a traditional village (KOBO) sharing life and culture, initiation practices and the resources of the land and sea until separation. The reference to separation appears to have been related to the inundation of the ancient land bridge joining Australia and PNG. Mr Gamogab referred to a traditional Dangaloub-Gizra method of cultivation using earth mounds which is found all over Dangaloub-Gizra land, was used in the 16 th century and is also found on Saibai Island and many other Torres Strait Islands. He stated his belief that this illustrated the movement of his people in the Torres Strait region and area to and from before the loss of the land bridge. He also referred to common cultural and ritual practices. One of the documents exhibited to Mr Gamogab's affidavit was a submission prepared in 2002, apparently on behalf of the occupants of the Kupere Village, in relation to a proposed PNG-Australia gas pipeline. A covering letter dated March 2002 was signed by Mr Gamogab as the Interim Chairman of the Dangaloub Association. The submission was made in support of Dangaloub clan's participation in the sharing of benefits which might arise from the project. It was based on a report prepared by a Dr Lawrence Goldman. Some of the submission provided a useful overview of Dangaloub-Gizra contentions about their traditional history. According to the submission Kupere Village (also known as Kupiru) is located on the edge of the Oriomo Plateau about 120 kilometres North West of Daru and about 5 kilometres directly opposite and North of Butu Malu and Agoar on the PNG coast. It is in the South Fly District of Western Province on the fringe of lowland forest. The village stands near an ancient traditional village site (KOBO) where the first white man is said to have met their people. Kupiru was said to have been made up of people called Dangaloub, which is one of the clans or groups of the Gizra tribe. The other two groups are Zibram, the people of Waidoro and Gizra, the people of Togo. The Gizra tribe was said to occupy and inhabit the area north, north-west and north east of the Torres Strait Island of Saibai. The origins of Gizra, as explained in tradition and culture and the Myth of Origin, were then described. Three cultural groups, the Dangaloub, Zibram and Gizra merged at Basir Purek with whatever socio-magical powers and belief the Gizra valued and used to master their environment as invented and instigated by their creator, Geadap. All was inherited from the creator and the people were bound together by common customs and beliefs whether on the land or on the sea. The Myth of Origin, which was said to have been passed from generation to generation, also stated that the Abarsen (Aborigines), the Siepams (Western Torres Strait Islanders), the Maligs, the Kutargs and Gizra had the one common birth place at Basir Puerk, otherwise known as Mabudawan. According to the submission, linguistically and culturally, Gizra is the closest Papuan group in PNG to the Torres Strait Islanders, the Malig and Kutaigs and the Abarsen on the Australian mainland. Research by the anthropologist, Professor Wurm, in 1975 was said to reveal Gizra's closest linguistic relative in the Mirim language of the Eastern Torres Strait. This was not a trade language but a language inherited from cultural heroes. The pipeline submission described the customary practice of barter trade between islanders and Gizra. It was apparently somewhat informal and ad hoc based on a clan or sub-clan totemic relationship. Gizra would trade artefacts, garden food, natural edible fruits and crops for clothes, knives, axes, cooking utensils and banana leaves for smoking. Major trading took place at Basir Puerk and Agoar Point. Both the islanders and the Gizra knew when trading was going to take place by sending smoke signals and tallying with broom sticks. According to the submission the Torres Strait Islanders introduced white man's items such as axes and knives into the trading. The submission cited the traditional land boundaries of the Gizra tribe and ownership of the resources of the intertidal zone on the coastal shoreline according to a clan allocation. An area of the Torres Strait from the south to the north was said to represent a Dugong called 'Gisu' lying from the sea in the Torres Strait towards the PNG mainland where Dugong rituals are performed. This includes Mari Island. Gizra territory hosts the body heart and the head of the Dugong making it a special area within the region. Gizra and Siepam, that is Torres Strait Islanders, were said to have a common belief about the shape of the Dugong and its role in creation of life in the sea. Gizra did not use sea and marine resources as much as the Maligs and Kutaigs, the Abarsen and the Islanders. Traditionally Gizra and the Siepams believed that the Gizra always had adequate cultivated crops and a wide range of edible natural foods within their terrestrial and aquatic environments. The Gizra had a lot of suitable and fertile land for cultivation. Traditional marine tenure was asserted, which was said to be based on a totemic system determining the clan which in turn would determine the ownership and usage rights. The Gizra and Dangaloub of Kupiru were said to believe that all creatures in the sea were the work of the creator Gisu. The general term which the Gizra and the Dangaloub use to classify aquatic marine plants and animals is 'Maluan Zaa'. It was said that the Dangaloub use the sea and the coast traditionally for their livelihood. Individual rituals and the application of magical spells is respected and practised in hunting and fishing activities in the sea by both Gizra and the Torres Strait Island community. The Dangaloub claimed, in their pipeline submission, a very strong linkage to the Torres Strait marine environment. The local cultural perception of Dugong was widespread throughout the entire Torres Strait region, inland Papuan villages and coastal Papuan villages. According to the submission, the Dangaloub used the sea by walking, the use of bamboo rafts and by the use of canoes. They said that the canoe was invented by their ancestor, Muiam, and when Muiam travelled east he would use the canoe which inspired Kiwai and other people to make their own canoes. Article 1 of the Treaty is an interpretation provision. By Article 2 PNG recognises Australia's sovereignty over all islands south of a seabed jurisdiction line referred to in Article 4(1) of the Treaty, defined in Annex 5 of the Treaty and shown on a map comprising Annex 6. PNG also recognised Australia's sovereignty over certain specified islands and cays north of the line. The islands recognised were Aubusi, Boigu, Dauan, Deliverance, Kaumag, Kerr, Moimi, Saibai and Turnagain. Australia recognised PNG's sovereignty over all islands north of the seabed jurisdiction line and three islands south of the line, being Kawa, Mata Kawa and Kussa. The sovereignty reciprocally recognised over the islands includes sovereignty over their territorial seas, the seabed beneath those territorial seas and its subsoil and any islands, rocks or low-tide elevation lying within their territorial seas. Article 10 of the Treaty defines a 'Protected Zone' comprising all the land, sea, airspace, seabed and subsoil within an area bounded by a line described in Annex 9 to the Treaty and shown in a map comprising Annex 7. The Protected Zone lies both to the north and south of the seabed jurisdiction line in the area between the two mainlands. In giving effect to its obligations under the Treaty Australia passed a number of amendments to various Acts by the Torres Strait Treaty (Miscellaneous Amendments) Act 1984 (Cth). The Torres Strait Fisheries Act 1984 (Cth) (the Act) was also enacted. It appears from the applicants' submissions which were, in this respect, undisputed, the definition of 'traditional inhabitants' in the Treaty did not lend itself to a straightforward identification of PNG nationals who would benefit from the Treaty. A list of villages whose inhabitants would be regarded as traditional inhabitants for the purposes of the Treaty was agreed by Exchange of Notes between Australia and PNG in 2000. This effectively restricted the definition of the term 'traditional inhabitant' to people from one of 14 listed 'Treaty villages'. The applicants pointed out that this created two classes of PNG nationals who might seek access to Australian waters. The first are those nationals who are from Treaty villages and who are accepted as beneficiaries of the Treaty. The second consists of nationals who did not have the benefit of the Treaty. I have not been able to sight the Exchange of Notes nor to consider their effect on the Treaty obligations. A detailed review of the history and contents of the Treaty may be found in a paper by Mr H Burmester entitled 'The Torres Strait Treaty: Ocean Boundary Delimitation by Agreement', (1982) 76 American Journal of International Law 321-349. As appears from Exhibit B to the affidavit of Mr Gamogab, his village of Kupere is not one of those regarded as a Treaty village. In a petition addressed to the Honourable Sir John Kaputin, former Minister for Foreign Affairs and Trade of PNG, it was said that a number of villages including Kupere had been '.... excluded from the Treaty since 1978. ' One of the demands in the petition was that the Ministry of Foreign Affairs endorse '... our membership to the Treaty and accordingly inform Canberra'. This appears to be a matter of ongoing concern to the people of Kupere on whose behalf Mr Gamogab seeks joinder. Section 63 provides that an application filed under s 61 must, as soon as practicable, be given, by the Registrar of the Federal Court to the Native Title Registrar. Section 66 sets out the obligations of the Registrar to give notice of the application. The Registrar is required to give copies of the application to the relevant Minister of a State or Territory where any of the area covered by the application is within the jurisdictional limits of that State or Territory. A copy of the application must also be given to representative bodies for areas which it covered. In addition the Registrar is to give notice containing details of the application to the various classes of persons or bodies set out in s 66(3) which include 'any local government body for any of the area covered by the application ...' (s 66(3)(a)(vi)). The Registrar is required to 'notify the public in the determined way of the application' (s 66(3)(d)). In the case of a claimant application the notice requirements imposed by s 66(3) are not to be complied with until the Registrar has decided, under s 190A , whether or not to accept for registration the claim made in the application (s 66(6)). The notice given under s 66(3)(a) or (d) must specify a date known as the 'notification day' (s 66(8)). The notification provisions are to be read with s 84 of the NTA which deals with parties to proceedings in relation to applications to which s 61 applies. There are therefore three elements to be considered in a decision under s 84(5) of the NTA: Whether the person has an interest. Whether the interest may be affected by a determination in the proceedings. Whether, in any event, in the exercise of its discretion the Court should join the person as a party. The kind of interest necessary to enliven the discretion under s 84(5) can include '... a special well-established non-proprietary connection with land or waters that is of significance to that person'. The interest need not be proprietary or legal or equitable in nature. It must not be indirect, remote or lacking in substance. It will not include interests of an emotional, conscientious, ideological or intellectual kind --- Byron Environment Centre Inc v The Arakwal People (1997) 148 ALR 46 at 51-52 (Black CJ, see also at 84 Merkel J). Within Australia indigenous persons who are not claimants but contend that they have traditional rights and interests within the area of an application for a determination of native title, may have an interest which renders them eligible for joinder as parties. They may however lead to a more informed decision on the Kokatha claim as to whether the native title rights and interests should be granted as expressed in that application. That is, the assertion of those rights may result in the Kokatha claim being less successful than it may otherwise be. Where there may be a competing native title group who claim communal rights and interests which may be affected by a determination in the Kokatha claim, but there is no application by that group over the claim area, the members of that group should not be precluded from putting forward their claim in a defensive attempt to avoid the dilution of those interests. It is not therefore beyond the bounds of possibility that a PNG national living in PNG who is a traditional inhabitant of the claim area may have rights and interests capable of recognition by the common law. The effect of the Act on the ability of such persons to obtain a determination under its provisions, is another matter. The expression 'native title' and 'native title rights and interests' as defined in s 223 of the Act '... means the communal, group or individual rights and interests of Aboriginal people or Torres Strait Islanders in relation to land or waters ...'. The term 'Torres Strait Islander' is defined in s 253 to mean '.... A descendant of an indigenous inhabitant of the Torres Strait Islands'. It would not seem, therefore, that a determination of native title could be obtained by PNG nationals on the strength of rights and interests possessed within Australian waters under the traditional laws acknowledged and the traditional customs observed by the society of which they are part. Nevertheless, the rights and interests of such persons might limit or qualify the native title rights and interests of Torres Strait Islanders. Such a limitation could arise as an element of the traditional laws acknowledged and the traditional customs observed by the Islanders themselves. This would be consistent with traditional concurrent use of areas of the Torres Strait within the claim area with people from PNG. In my opinion, on that basis, the interests asserted by Mr Gamogab, as a member of the relevant traditional community, would render him eligible for joinder as a party. It cannot be said that the interests of traditional inhabitants of the Torres Strait regional claim area from PNG would be unaffected by a native title determination over the sea. A native title determination recognising native title rights and interests on the part of the applicants could render enforceable and protected at Australian law, rights and interests which accord no recognition to the rights and interests asserted by Mr Gamogab and his community. In so saying, I offer no opinion on the question whether Mr Gamogab's asserted rights and interests as a traditional inhabitant do in truth exist in the claim area. Relevantly to the exercise of the discretion to join Mr Gamogab, it can be said that a consideration of the legitimate traditional rights and interests of PNG nationals who are traditional inhabitants of the claim area would lead to a more accurate definition of the native title rights and interests claimed. The determination could protect the rights and interests of traditional inhabitants from PNG by limiting the scope of the rights and interests of the Torres Strait Regional Seas Claim applicants and their communities. In a first written submission in opposition to the joinder, the applicants said that if the traditional rights asserted do exist they would be protected under the Treaty. So far as the question of eligibility for joinder goes, this is beside the point. However it may be relevant to the exercise of discretion as the Commonwealth, which is a party to the application, has an obligation to honour the terms of the Treaty. That obligation would appropriately extend to ensuring that any traditional rights and interests held by PNG nationals which are protected under the Treaty would not be prejudiced by any native title determination. The applicants submitted that the acquisition of sovereignty in the waters of the Torres Strait meant that all common law and statutes applicable to the area over which sovereignty extended applied to persons who accessed that area from the date of sovereignty. Therefore it was contended that Australian migration, fisheries and associated legislation made it unlawful, at least for PNG non-Treaty groups, to access the claim area and was inconsistent with their continued use of the claim area in accordance with their customary law. The effect, was said to be, to render nugatory any customary law rights PNG non-Treaty groups may have once had in the claim area. Mr Gamogab, it was submitted, was not a member of a Treaty village and therefore any access by him to any part of the claim area would be unlawful and would not be rendered or regarded as lawful by or under the Treaty or any relevant municipal laws of Australia. The Commonwealth disputed these contentions about the effect of the 1985 Treaty. It pointed out that the Treaty dealt with sovereignty in small parts of the claim area. To the extent that it provided for issues of 'sovereignty' the relevant provisions of the Treaty: Provided for Australia to have sovereignty over islands to the south of the seabed jurisdiction line and for PNG to have sovereignty over islands to the north of that line. Additionally provided for Australia to have sovereignty over certain nominated islands to the north of the seabed jurisdiction line. Provided for Australia and PNG to have sovereignty over a belt of territorial sea and seabed surrounding each island over which it had sovereignty. The Commonwealth pointed out that the 1985 Treaty did not recognise 'sovereignty' in Australia or PNG in respect of those areas of sea and seabed in Torres Strait seaward of the islands and the territorial seas around them. Rather, it apportioned between Australia and PNG certain 'sovereign rights' and 'rights less than sovereignty' being fisheries jurisdiction, seabed jurisdiction and residual jurisdiction all of which were defined in the Treaty. The Commonwealth submitted that the effect of these provisions in the Treaty is that there is a part of the claim area namely Part B, over which Australia exercises fisheries jurisdiction in respect of its waters and PNG exercises seabed jurisdiction in respect of its seabed. The fisheries jurisdiction excludes rights in relation to 'sedentary species'. So in the top area of the claim, Australia's fisheries jurisdiction does not extend to sedentary species. They are covered by PNG's seabed jurisdiction. There are other parts of the claim area which are beyond the limits of Australia's territorial sea. They are areas of sea and seabed that fall within Australia's exclusive economic zone, an area in which under international law, Australia has sovereign rights. The Commonwealth however submitted that Australia cannot be said to have sovereignty over those areas as those rights fall short of sovereignty. As to the contention that it is unlawful for Mr Gamogab and those he represents to access the claim area because of the Act, the Commonwealth pointed out that s 48 of that Act does not have the effect of prohibiting Mr Gamogab and those he represents from using a boat for fishing in the claim area in all circumstances. So it would be no offence against the Act for Mr Gamogab and those he represents to use a boat in the top part of the claim area for the taking of sedentary species there. Whether he would be permitted to do so under the law of PNG is a different question. The Commonwealth submitted that the applicants fell into a similar error in relation to the Migration Act 1958 (Cth). The applicants contended that it was unlawful, by reason of the Migration Act , for persons such as Mr Gamogab and those he represents to access the claim area today despite claimed customary rights. The Commonwealth contended that this statement is far too broad to be wholly correct. It would be absurd to suppose that a person from Mr Gamogab's village who was sailing through the top area on route to a place in another part of PNG and who was not reasonably suspected by an officer to be seeking to enter the migration zone or an excised offshore place, would be liable to be stopped enroute and placed in detention under s 189 of the Migration Act as contended for by the applicants. It is not necessary for present purposes to rule upon the correctness of the Commonwealth's submissions. The nature of the issues they raise however, informs the exercise of the discretion to join or not join Mr Gamogab. In my opinion it is reasonable arguable that the Commonwealth has an obligation under the Treaty to ensure that the traditional activities of traditional inhabitants in the Torres Strait which are protected by the Treaty are taken into account to the extent that it is proper to do so in the native title determination process. This may extend to the provision of evidence relevant to the existence of limitations on the applicants' native title rights and interests by reference to their traditional acceptance of concurrent use of some of the land and waters within the claim area. The extent to which that obligation is limited by the Exchange of Notes was not debated on the motion before the Court. The question whether a PNG village whose members are not treated as traditional inhabitants by the executive governments of PNG and Australia for the purposes of the Treaty should be so treated for the purpose of these proceedings, is a matter for those executive governments. These proceedings should not be used as a vehicle for advancing the case of particular PNG villages in that respect. It may be that a PNG group dissatisfied with its government's failure to recognise its members as traditional inhabitants for the purposes of the Treaty could bring declaratory proceedings in the National Court of PNG. There is a risk, in my opinion, that the joinder of Mr Gamogab will bring to bear on these proceedings debates between village communities in PNG about their respective interests in the Torres Region Seas Claim area. These are matters best left to the Courts of PNG or to its executive government to resolve by agreement with the Australian government under the Treaty. As a matter of discretion I consider that the joinder of Mr Gamogab, notwithstanding his claimed interest, is undesirable. I consider that attention should also be given to the position of other PNG nationals who have been joined as parties. I do not exclude the possibility that any native title determination which is made pursuant to the Torres Strait Regional Seas Claim will be expressed to be subject to the traditional rights and interests of PNG nationals. It is to be hoped that so much could be made a matter of agreement if the positions of the parties allow. The question then of which PNG nationals would be entitled to exercise those traditional rights and interests could be worked out on a case by case basis in the event of a dispute if one arose. It may be, for example, that the applicants would be able to agree that villages recognised as Treaty villages pursuant to the Exchange of Notes made in 2000, could be identified as members of the classes of person entitled to carry out traditional activities in part of the claim area. The list of such communities need not be exhaustive for the purposes of the determination and need not exclude the possibility that other groups might be included. In my opinion Mr Gamogab's motion should be dismissed. There will be no order for the costs of the motion. | parties joinder torres regional seas claim nationals of papua new guinea having traditional connection with parts of the claim area claim for joinder based on 'interests' of png nationals in relation to the pursuit of traditional activities torres strait treaty recognition by exchange of notes between governments of certain png communities as traditional inhabitants applicants for joinder not included under treaty native title determination proceedings inappropriate vehicle for resolution of disputes between png village communities inappropriate vehicle for advancing case for recognition by executive governments under treaty commonwealth appropriate party to ensure protection of traditional activities of png nationals in torres strait joinder application refused on discretionary grounds native title |
2 He arrived in Australia on 26 April 2006 and applied to the Department of Immigration and Multicultural Affairs for a Protection (Class XA) Visa on 9 June 2006. A delegate refused that application on 21 July 2006 and an application for review was lodged with the Refugee Review Tribunal on 17 August 2006. 3 On 24 November 2006 the Tribunal affirmed the delegate's decision and on 4 December 2007 the Federal Magistrates Court dismissed an application seeking to review the decision of the Tribunal: SZJZS v Minister for Immigration & Citizenship [2007] FMCA 2003. 4 The Appellant now appeals to this Court against the decision of the Federal Magistrate. He appeared before the Court unrepresented, albeit with the assistance of an interpreter. Previously filed on his behalf were written submissions. 1. The Honorable Federal Magistrate erred in considering that the Refugee Review Tribunal (the Tribunal) made a jurisdictional error not following the obligation u/s 424A of the Migration Act 1958 ( the Act). The Federal Magistrate wrongly agreed witht the written submissions provided by Ms wong in paragraph 16. Because the Court gave an opportunity to applicant to respond the documents issue (21) but the Tribunal did not give any opprtunity to the applicant to respond any issues. Absence of Tribunal hearing transcript can not be the reason to reject the genuine claim (23) 2. The Honorable Federal Magistrate erred in finding that the Tribunal denied the applicant natural justice when the Tribunal did not arrange 'Pakistani Pushto Language Interprator' and this issue was rejected only that there was no transcript of the Tribunal hearing before the Court and the Court wrongly agreed in paragraph 21 with the respondednt. 6 Neither Ground of Appeal has been made out and the appeal should be dismissed. (2) The information and invitation must be given to the applicant: (a) except where paragraph (b) applies--by one of the methods specified in section 441A ; or (b) if the applicant is in immigration detention--by a method prescribed for the purposes of giving documents to such a person. (2A) The Tribunal is not obliged under this section to give particulars of information to an applicant, nor invite the applicant to comment on or respond to the information, if the Tribunal gives clear particulars of the information to the applicant, and invites the applicant to comment on or respond to the information, under section 424AA. (3) This section does not apply to information: (a) 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; or (b) that the applicant gave for the purpose of the application for review ; or (ba) that the applicant gave during the process that led to the decision that is under review, other than such information that was provided orally by the applicant to the Department; or (c) that is non disclosable information. 9 The first Ground of Appeal as set forth in the Notice of Appeal is difficult to understand. ... [21] This put the applicant on notice that the genuineness of the documents was in issue. He was given the opportunity to respond to this issue during the hearing or in written submissions after the hearing. The applicant failed to do so. ... [23] In respect of the fourth issue, the Tribunal is under no obligation to provide the applicant with more specific reasons why a document may carry little weight, when it has already alerted him to its concerns. This is particularly significant when the applicant is unable to provide originals but relies on copies. Ms Wong submits that in the absence of a transcript of the Tribunal hearing, it is not possible to demonstrate that the Tribunal failed to alert the applicant of its concerns regarding the absence of original documents. I agree and accept the submission that the Tribunal reached its conclusion in conformity with its obligations under Division 4 of Part 7 of the Migration Act and that particulars (i)-(vii) of ground one do not identify any jurisdictional error. 10 The first Ground of Appeal is made even more difficult to understand when reference is made to the written submissions as filed by the Appellant. Left to one side is any question as to how such contentions fall within either s 424A or the first Ground of Appeal as presently drafted. There is some correlation between the first Ground of Appeal and the written submissions such that the arguments sought to be advanced by the Appellant may at least in part be discerned. Counsel for the Respondent Minister quite properly did not oppose any of the issues raised by the written submissions, or by the submissions made orally, being entertained by this Court. 11 But none of those arguments, it is considered, have any substance. 12 As was correctly concluded by the Federal Magistrates Court, there is no obligation upon an administrative tribunal, and no obligation imposed upon the Refugee Review Tribunal, to refer to each piece of evidence placed before it for consideration and no obligation to either explain why it accepts or rejects particular evidence. An administrative tribunal is thus not normally required to state what evidence is accepted, rejected or taken into account with respect to findings of fact: cf Guy v Repatriation Commission [2002] FCA 525 , 74 ALD 617. An administrative tribunal is not required " to give a subset of reasons [as to] why it accepted or rejected individual pieces of evidence ": cf Chief Executive Officer of Customs v ICB Medical Distributors Pty Ltd [2007] FCA 1538 at [44] , [2007] FCA 1538 ; 97 ALD 746 at 755. 13 Nor is there any obligation imposed upon the Tribunal to inform an applicant as to whether it proposes to accept or reject individual claims or pieces of evidence and, in effect, inform an applicant as to its " mental processes before [it] reaches a final decision ": SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 at [48] , [2006] HCA 63 ; 228 CLR 152 at 166. 14 The first of the three contentions is thus rejected. 15 Insofar as the second contention is concerned, it may be accepted that the Tribunal carries out an " inquisitorial process ": SZJBA v Minister for Immigration and Citizenship [2007] FCA 1592 at [53] , [2007] FCA 1592 ; 164 FCR 14 at 27---8. That obligation involves such mundane things as opening letters, reading them once opened and taking at least basic simple steps that would be taken in any well-run commercial, professional or governmental office, conformable with the recognition of the importance of the response to the invitation to the rights of the applicant and the review process contained within Pt 7 of the Migration Act . This does not rest on some posited duty of inquiry. It is not engaging in steps that require for their enforcement some express statutory power. ... ... [57] These conclusions can be fortified by the recognition, so often stated, that the Tribunal is engaged in an inquisitorial process... [58] This inquisitorial function has become relevant in a number of contexts. In Applicant S 217 CLR 387 at [76] McHugh J said: If the Tribunal had considered the issue that it was legally required to consider, it was open to the Tribunal to investigate whether such a perception existed, whether within the Afghan society or some section of it, or objectively. Indeed, arguably in the context of its inquisitorial process, the Tribunal had a duty to seek evidence concerning this vital matter. See also: Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S 154/2002 [2003] HCA 60 at [58] , [2003] HCA 60 ; 201 ALR 437 at 450---1; Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 at [73] , [2004] HCA 32 ; 207 ALR 12 at 30---3. 16 A general answer may be provided to the alleged " duty to investigate ": even though the Tribunal performs an " inquisitorial function ", the primary responsibility nevertheless remains upon an applicant appearing before it to present such evidence and to advance such submissions as are considered relevant to his claims. It is no part of the task of the Tribunal to make out an applicant's case for him: cf Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550. The applicant is entitled to support his application by such information and material as he thinks appropriate and he cannot complain if the authorities reject his application because they do not accept, without further notice to him, what he puts forward. The tribunal must then decide whether that claim is made out. See also: Brehoi v Attorney-General of the Commonwealth [2000] FCA 1747 at [35] per Hely J. The legislative requirement is that an invitation must be extended to an applicant " to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review ": Migration Act , s 425(1). This right is " clearly an important and central right " in the review system established by Part 7 of the Migration Act : Liu v Minister for Immigration and Multicultural Affairs [2001] FCA 1362 at [44] , [2001] FCA 1362 ; 113 FCR 541 at 552; Amankwah v Minister for Immigration and Multicultural Affairs [1999] FCA 1162 at [13] , [1999] FCA 1162 ; 91 FCR 248 at 251. And the obligation imposed upon the Tribunal is an obligation to give a " real and meaningful invitation to comment ": SZJBA v Minister for Immigration and Citizenship [2007] FCA 1592 at [53] , [2007] FCA 1592 ; 164 FCR 14 at 27---8 per Allsop J. 17 Such an opportunity was indeed extended to the now Appellant in the current proceedings. The " RRT Hearing Record " discloses that the hearing extended to him took about two hours. Of perhaps even greater importance than the mere allocation of time is the fact that the reasons for decision of the Tribunal record in considerable detail the questions asked of the now Appellant. There is no basis for concluding that he was not given the opportunity envisaged by s 425(1) of the 1958 Act and a meaningful opportunity to make out his claims. 18 Notwithstanding the invitation extended to him, and the fact that the now Appellant attended the hearing before the Tribunal, the written submissions filed by the Appellant nevertheless asserted a duty to make an " investigation regarding student membership " and a duty to investigate a " speech " delivered by him. 19 There is no unqualified duty imposed upon the Tribunal to make all such inquiries or to undertake all such investigations as a party may wish to be undertaken: cf Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 at [42] ---[43], [2004] HCA 32 ; 207 ALR 12 at 21---2 per Gummow and Hayne JJ. See also: SZEEU v Minister for Immigration & Citizenship [2008] FCA 269 at [44] . 20 Nor can criticism be directed at the Tribunal for in fact failing to pursue the claims of the now Appellant and to make such inquiries as it considered appropriate. Thus, and by way of example, the Appellant's contention that the Tribunal failed to undertake an investigation of his membership of the " People's Student Federation " may be rejected on the facts. The Tribunal did consider his claims in this regard and had an adequate basis upon which it could reach the conclusions that it did. Such inquiries or investigations as were necessary in order for this claim to be resolved were undertaken. These documents were all provided to support the applicant's claim that he was a member and office holder of the PPPP (or PPP). At hearing the applicant also provided 2 laminated membership cards which purported to be issued by the PPP. I do not accept that the applicant was ever a member or office bearer of the Pakistan People's Party (PPPP or any other faction) between 1996 and 2006 despite the documents given to the Tribunal to support his claims of party membership. As put to the applicant at hearing, the country information indicates that it is relatively easy to obtain all manner of false documents in Pakistan and whilst this alone does not cause me to conclude that the documents have been fabricated I have given these documents no weight as I do not accept that the applicant is or was a member of the PPP for the reasons set out above. I do not accept that whilst the applicant was at school or college that he was a member of the People's Student Federation and that he had a hostile relationship with a member of the Islami Jamiati Talba (IJT) which was the student faction of the Jamaat Islami (JI). 22 The failure to provide " any good reason " is expressed by the third contention to have been a failure to provide reasons " why it did not accept the relationship ". But this contention must also be rejected. The explanation provided by the Tribunal more than adequately explains the basis upon which it proceeded. I find the evidence given that he had such a relationship and was accused of an extra marital relationship highly implausible. When asked to give evidence about the circumstances which resulted in the accusation the applicant was ambivalent and his evidence was contradictory and lacked the type of detail I would have expected from a person who had personally experienced the events he had outlined. He spoke of the events in an impersonal and detached manner and did not give evidence of what he observed, heard and said when speaking about these events. He appeared perplexed when I asked him whether he was curious as to what had happened to the girl with whom he had a relationship after he left the village. He appeared evasive when he discussed the possibility that she had been killed. He then stated that he did not know what had happened to her because he was a long way from the village. The applicant had given evidence earlier in the hearing that his family still lived in the village and he had also recently received a number of other items of evidence to support his application. I do not accept that if he and a girlfriend had been accused of "zina" that he would not have made enquiries as to whether his girlfriend had come to any harm following his departure. 23 The third contention is therefore also rejected. DENIAL OF NATURAL JUSTICE? 25 A response provided by the now Appellant on 6 September 2006 to a " Hearing Invitation " issued by the Tribunal stated that he did need a Pashto language interpreter. He was assisted at hearing by an interpreter of the Pashto language. No more is known in the present proceedings other than that an interpreter was provided. The argument as developed orally by the Appellant was that there was a difference as between an Afghani and a Pakistani Pushto interpreter. It was contended that the difference was of significance as there was a difference between the way in which " some words " were interpreted. 28 It should perhaps further be noted that it has been assumed that the Appellant wished to contend by this second Ground of Appeal that the asserted denial of an interpreter has deprived him of an effective opportunity to appear before the Tribunal and to give evidence and present arguments. Section 425(1) of the Migration Act 1958 (Cth) provides for such an opportunity. 29 The invitation to attend an oral hearing " must not be a hollow shell or an empty gesture ": Mazhar v Minister for Immigration and Multicultural Affairs [2000] FCA 1759 at [31] , [2000] FCA 1759 ; 183 ALR 188 at 194---5. 30 The importance of the role potentially to be played by a competent interpreter in ensuring the effectiveness of such a hearing has been recognised in both the legislation and prior decisions of this Court. The sub-section, it is noted, confers a discretion. 31 Prior decisions of this Court also recognise that an effective opportunity to be heard may require the provision of an interpreter. If an invitation to appear is extended to an applicant, where the tribunal knows that an interpreter is required, the obligation to extend the invitation will not be satisfied if the tribunal provides an interpreter whose interpretation is such that the applicant is unable adequately to give evidence and present argument to the tribunal. If that situation arises the tribunal will not have fulfilled its obligation under s 425(1). Absent an interpreter, the Tribunal may be unable to afford an effective opportunity to a non-English speaking applicant to give evidence and the Tribunal, it has been said, lacks jurisdiction to continue the hearing unless an interpreter is provided: Perera v Minister for Immigration and Multicultural Affairs [1999] FCA 507 at [21] , [1999] FCA 507 ; 92 FCR 6 at 17 per Kenny J. 32 Other decisions have also recognised that a meaningful opportunity to give evidence and present arguments, in the case of a person who is not fluent in the English language, will only be afforded if an interpreter is present and it is evident that, subject to reasonably accurate interpretation, that which an applicant wishes to convey to the Tribunal and that which the Tribunal wishes to convey to an applicant is fairly interpreted: SZGYM v Minister for Immigration & Citizenship [2007] FCA 1923 at [27] . An inadequate translation service may deprive a party of an effective opportunity to present his case where the standard of interpretation at the Tribunal hearing is so inadequate that the appellant is effectively prevented from giving evidence at the Tribunal: W284 v Minister for Immigration & Multicultural Affairs [2001] FCA 1788 ; Tobasi v Minister for Immigration and Multicultural Affairs [2002] FCA 1050 , 122 FCR 322 ; Appellant P119/2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 230. The onus in judicial review proceedings remains upon an applicant to make out the ground of review upon which he wishes to proceed: cf VAAD v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 117 at [45] per Hill, Sundberg and Stone JJ. That onus was not discharged before the Federal Magistrates Court in the present proceedings and no appellable error is exposed as to the manner in which the Federal Magistrate proceeded. 34 In the present proceedings there is thus no basis upon which it can be concluded that there has been any denial of procedural fairness and no basis upon which it can be concluded that the Appellant has been deprived of an effective opportunity to present his case before the Tribunal. No instance has been given of the assistance in fact provided to the now Appellant by the interpreter being in any way deficient or inadequate. No question arises in the present proceedings of any consideration having to be given to whether a requirement to provide an interpreter is to be constrained by reference to any " reasonableness requirement ": cf Attorney-General v Udompun [2005] 3 NZLR 204 at 225. 35 The second Ground of Appeal is also rejected. 36 A discrete submission made orally by the Appellant at the hearing of the appeal was that the provision of the interpreter in fact provided was made " intentionally " so as to deprive the Appellant of an opportunity to be heard. The submission was understood to be that the Tribunal was biased. It was not a submission advanced before the Federal Magistrates Court. That submission is, however, without substance and is rejected. There is no basis upon which a " fair-minded and informed person might reasonably apprehend that the [Tribunal] might not bring or have brought an impartial mind to bear on the decision " by reason of the interpreter in fact provided to the now Appellant: cf NADH v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 328 at [14] , [2004] FCAFC 328 ; 214 ALR 264 at 268. A reasonable apprehension of bias, it has been said, must be " firmly established ": Re JRL ; Ex parte CJL [1986] HCA 39 ; (1986) 161 CLR 342 at 352. Nothing in the present proceedings even approaches such a basis being established. 37 An Affidavit was filed on behalf of the Respondent Minister seeking a fixed costs order in the sum of $3,131 in the event that the appeal was dismissed. There is no reason to question that quantification. The appeal be dismissed. 2. The Appellant to pay the costs of the First Respondent fixed in the sum of $3,131. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | refugee review tribunal applicant to make out his case inquisitorial functions of tribunal alleged inadequate translation service no denial of opportunity to present case onus on applicant in judicial review proceedings onus not discharged migration |
Thereafter, a delegate of the Minister refused to grant a protection visa. On 31 March 2004, the applicant applied to the Refugee Review Tribunal for a review of that decision. The Refugee Review Tribunal affirmed the decision of the delegate not to grant a protection visa. 2 It is apparent from a consideration of the decision of the Tribunal that a central plank of the applicant's case was that his father had extensive involvement in the activities of the Khalistan Liberation Army and this had led to persecution. The applicant based his claim for refugee status on the fact that he would be identified with the Khalistan Liberation Army, although he assured the authorities that he had only preached the Sikh religion and had not taken part in any terrorist activities. The applicant alleged that the Indian police did not trust him, and that he had been taken by them to an unknown destination where he had been tortured. He said that his brothers and uncle bribed the police. 3 The applicant told the Tribunal he later married and went to live with his in-laws, but the police came to know of his whereabouts and again persecuted him. He also stated that he came to Australia as a member of an agricultural delegation and had experienced no trouble leaving India. In addition, the applicant claimed he was the President of the Khalistan Liberation Army in a subdistrict in Jalandhar in the Punjab. He stated he was an ordinary member of the Khalistan Liberation Army prior to 1990, and was its President from 1995 to 1998. The applicant said he feared returning to India because he was blacklisted by the police for being a supporter of the liberation of Khalistan - which I understand is a Sikh movement for an independent state - and a member of the Khalistan movement. 4 Nevertheless, it was put to him by the Tribunal member that the Sikh militant movement was no longer active in the Punjab. The Tribunal pointed out that the applicant had been able to leave India without a problem, and put it to him that if had he been blacklisted, he would not have been able to leave India or obtain a passport. The applicant stated that he had paid money to an agent to convey him to Australia. 5 It was also put to the applicant that India is a parliamentary democracy where people are able to express their political opinion. The applicant stated that if the Tribunal needed more documents, he would require more time to organise their production. It was further put to the applicant that his leader was one of the people who make decisions in India, whereupon he stated that the elections were won when he was imprisoned. 6 The Tribunal had regard to a great deal of country information and a significant proportion of this is listed in the course of the decision. In its findings and reasons, the Tribunal made a strong finding that it did not accept the applicant as a witness of truth. It said his evidence was vague and implausible, and the Tribunal expressed satisfaction that the applicant had tailored his evidence in order to enhance his claim to refugee status. In particular, in coming to this conclusion, the Tribunal member referred to the fact that the applicant had claimed to be President of a local branch of the Khalistan Liberation Army whose leader was Singhmann, a member of parliament. The Tribunal stressed that the applicant claims to be on a police blacklist for his membership of this organisation even though the Khalistan Liberation Army does not appear to be known to independent sources and certain evidence suggests that the Sikh movement is no longer active in the Punjab. The Tribunal also highlighted that the applicant was able to leave India legally with a passport in his own name. 7 It seems to me that the central finding ---based on the findings of a lack of credibility and the fraudulent fabrication of evidence to support the applicant's claim- was the firm and clear determination that no such organisation as the Khalistan Liberation Army existed. The Tribunal suggested that if the organization had existed in Khalistan from about 1984, it would have been known to sources such as the US State Department, the Australian Department of Foreign Affairs and Trade, the United Kingdom Home Office and the United Nations High Commission for Refugees. As documented at page 86 of the Appeal Book, the Tribunal member said "I do not accept the organisation does not exist. " This is an error, and obviously means that the member did not accept that the organisation existed. For this reason, the Tribunal did not accept the applicant was on a police blacklist because of his membership of the Khalistan Liberation Army. 8 When the matter came for hearing before me, on appeal from the decision of Federal Magistrate Smith, my attention was directed to a communication from the Australian Department of Foreign Affairs and Trade (Document No. :CX2551 of 6 July 1992), which expressly refers to the Khalistan Liberation Army and states that no such organisation is known. 10 This document, referred to on page 79 of the Appeal Book, was before the Tribunal and constituted clear evidence that the Khalistan Liberation Army did exist. Therefore one of the principal reasons, if not the principal and most important reason, for a finding of lack of credibility and fraudulent conduct was based on a clearly erroneous fact. In my view, this is a sufficiently basic error to amount to an error of jurisdiction. It has been put for the Minister that first, the cable is ambiguous and secondly, that on a fair reading of the cable the benefit of the doubt should be given to the conclusion reached by the Tribunal member. However, I consider that the error is so clear from the document and in the reasons of the Tribunal that this course should not be adopted. 11 It is also put for the Minister that there are other reasons for making adverse findings on the question of credibility. This is so, but these reasons are somewhat scant, and pale into insignificance alongside the important finding that the Khalistan Liberation Army did not exist and therefore the appellant must have been telling lies. For this reason, I consider that there is a clear error in relation to the finding, and not only an error of fact, but a basic error of principle in coming to this conclusion with regards to credibility. 12 It is then said that there is evidence to the effect that the appellant could relocate in India, and this is based on country information documents on which the Tribunal relied. However, in coming to this conclusion, it must be that the Tribunal has based the finding of relocation on the fact that the applicant has been disbelieved in this case; and, as the High Court has pointed out in the past, one important factor in considering whether there is a real chance of persecution is the treatment which an appellant has been subjected to historically. If an appellant's claim of persecution is disbelieved, then of course it is easier to reach a conclusion that there is a chance of relocation. 13 If such a claim is believed, however, the conclusion as to relocation may be different. The degree of anticipated animosity, hostility or harassment will be much greater if a finding is made that the person in fact has been persecuted. In the present case, the applicant's contentions have been totally rejected on the basis that the organisation simply did not exist. Therefore, in my view, the question of relocation is not a sufficient answer to the error which the applicant alleges exists and which amounts to a jurisdictional fact. 14 There is also a matter raised as to the question of whether there has been procedural unfairness either in a statutory form or according to the ordinary applicable administrative law principles. In my view, I am not persuaded that there has been any breach of the obligation to provide procedural fairness in this case. I think the applicant was on clear notice that his story was disbelieved and he had an opportunity to put forward his case. The Tribunal member clearly raised issues with him that went to the question of the credibility, and I do not think the the decision of the Tribunal fails on this basis. 15 Also, having regard to the reasons which I have given above, I believe that there has been an error by the learned Federal Court Magistrate in affirming the decision of the Refugee Review Tribunal and rejecting the application for review. Accordingly, in my view, the appeal should be allowed. The decision of the learned Magistrate should be set aside and the matter remitted to the Tribunal for determination in accordance with law. 16 I also make an order as to costs in favour of the appellant. I note that there were other matters raised by the appellant that were not argued, and I know that there must have been preparation in relation to those grounds. However, in all the circumstances, I do not believe it is appropriate to apportion the costs in any way, and therefore the order as to costs is a total order rather than a partial order. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | refugee protection visa whether finding of lack of credibility based on erroneous fact amounts to jurisdictional error. immigration |
An amended statement of claim filed on 6 June 2008 asserts that the applicant, a company incorporated and doing business in the United Kingdom, entered into contractual arrangements with the first respondent which is the developer of email marketing software known as Campaign Master. The first respondent is said to be a wholly owned subsidiary of the second respondent. The respondents are Australian companies which conduct their business here. The contracts were preceded by negotiations during which, it is alleged, a number of representations were made by the first and/or second respondents to the applicant. It is pleaded that a number of representations as to future matters are deemed to have been misleading by reason of s 51A of the Trade Practices Act 1974 (Cth) ('the Act'). It is, accordingly, too early to know whether s 51A will have the effect which is suggested. 4 The amended statement of claim also alleges that the representations constituted misleading or deceptive conduct (or conduct which was likely to mislead or deceive) in contravention of s 52 of the Act. The loss and damage was identified by the amended statement of claim to include a licence fee, maintenance fees, loss of opportunity to obtain new customers and increase the value of existing customers, loss of revenue due to loss of customers and the cost of obtaining certain software development services. 6 The amended statement of claim also pleads breach of a term of the Maintenance and Support agreement. The loss alleged as a result of breach of the Maintenance and Support Agreement is the same as the loss and damage caused by reliance upon the representations except that it is not alleged that such loss includes the maintenance fees. 7 The final pleaded matter alleges breach of a collateral agreement or an implied term of the Maintenance and Support Agreement that the respondents would provide to the applicant the 'source code' for the software which is the subject of the Licence Agreement. 8 The relief claimed, by an amended application filed on 19 June 2008, includes damages and both mandatory and prohibitive injunctive relief under s 87(1A) or s 80 of the Act. 9 When the matter first came before the Court the applicant indicated that it would seek interlocutory relief once the pleadings were closed. Foremost in its announced desires was an interlocutory order that the 'source code' be provided. However, before the respondents could file their defences, the applicant sought an urgent hearing of a notice of motion seeking interlocutory relief. I listed that notice of motion for hearing on 25 June 2008. 10 Some further explanation of the background is now necessary. An affidavit affirmed by Gurjeet Dhillon, a director of the applicant, was sworn on 16 June 2008 and provided to the respondents and the Court in draft form on 19 June 2008. At the hearing on 25 June 2008 a number of objections were taken to matters stated within it. Most of it survived objection at that time having regard to the character of the proceedings. The rulings made at that time were not intended to foreclose further debate about any question of admissibility for the purpose of a final hearing. Mr Dhillon was not cross-examined. No direct evidence was led to contradict his assertions and statements, although some additional correspondence was provided. For the purpose of the notice of motion I have accepted Mr Dhillon's statements as reliable unless clearly contradicted, as some were, by the terms of certain contracts and other documents to which he referred. 11 Mr Dhillon explained that the applicant was incorporated on 12 October 2005 to market and sell licence agreements for the Campaign Master software provided by the first respondent. The applicant's business is to provide an internet facility allowing its clients to send bulk emails personally addressed. A client's email address database is uploaded to the Campaign Master software for that purpose. 12 The first respondent and the applicant made an agreement on 1 February 2006 called a 'Reseller Agreement'. That agreement entitled the applicant to an exclusive right to market and sell licence agreements for the Campaign Master software in the United Kingdom and the Republic of Ireland for three years. Mr Dhillon stated that the applicant was successful and, as a result, commenced negotiations to obtain an exclusive licence agreement. On 21 May 2007 the first respondent and the applicant made, as I earlier indicated, a Licence Agreement and a Maintenance and Support Agreement. Each agreement is still in effect. Each contains express provisions for termination. Neither agreement has been terminated by either party. 13 The Licence agreement provided for the payment of a licence fee of [sterling]1,700,000. The Maintenance and Support Agreement provided for the payment of maintenance fees each quarter, being the lower of 5% of gross revenues (excluding taxes) derived by the applicant from the sale of licence agreements in that quarter or [sterling]30,600. Mr Dhillon says that all required payments have been made. The last quarterly maintenance fee was paid on 14 April 2008 for the period January to March 2008. 14 Under the Licence Agreement the applicant was granted an exclusive licence to use and market the software in the United Kingdom and the Republic of Ireland. It may appoint an unlimited number of sub-resellers. The software which was the subject of the Licence Agreement included 'the object code (but not the source code) of the current edition' of the first respondent's Campaign Master software, including various modules and developments. The applicant was permitted, at its own cost, to enhance or modify the software but it was prohibited from creating or recreating the source code or reverse engineering, decompiling or disassembling the whole or any part of the software. The parties agreed and mutually undertook to execute an 'Escrow Agreement' based on a standard form of such agreement provided by an escrow agent, NCC Escrow International Limited. Such an agreement has never been executed between the parties. 15 The standard escrow agreement which the Licence Agreement contemplated makes provision for a source code (a computer programming code of the software in human readable form) to be lodged with the escrow agent. Upon the happening of identified 'release events', the source code may be released to a licensee without such release interfering with or acting as an assignment of the confidential and intellectual property of the owner. The 'release events' include insolvency, winding up, the owner ceasing to carry on the particular business and assignment of the intellectual property rights without a novation agreement or a new escrow agreement. Material breach of obligations concerning maintenance is also a release event provided that the owner has failed to remedy a notified default. 16 Although an escrow agreement has not been executed between the parties, I have described the general nature of the provisions in the standard form of such an agreement in order to illustrate that it is directed to the preservation of the source code in independent hands with provision for release to a licensee only upon defined events, all of which involve a failure, for some reason or another, by the owner to continue to perform its obligations with respect to the software. 17 The Maintenance and Support Agreement recorded that a copy of the software has been installed on the applicant's infrastructure. It recorded that the maintenance fees (each quarter) must be paid for so long as the software is being maintained and supported. It required the first respondent 'to invest, in any twelve month period, an amount not less than the maintenance fees received by it during such twelve month period, in continuing to develop the software'. The first respondent was obliged to make available to the applicant 'as soon as reasonably practicable, any Developments of the Software developed and rolled out' by the first respondent. He alleges that enhancements to the software were not developed and provided in accordance with an intended program provided in June 2007. On 28 February 2008 a letter of demand was sent. On 1 April 2008 a further letter of demand was sent. As I earlier indicated, proceedings were commenced on 9 May 2008. On 29 May 2008 the applicant was advised that some restrictions would be imposed upon the way in which the first respondent dealt with requests for assistance from the applicant. 19 The issue which appeared to prompt the application for urgent interlocutory relief first came to notice about 23 May 2008. The 'servers' used by the applicant were scheduled to be physically relocated by the applicant's hosting provider in the United Kingdom, Server City Ltd. At first that was to happen on 30 May 2008. The applicant protested to its hosting provider pointing out that it needed to give its own clients notice. The proposal to physically relocate the servers was delayed for four additional weeks. In order to relocate the Servers, the following must be done:- (a) The data on the Servers must be backed up; (b) The Servers must be shut down; (c) The Servers must be physically removed to an alternative hosting facility; (d) The Servers must be reconfigured with new IP's and settings in order to function properly. As the First Respondent was responsible for the set up and configuration of the Servers in or around late 2005 and early 2006, the Applicant requires the First Respondent's assistance in reconfiguring the Servers once the Servers have been relocated at an alternative hosting facility. Also, as the First Respondent has always been responsible for the maintenance of the Servers, the Applicant requires the First Respondent's expertise in order to properly back up the data on the Servers prior to the Servers being relocated. Although the first respondent expressed the view to the applicant that these matters fell outside the obligations under the Maintenance and Software Agreement with respect to the software, I accept that it is arguable that clause 4.7 of the Maintenance and Software Agreement earlier set out includes an obligation to provide the 'information' which the applicant has said it needs. 21 Speaking very generally, on an application for interlocutory relief of the present kind the Court will be concerned to examine whether there is a serious issue to be tried and whether the balance of convenience favours the grant of the injunctive relief pending the trial. Relevant to the second aspect will be the question of whether, at the end of the day, damages are an adequate remedy. In Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 Gummow J (sitting as a judge of this Court) drew attention (at 506) to the necessity for an applicant for injunctive relief to show that 'what is involved is some legal right attracting injunctive relief'. Examination of whether there is a serious question to be tried is an examination which concerns the vindication of legal rights rather than simply questions of commercial convenience or even commercial 'morality'. 22 Final injunctive relief under the Act, if granted in due course, must be directed to conduct having the relationship required by s 80 with contravention of the Act. The final injunctive relief sought by the amended application could not, as the pleadings are presently framed, extend to conduct falling outside those boundaries whether as prohibitive or mandatory injunctive relief (see ICI Australia Operations Pty Limited v Trade Practices Commission [1991] FCA 527 ; (1992) 38 FCR 248 per Gummow J at 267; Thomson Australian Holdings Proprietary Limited v Trade Practices Commission [1981] HCA 48 ; (1981) 148 CLR 150 at 181). The power of this Court to grant interlocutory injunctions is restricted by the need that the power be exercised for the purpose for which it is conferred and, generally, to ensure the effective exercise of the jurisdiction invoked (see Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30 ; (1998) 195 CLR 1 at [35] ). The position is not at large. In particular, regard must be paid to the nature and jurisdictional foundation for the final relief sought and the relationship between that claimed relief and the interlocutory steps the Court is asked to take. An order pursuant to section 80 of the Trade Practices Act 1974 restraining the First Respondent and the Second Respondent from imposing restrictions on the provision of services for maintenance and support set out in the email from Sean Newell of the First Respondent to Gurjeet Dhillon of the Applicant dated 29 May 2008. An order pursuant to section 80 of the Trade Practices Act 1974 requiring the First Respondent to comply with its obligations to maintain and support the Campaign Master software pursuant to sections 3 and 4 of the Maintenance and Support Agreement between the Applicant and First Respondent dated 21 May 2007 until further order. An order pursuant to section 80 of the Trade Practices Act 1974 restraining the Second Respondent from preventing the First Respondent complying with orders 1, 2 and 3, and requiring the Second Respondent to take all necessary steps to procure the first respondent to comply with orders 1, 2, 3 and 4. In the alternative to orders 1, 2, 3, 4 and 5, that the proceedings be expedited. Costs. To provide to the applicant in a timely way any advice requested by the applicant concerning procedures for backing up the data on the applicant's existing computer servers in the United Kingdom in respect of the applicant's clients using the Software ("Servers"). To provide to the applicant in a timely way any advice requested by the applicant concerning procedures necessary for shutting down the Servers. To carry out, in Australia, in a timely way any steps necessary on the part of the first respondent (when requested by the applicant) to reconfigure the Servers so as to allow them to communicate in relation to the provision of the Software by the applicant to its clients. I have no reason to think, and none was suggested, that the undertaking would not be effective to deal with the matters concerning the applicant which I accept, at this preliminary stage, are ones capable of having a direct and serious effect upon its business. 26 That is sufficient to deal with the matter which was principally relied upon as justifying the need for attention to the question of interlocutory relief before the pleadings were closed. However, the remaining matters have been argued and it seems convenient for me to deal with them. It is clear that the restrictions were imposed as a result of the commencement of the proceedings but I accept the submission made by counsel for the respondents that I should not, at this stage, infer anything sinister. The respondents contend that, as a number of allegations of misrepresentation have been made by the applicant, they are entitled to ensure that channels of communication between the applicant and the first respondent are orderly and, if necessary, properly documented. At this stage the contention should be accepted. The applicant has not shown the steps taken were not legally open, or even unreasonable. 28 There are a number of other difficulties in the way of granting such relief. First, I cannot relate the relief sought in any satisfactory way to the pleadings in the amended statement of claim or to a proper foundation for final relief. Insofar as breach of the Maintenance and Support Agreement is alleged in the amended statement of claim, the allegation concerns a failure to invest maintenance fees in continuing to develop the software. There is no pleaded allegation to the effect that services required to be provided under the Maintenance Support Agreement have not been provided, or will not in the future be provided, in accordance with that agreement. Withdrawal of services provided voluntarily or, as appears, a decision to make a charge for services previously provided freely does not evidence the existence of a 'legal right attracting injunctive relief' . Neither does the relief sought appear satisfactorily adapted to the vindication of any right to be addressed at a final hearing. In the circumstances I am not persuaded that the applicant has discharged its onus of identifying a serious issue to be tried which would sustain the second order sought or that the balance of convenience would require or justify an order in the terms sought. Mr Dhillon provides no explanation for his own decisions in that regard. I cannot proceed upon a bare assumption that the failure to execute an escrow agreement represented a breach of the Licence Agreement. Indeed, that was not submitted. Moreover, the provisions of the Licence Agreement and the foreshadowed execution of an escrow agreement in the standard form provide no real support for any conclusion that the parties had in mind a legally enforceable mechanism whereby the applicant could insist on provision of the source code in the event of dissatisfaction with the speed at which enhancements to the software were made. 30 I think, for two reasons, that the applicant has failed to establish a serious question to be tried in relation to this issue. The first reason is that the legal foundation for any proposition that there was a contractual obligation contemplated whereby the source code would be provided to the applicant in circumstances such as the present is too weak. The second is that the applicant has failed to provide a sufficient evidentiary foundation for any suggestion that the failure to do that which the Licence Agreement contemplated (execute an escrow agreement) might arguably be regarded as a unilateral breach of the Licence Agreement. It might equally reflect an agreed position. 31 So far as the matter can be assessed by reference to the documents before the Court compulsory provision of the source code would be a major departure from the arrangements which were agreed. There is therefore no justification for this order having regard to the balance of convenience. It would upset, not preserve, the status quo. The practical effect of such an order would be to add the possibility of proceedings for contempt to the proceedings which have already been commenced. There is no doubt that the first respondent has obligations under the Maintenance and Support Agreement. The only pleaded case to the effect that those obligations have been breached concerns an allegation that the first respondent has not, as it promised, invested maintenance fees in continuing to develop the software. There is no satisfactory evidence to support this contention at the present time. Such inferences as may be drawn from the conduct of the parties, including the fact that all quarterly maintenance fees have apparently been paid, do not sufficiently support a conclusion that the level of support provided to the applicant, at least until the last payment of maintenance fees in April 2008, has involved the breach of contract alleged in the pleadings. Further evidence may make the proposition good but in my view the applicant has not at this point made out a serious issue to be tried with respect to this matter. Furthermore, I would not, having regard to the balance of convenience, be prepared to grant an injunction designed simply to expose the first respondent to proceedings for contempt in the event that contested contractual obligations were not honoured. Had it been appropriate to make orders against the first respondent it would not have been necessary to attempt to bolster the authority of those orders by ancillary orders against the second respondent. That would, in some circumstances, be an appropriate course to take. However, I have decided that none of the interlocutory orders sought is warranted on the material before me. There is no necessity for me to balance a possible justification for such orders against the possibility that an alternative method of achieving a just result between the parties could be found in some other fashion. The respondents have not yet been required to file their defences. There is no reason, from the Court's point of view, why the proceedings should not be dealt with expeditiously when the proceedings are closed. The matter is listed for further directions on 25 July 2008. I will leave the matter in the list on that day. I will at that time consider what further steps might be necessary to make the matter ready for trial and whether there appears to be a foundation for giving the matter priority. On the contrary, as I have rejected each of the orders sought in the notice of motion it is inevitable that the applicant pay the respondents' costs of the notice of motion. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | interlocutory injunction necessity to consider the nature and jurisdictional foundation for the final relief sought and the relationship between final relief and any interlocutory steps injunctive relief sought in part to compel compliance with existing legal obligations interlocutory relief refused. injunctions |
As such, he was an ' officer ' for the purposes of the Public Service Act 1922 (Cth) ('the Public Service Act'). This proceeding raises the question of whether legal expenses incurred in resisting charges made against the Taxpayer under the Public Service Act, alleging improper conduct as an officer and failing to fulfil his duty as an officer, should be allowed as deductions from the Taxpayer's assessable income for the purposes of the Income Tax Assessment Act 1997 (Cth) ('the Assessment Act'). The proceeding is an appeal against a decision by the respondent, the Commissioner of Taxation ('the Commissioner'), on an objection by the Taxpayer against an assessment to tax for the year ended 30 June 2002. Section 56(d) of the Public Service Act relevantly provided that an officer should be taken to have failed to fulfil his duty as an officer if he engaged in improper conduct as an officer. Section 56(f)(i) relevantly provided that an officer should be taken to have failed to fulfil his duty as an officer if he contravened, or failed to comply with, a provision of the Regulations that was applicable to him. Regulation 13(a) of the Public Service Regulations 1935 (Cth) ('the Regulations') relevantly provided that an officer who recorded, as the time of his arrival on duty or at his departure from duty, a time other than the actual time of his arrival on duty or his departure from duty, as the case may be, committed a breach of the Regulations. Regulation 13(g) also provided that an officer who, being prevented by illness or other emergency from attending for duty, did not, as soon as he may do so, report the fact to the officer in charge committed a breach of the Regulations. 3 Under s 62(1) of the Public Service Act, where an officer was charged with misconduct under s 61, an inquiry was to be held into the charge by an officer appointed for that purpose by the Secretary. Under s 62(6), where the officer holding such an inquiry ('the inquiry officer') was satisfied that the officer charged had failed to fulfil his duty as an officer, the inquiry officer could direct that certain action be taken in respect of the officer, including action by way of reducing the salary of the officer and transferring the officer to another position with Customs. Under s 63D(2) of the Public Service Act, an officer could appeal to a Disciplinary Appeal Committee against a decision made under s 62(6) by an inquiry officer. On 23 September 1998, the Taxpayer also was given notice of suspension but continued to receive regular pay in respect of his accrued leave and similar entitlements. On 1 February 1999, the Taxpayer was given notice of removal of suspension and from that day his pay was no longer taken out of accrued entitlements but was paid as ordinary salary. They are not to be used for any other purpose. 6 The relevant inquiry officer found that it was improper in the circumstances for the Taxpayer to ask to see Ms Barbara Baker, presenting his official identification card in order to secure her attendance. The inquiry officer considered that it was improper of the Taxpayer to convey the impression that the inquiry that he wished to make of Ms Baker had an official purpose, in circumstances where the Taxpayer's attendance upon Ms Baker was not in fact work related. By notice dated 10 December 1998, the inquiry officer directed, under s 62(6) of the Public Service Act, that the Taxpayer be demoted to a position identified in the notice with a salary identified in the notice. 7 The Taxpayer exercised his right of appeal to a Disciplinary Appeal Committee. On 24 February 1999, the Disciplinary Appeal Committee found that the First Charge was proven, but varied the direction against which the appeal was made to a direction that the Taxpayer be transferred to another position at the top salary point for the relevant band. 8 The Taxpayer then applied to the Federal Court for orders under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('the Judicial Review Act') in respect of the decision of the Disciplinary Appeal Committee. On 22 October 1999, Gyles J ordered that the decision of 24 February 1999 be set aside and that the matter be remitted to a Disciplinary Appeal Committee to be heard according to law (see [1999] FCA 1444). His Honour ordered the second respondent, the Commonwealth, to pay the costs of the proceeding and directed that the costs of the appeal to the Disciplinary Appeal Committee be reserved for consideration after the further rehearing. The Commonwealth appealed from the orders of Gyles J. On 13 April 2000, a Full Court dismissed the appeal with costs (see [2000] FCA 474). 9 The matter that was remitted to the Disciplinary Appeal Committee was heard on 11 September 2000. On 28 December 2000, the Disciplinary Appeal Committee set aside the direction of the inquiry officer of 10 December 1998 and ordered the Commonwealth to pay the Taxpayer's costs. As a consequence of the determination of 28 December 2000, the Taxpayer received full credit for entitlements that had been withheld from him. 10 At the first hearing before the Disciplinary Appeal Committee, the Taxpayer was represented by Mr P. Roberts SC, who also gave advice to the Taxpayer. Following the decision of that Disciplinary Appeal Committee, the Taxpayer sought advice from Mr Roberts about the decision. Mr Roberts also appeared for the Taxpayer before Gyles J and in the Full Federal Court and at the hearing of the remitted matter before the Disciplinary Appeal Committee. Mr Roberts was instructed to appear on behalf of the Taxpayer by Mr James Hasson, solicitor, who did not charge fees to the Taxpayer. Mr Roberts rendered fees to Mr Hasson for his appearances and advice, which the Taxpayer paid. It is agreed between the parties that the total of the fees paid to Mr Roberts that are attributable to the proceedings involving the First Charge was $27,386. After giving credit for the sum of $19,483 recovered under costs orders, the amount effectively claimed as a deduction in respect of the First Charge is $7,903. There were twelve separate charges involved. Two of those charges were later withdrawn and replaced on 16 January 1999 and 3 February 1999 with similar charges. All of the Second Charges related to alleged failures on the part of the Taxpayer, on various dates in 1997 and 1998, to fulfil his duty, under s 56(f)(i) of the Public Service Act, in so far as he failed to comply with the provisions of Regulation 13. The charges alleged that he did not accurately record attendance in connection with his employment. 12 By way of example, one of the Second Charges alleged that on 18 December 1997, the Taxpayer did not accurately record his attendance on his attendance record for that day. A statement of facts was attached to the charge. DAY paid the amount of $79.00 cash for the use of a room at the "day use" rate, and was allocated room 231. "Day use" allows the tenant to occupy the room between the hours of 09:00 and 18:00. On this card DAY provided the address 12 Punch Street, Mosman, 2088. DAY advised the receptionist that he would check out between 17:30 and 18:00. DAY resides at 90 Boyce Road, Maroubra. Separate directions were given in relation to each of the Second Charges that was found proven. For example, in relation to the charge particularised above, the inquiry officer found that the Taxpayer was not on Customs premises on the afternoon of 18 September 1997. The inquiry officer found that, while it was impossible to note precisely the time that the Taxpayer left work on the day in question, it seemed reasonable to assume that he left at about 12.30 pm. The inquiry officer therefore concluded that the Taxpayer did not accurately record his attendance on the day in question and that there was a discrepancy of three hours and fifty minutes in the flexitime sheet completed by him. The inquiry officer was satisfied that that amounted to a breach of Regulation 13(a) of the Public Service Regulations and therefore found that the charge was proven. 14 On 2 August 1999, the inquiry officer directed, under s 62(6) of the Public Service Act, that $400 be deducted from the Taxpayer's salary in respect of the failure to fulfil his duty in respect of his attendance record for 18 September 1997. Similar findings and directions were given in relation to the other of the Second Charges that were found proven. In addition, the inquiry officer directed that the Taxpayer be subject to counselling and demotion. 15 The Taxpayer appealed to the Disciplinary Appeal Committee. Mr Hasson retained Mr Andrew Bell of counsel to advise the Taxpayer in conference on 19 October 2001 in relation to the appeal. The Taxpayer paid fees of $220 to Mr Bell. 16 At the hearing before the Disciplinary Appeal Committee, the Taxpayer was represented by Mr Hasson, who did not charge him any fees. On 11 February 2002, the Disciplinary Appeal Committee varied the decision of the inquiry officer. In respect of each of the charges found proved, the Taxpayer was to be transferred to a position at another level and paid the salary payable to an officer at the top of the salary range for that level. That transfer represented a demotion and a reduction in remuneration. The Taxpayer applied for review of that decision under the Judicial Review Act. However, no fees are claimed as deductions in the year ended 30 June 2002 in respect of that proceeding. In the course of that investigation, officers of the Australian Federal Police carried out telephonic interceptions of telephones used by the Taxpayer at both his place of work and at his home, pursuant to one or more warrants issued under the Telecommunications (Interception) Act 1979 (Cth) ('the Interception Act'). Ten telephone conversations occurring between 9 December 1997 and 12 June 1998 were intercepted. 18 Customs requested the Australian Federal Police release transcripts of the product of such telephonic interceptions for use in connection with possible disciplinary action against the Taxpayer. The Australian Federal Police agreed to that request. Ms Williams was given the transcripts for the purpose of deciding whether the Taxpayer may have failed to fulfil his duty as an officer and whether he should be charged under s 61(2) of the Public Service Act. 19 On 22 March 1999, Ms Williams gave the Taxpayer notice of seven further charges under s 61 of the Public Service Act ('the Third Charges'). The Third Charges alleged that the Taxpayer had failed to fulfil his duty as an officer within the meaning of s 56(d) at various times from 1997 to 1999, particulars of which were set out in charge sheets. The transcripts were also supplied to the relevant inquiry officer, following the laying of the Third Charges against the Taxpayer. 20 Three of the charges related to claims for a diesel fuel rebate by Mr Tony Panto, the partner of Ms Angela Blake. It was alleged that the Taxpayer failed to inform Customs of information in that regard, lent improper support and assistance to Ms Blake in connection with Mr Panto's claim for diesel fuel rebate and was knowingly concerned in the creation of a diary for use in connection with an audit of Mr Panto's claims for diesel fuel rebate. A further charge was that the Taxpayer secured access to, and organised the use of, a work vehicle for a purpose that included the collection and transportation of his daughter for a non-work related purpose by a fellow officer. Two further charges involve deception and false attendance records concerning 12 June 1998 when the Taxpayer was absent from his workplace. The final charge involved alleged failure by the Taxpayer to inform Customs of various matters concerning an investigation into a Mr Dennis Partridge. 21 On 24 August 1999, the Taxpayer commenced a proceeding in the Federal Court. An amended application was filed on 13 October 1999. In the proceeding, the Taxpayer alleged that officers of the Australian Federal Police had, under warrant, intercepted the Taxpayer's telephone calls at work and at home as part of a criminal investigation and that information obtained from those interceptions had been conveyed to officers of Customs, including Ms Williams. The Taxpayer sought orders that the Third Charges be set aside and that the inquiry under s 62 of the Public Service Act stayed and a declaration made that the communication by the Australian Federal Police to Customs of the product of the telephonic interceptions was unlawful. The Taxpayer also claimed damages under s 107A(4) of the Interception Act. 22 On 31 March 2000, after a hearing on 3 November 1999, Einfeld J dismissed the Taxpayer's application with costs (see Day v Commissioner of Australian Federal Police (2000) 96 IR 240). The Taxpayer appealed to the Full Court and, after a hearing on 31 August 2000, the Full Court dismissed the appeal with costs on 11 September (see Day v Commissioner, Australian Federal Police [2000] FCA 1272 ; (2000) 101 FCR 66). On 9 October 2000, the Taxpayer filed an application to the High Court for special leave to appeal. That application was subsequently dismissed with costs. 23 In connection with the proceeding before Einfeld J, the Full Court and the High Court, the Taxpayer was represented by Mr Roberts SC on instructions from Mr Hasson. In addition, Mr Hasson retained Mr Stephen Gageler SC to advise and represent the Taxpayer in connection with the application to the High Court. It is agreed between the parties that the total of the fees paid to Mr Roberts that are attributable to those appearances is $23,014 and that the Taxpayer incurred expenses to Mr Gageler SC in the sum of $5,940 in relation to his appearances and advice. In that return, the Taxpayer did not claim a deduction for the legal expenses now under consideration. On 7 November 2002, the Commissioner issued a notice of assessment for the year ended 30 June 2002. On 12 November 2004, the Taxpayer lodged an objection against that assessment, saying that the sum of $37,077 should have been allowed as a deduction from his assessable income for the year ended 30 June 2002. On 19 April 2005, the Commissioner disallowed the objection. 25 This proceeding was commenced on 17 June 2005, by way of appeal under s 14ZZ(a)(ii) of the Taxation Administration Act 1953 (Cth) ('the Administration Act') against the Commissioner's objection decision of 19 April 2005. However, under s 8-1(2)(a), a taxpayer cannot deduct a loss or outgoing under s 8-1 to the extent that it is a loss or outgoing of capital. Further, under s 8-1(2)(b), a taxpayer cannot deduct a loss or outgoing to the extent that it is a loss or outgoing of a private nature. He says that in all of the proceedings described above his 'essential stance was defensive '. The Taxpayer says that, in the proceedings in the Federal Court in relation to the First Charge, he sought to defend himself against reviewable errors by the Disciplinary Appeal Committee. He says that the objective relationship between the expenditure and the gaining or production of assessable income so predominates that it is not material to consider his subjective purpose or motive but that, if such matters are considered, they support the same conclusion. He denies that the expenses were of a capital or private nature. 30 The Commissioner, on the other hand, says that the matters variously described as the Taxpayer's objective purpose relate only to the immediate reason for payment of the expenses and says that the Taxpayer's contentions ignore the situation that impelled the proceedings in the first place, namely, the conduct described in the charges and statements of facts: that conduct was not engaged in for the purpose of, or in the discharge or performance of, his duties as an officer. The Commissioner accepts that the legal expenses in question were incurred involuntarily and, accordingly, he says, the state of mind of the Taxpayer as to his purpose, object or motive in making the payments in question is irrelevant. 31 In addition, in relation to the expenses incurred in connection with the Third Charges, the Taxpayer contends that the Commissioner is estopped from denying their deductibility. The estoppel is said to arise as a consequence of orders made by consent in an earlier proceeding in the Federal Court between the Commissioner and the Taxpayer concerning the deductibility of legal expenses paid to Mr D F Jackson QC during the year ended 30 June 2001. The Commissioner denies that any issue estoppel arises by reason of the orders made in the earlier proceeding. Even if, when the expenditure is actually paid by a taxpayer, the taxpayer was actuated in paying the expenditure, not by a desire to produce income, but by the necessity of satisfying a liability or claim to which the taxpayer had become subject in deriving assessable income, the expenditure will be still deductible. The question of whether money is expended in and for the production of assessable income is not to be determined by considering only the immediate reason for making the payment, but must also be determined by having regard to the purpose for which the liability or claim that gives rise to the expenditure was incurred (see Herald and Weekly Times Limited v Federal Commissioner of Taxation [1932] HCA 56 ; (1932) 48 CLR 113 at 118). 33 If legal expenses are properly treated as having been incurred by a taxpayer in defending the manner of his performance of his duties, the expenses will be deductible. If a liability is incurred, or a claim is encountered, because of the very act of performing the work by which a taxpayer earns assessable income, the expense will be deductible. If a proceeding in respect of which legal expenses are incurred arises from activities by which a taxpayer earns his income or the mode of his performance of a particular task carried out in the course of earning his income, the legal expenses incurred in relation to that proceeding will be deductible. That is to say, if the cause or the purpose of a taxpayer's incurring of legal expenses is his assertion that he had faithfully performed the duties by which he had earned assessable income, the expenditure will be deductible ( Commissioner of Taxation v Rowe (1995) 60 FCR 99 at 113 (' Rowe '). 34 If incurring costs can be shown to contribute to the success of an employee in defending himself from dismissal from his employment and costs are incurred to preserve the employee's entitlement to receive, in return for his services, assessable income, the costs will be deductible ( Rowe at 115-116). If legal expenses are incurred by an employee in defending himself from dismissal, the expenditure will be incurred on revenue account and not capital account ( Rowe at 118). Whether or not legal expenses constitute an outgoing of a capital nature or an outgoing on account of revenue depends upon the cause or the purpose of incurring the expense. It is therefore necessary to consider the object in view when the legal proceedings were undertaken or the situation that impelled a taxpayer to undertake the proceedings ( Hallstroms Pty Limited v Federal Commissioner of Taxation [1946] HCA 34 ; (1946) 72 CLR 634 at 647). 35 The proper characterisation of legal expenses depends upon the circumstances with which the proceedings in relation to which the expenses were incurred were concerned. It is not sufficient to limit the question to the object or purpose, whether subjective or objective, that the proceedings themselves were intended or were hoped to achieve. A distinction must be drawn between the immediate object sought to be achieved by the particular proceedings in which the legal expenses are incurred and the situation that impelled the Taxpayer to undertake them. It is not sufficient to say that the proceedings were undertaken in order to protect one's reputation or keep one's job. The relevant inquiry is what gave rise to the circumstances that made it necessary to incur the expenses in order to protect the reputation or keep the job. If the activity or conduct that resulted in the need to take such defensive proceedings was an activity or conduct engaged in for the purposes of producing assessable income, that might be one thing. However, if the activity or conduct was not engaged in for the purposes of producing or deriving assessable income, that would be a different matter. If that activity or conduct was engaged in by the Taxpayer for the purpose of, or in the discharge of, his duties as an officer of Customs, he may be entitled to claim that the legal expenses were incurred in gaining or producing assessable income. However, if the conduct that was the subject of the charges against the Taxpayer was conduct that was not engaged in in the discharge of his duties as an officer of Customs, the expenses were not deductible. The fact that it was alleged not to have been engaged in for that purpose would not be fatal to his claim if he were able to persuade the Court, on the balance of probabilities, that, notwithstanding the First Charge, the conduct was engaged in in a bona fide belief that it was in discharge or in performance of his duties. The legal expenses in question were incurred because the Taxpayer engaged in conduct that was a breach of duty. He has made no attempt, for example, to establish that he believed, on reasonable grounds, that the conduct was in the performance or discharge of his duties as an officer of Customs or was in any way in connection with his employment. 38 The background facts concerning the First Charge are to be found in the reasons for the decision of Gyles J of 22 October 1999. On 28 July 1998, the workstation of the Taxpayer was searched by officers of the Australian Federal Police pursuant to a warrant. Items were seized, including personal items belonging to the Taxpayer. A business card was left behind by the searchers to indicate that the search had taken place. The Taxpayer made unsuccessful requests of his superior to ascertain why his workstation had been searched and sought, unsuccessfully, a copy of the search warrant. The Taxpayer also requested a copy of the search warrant from the Commonwealth Director of Public Prosecutions but was told that the Australian Federal Police had refused to supply a copy. After a complaint to the Commonwealth Ombudsman about the refusal to furnish him with a copy of the search warrant, an officer of the Ombudsman's office told the Taxpayer that it was not unreasonable for the Australian Federal Police not to supply the Taxpayer with a copy of the search warrant. 39 The Taxpayer was then informed by a work colleague that the premises of Tony Panto had been searched by the Australian Federal Police on the same day as the search of the Taxpayer's workstation. The Taxpayer was given a copy of the warrant pursuant to which Mr Panto's premises were searched. That warrant had been issued by Ms Barbara Baker at the Downing Centre Local Court. At the time of the issue of the warrant, Ms Baker held the position of Clerk of the Local Court, with responsibility for the issue of warrants. 40 On 21 September 1998, the Taxpayer attended at the counter area of the Downing Centre Local Court in order to speak to Ms Baker. The Taxpayer had a conversation with Ms Baker and gave her a plastic identity card in his name, which had been issued to him by Customs. On the basis of his identification, Ms Baker then took the Taxpayer into the secure office area of the Local Court. 41 Gyles J found that there could be no attack on the finding by the Disciplinary Appeal Committee that the use by the Taxpayer of his identity card was not in the performance of his duties or in exercising powers entrusted in him. His Honour also found that the Disciplinary Appeal Committee was perfectly entitled to make a finding that the Taxpayer was endeavouring to find out information concerning the warrant unofficially by using his status as an officer of Customs and that the use of the Customs identity card had the desired effect of ensuring access to Ms Baker, which he would otherwise not have attained. 42 Thus, Gyles J concluded that the particulars of the charge were established. That left two questions. The first was whether the Taxpayer's conduct was conduct as an officer and the second was if so, whether it was improper. Gyles J concluded, with considerable hesitation, that the Disciplinary Appeal Committee could properly conclude that the conduct of the Taxpayer on the occasion in question was conduct as an officer for the purposes of s 56(d) of the Public Service Act. However, his Honour concluded that the conduct was not improper, since the Taxpayer was making all and every inquiry possible about the warrant, both as to its terms and that which lay behind it. For that reason, his Honour set aside the decision and remitted the matter to the Disciplinary Appeal Committee to be heard according to law. The Full Court did not disagree with the analysis of Gyles J. 43 In the light of those facts and findings, it is clear that the First Charge was made by reason of conduct that was not engaged in in the performance or discharge of the Taxpayer's duties as an officer of Customs. While Gyles J concluded, with considerable hesitation, that the conduct was engaged in as an officer of Customs, it was not engaged in for the purpose of discharging or performing duties as an officer. It was engaged in in order to find out information concerning his own personal affairs, namely, the reasons for the search of his workstation. I do not consider that the legal expenses attributable to the First charge were deductible. The attendance records were completed by the Taxpayer in the performance of his duties as an officer of Customs. In defending the Second Charges, the Taxpayer was defending the manner of his performance of his duties. He was unsuccessful before the inquiry officer and the Disciplinary Appeal Committee. Nevertheless, the liability for legal expenses was incurred because of the way in which he performed his duties. I consider that the legal expenses attributable to the Second Charges were deductible. The proceedings at all three levels raised questions concerning the proper construction and effect of the Interception Act. Section 63 of the Interception Act prohibits use or communication of lawfully obtained information except as otherwise provided by the Interception Act. Section 67 permits an officer of an agency, such as the Australian Federal Police, to communicate lawfully obtained information to another person for a permitted purpose in relation to that agency. His Honour observed that it was only if that question were answered in the negative that it would be necessary to consider whether the circumstances of the case were such that the Taxpayer was entitled to damages. Einfeld J observed that s 67 permits communication by an officer of ' an agency ' to ' another person ' for a ' permitted purpose... in relation to the Agency '. His Honour considered that, in the case of the Australian Federal Police, such a purpose includes an investigation or inquiry under the Public Service Act into alleged misconduct of a Commonwealth officer. His Honour considered that it was difficult to see what that definition covered if not an investigation into the activities of an officer of Customs such as the Taxpayer was then facing. His Honour considered that the manifest purpose of the provision was to permit the Australian Federal Police to communicate lawfully intercepted information to assist the purposes referred to. 47 The Full Court considered that a reading of Einfeld J's reasons for judgment suggested that the only ground advanced in support of the application was a contention that s 67 of the Interception Act relates only to intra agency communications and does not permit the disclosure by the Australian Federal Police of the product of telephonic interceptions to another Commonwealth body or one of its officers, including Customs. Einfeld J rejected that contention and the correctness of his Honour's conclusion in that respect was not put in issue in the appeal. 48 The Taxpayer contended before the Full Court that Einfeld J did not deal with an argument that had been advanced below, namely, that at the time when the product of the telephonic interceptions was communicated to Customs and to Ms Williams and the relevant inquiry officer, there was no investigation of, or inquiry into, alleged misbehaviour or alleged improper conduct on the part of the Taxpayer. The Full Court considered that it was expedient to deal with the argument without embarking upon an inquiry as to whether or not the argument was put to Einfeld J at first instance. 49 The Full Court held that the Taxpayer had not established that the product of the telephonic interceptions was communicated to Ms Williams for a purpose other than one connected with an investigation or inquiry being undertaken by her in her capacity as an officer of the Commonwealth, as part of the process of determining whether charges under the Public Service Act should be laid against the Taxpayer. Since the onus of establishing that the power was improperly exercised was on the Taxpayer, the Taxpayer's claim failed. 50 In his application for special leave to appeal to the High Court, the Taxpayer contended that the Full Court erred in its construction of s 67 of the Interception Act and of the definition of ' permitted purpose ' in s 5 of the Interception Act. He contended that the Full Court erred in failing to hold that the communication by the Australian Federal Police to Customs of information obtained by interceptions and the use of that information by Customs, Ms Williams and the relevant inquiry officer was prohibited by s 63 of the Interception Act. 51 In his summary of argument in support of the special leave application, the Taxpayer said, in dealing with the factual background, that the Australian Federal Police had intercepted his telephone calls under warrants issued under the Interception Act and that the interceptions occurred in connection with a criminal investigation. The Taxpayer stated that the Australian Federal Police subsequently provided transcripts of the telephone calls to officers of Customs for use in connection with possible disciplinary action against the Taxpayer. He said that, upon becoming aware of the existence and use that had been made of the transcripts of the interceptions, he commenced the proceeding in the Federal Court challenging the legality of the provision of the transcripts to officers of Customs for use by Customs. 52 The only information before the Court concerning the conduct that was the subject of the Third Charges consists of the particulars furnished to the Taxpayer in connection with the Third Charges and the reasons of Einfeld J and the Full Court. It was not suggested on behalf of the Taxpayer that the conduct described in the Third Charges involved the performance by the Taxpayer of his duties as an officer. It could not be said that, in defending the Third Charges, the Taxpayer was defending the manner of his performance of his duties as an officer of Customs. I would be disposed to conclude, therefore, that the defence of the Third Charges cannot fairly be characterised as a defence by the Taxpayer of the manner of his performance of his duties as an officer of Customs. Accordingly, legal expenses incurred in relation to the Third Charges would not be deductible. 53 However, as I have said, the Taxpayer contends that the Commissioner is estopped from denying that the legal expenses incurred in relation to the Third Charges are allowable deductions. That question must be determined first. 54 In the year ended 30 June 2001, the Taxpayer paid the sum of $6,000 to Mr D F Jackson QC for legal fees. The Commissioner assessed the Taxpayer for tax in respect of the year ended 30 June 2001 on the basis that that expense was not deductible. The Taxpayer objected to the assessment and the Commissioner disallowed the Taxpayer's objection. The Taxpayer appealed to the Federal Court from that objection decision under s 14ZZ of the Administration Act. That appeal became Proceeding A4 of 2003 between the Commissioner and the Taxpayer in the Australian Capital Territory Registry ('the Earlier Proceeding'). (2) The Commissioner effect the amendment referred to in Order 1 above within 28 days of the making of this order. (3) The Commissioner pay the costs of the Taxpayer in the amount of $9,000 within 28 days of the making of the order. 57 The Taxpayer says that the same issue arises in the present proceeding as was finally and authoritatively determined in the Earlier Proceeding by the orders of 5 December 2003. He says that one of the issues as defined by the parties in the Earlier Proceeding was the deductibility of legal expenses incurred in relation to defending the Third Charges, including challenging the use of telecommunications interceptions made by the Australian Federal Police in connection with the Third Charges. It is necessary, therefore, to examine, as far as the evidence permits, the issues that were raised and resolved in the Earlier Proceeding. 58 Under the Federal Court Rules , appeals against objection decisions do not proceed on pleadings. Such proceedings are regulated by Order 52B, which deals with appeals against appealable objection decisions brought under the Administration Act. Under Order 52B rule 4, as in force at the time of the Earlier Proceeding, an appeal was to be commenced by filing an application in accordance with Order 4 of the Federal Court Rules in the form prescribed in the Rules. Under Order 52B rule 5, the Commissioner was required, within 28 days after the application was served, to file and serve on the relevant taxpayer a statement outlining succinctly the Commissioner's contentions and the facts and issues in the appeal as the Commissioner perceives them. At the first directions hearing, the Court would make a direction for the filing and service of a similar statement by the relevant taxpayer. Thus, the statements by the Commissioner and the relevant taxpayer raised the issues for determination by the Court. Where an appeal from an appealable objection decision is resolved by consent, it would be necessary to examine the statements filed by the parties to determine what issues were necessarily resolved or determined by the judgment or order made or given by consent. 59 In the present context, the question is whether an issue that arises as between the Commissioner and the Taxpayer in the present proceeding was resolved or determined in the Earlier Proceeding. The orders made by Finn J were made by consent. It is necessary, therefore, to examine the respective stances taken by the Commissioner and the Taxpayer in that proceeding in order to determine what issue as between them was resolved or determined by those orders. In the year ended 30 June 2001, the applicant incurred legal expenses (being barristers fees) amounting to $6,000 ('legal expenses'). The Applicant claims the legal expenses as a deduction incurred in defending various disciplinary charges brought against him by [Customs] . The Applicant claims that the expenses relate to defending the second and third sets of disciplinary charges (detailed below), and in challenging the use of interceptions made by the Australian Federal Police ('AFP') in connection with the disciplinary charges . The first disciplinary charges against the Applicant were dismissed and [Customs] was ordered to pay the applicant's costs. The second set of charges dated 13 November 1998 consist of allegations that on twelve occasions the Applicant failed to fulfil his duty as an officer by not accurately recording his attendance at work under subsection 56(f) [the Public Service Act] . An inquiry officer within [Customs] found that eleven of the charges against the Applicant were established. An appeal against these findings has been made and is yet to be finalised. The third set of charges dated 22 March 1999 relate to seven allegations that the Applicant failed to fulfil his duty as an officer within the meaning of subsection 56(d) of [the Public Service Act] . These charges are yet to be determined. The evidence of the second and third sets of disciplinary charges include AFP telephone interceptions and AFP covert surveillance records . The amended application was dismissed with costs. The Applicant's appeal to the Full Federal Court against that decision was dismissed. On 10 August 2001 the High Court refused special leave to appeal against the decision of the Full Federal Court. All litigation engaged in by the appellant and all of the legal expenses incurred by the appellant were incurred on matters directly concerned with the disciplinary charges. The disciplinary charges against the appellant were laid as a result of a consideration by [Customs] of the [AFP telephone interceptions and AFP covert surveillance records] . [Customs] sought [the AFP telephone interceptions and AFP covert surveillance records] for use in connection with "possible disciplinary action" against the appellant, which necessarily encompassed the making by [Customs] of a decision whether to lay charges against the appellant. [The AFP telephone interceptions and AFP covert surveillance records] were communicated to Ms Williams for a purpose connected with an investigation or inquiry being undertaken by her in her capacity as an officer of the Commonwealth, as part of the process of determining whether charges under [the Public Service Act] should be laid against the appellant. The first disciplinary charges laid against me were dismissed and [Customs] was ordered to pay my costs. In the year ended 30 June 2001, I sought advice about the charges I was facing and I incurred legal expenses amounting to $6,000 for fees paid to David Jackson QC ("legal expenses") . I incurred the legal expenses in defending the disciplinary charges brought against me by [Customs] . All of the legal expenses I have incurred relate to defending disciplinary charges. These legal expenses include concurrent actions to challenge the evidence that [Customs] sought to rely on. 65 As I have indicated, the proceeding in the Federal Court was commenced before any determination by the relevant inquiry officer and, for that reason, the conduct of the Taxpayer that was the subject of the charges was not examined. Rather, the proceedings in both the Federal Court and the High Court appear to have been concerned entirely with questions concerning the construction and effect of the Interception Act and the extent to which the product of the interceptions by the Australian Federal Police could be used by Customs for the purposes of disciplinary action against the Taxpayer. 66 The fact that a judgment or order is made or given by consent does not preclude an issue estoppel arising from that judgment or order. Clearly, in such a case, the Court that makes or gives the order or judgment has not investigated the facts and circumstances out of which a dispute arises or the legal principles that govern the resolution of the dispute. Nevertheless, by the judgment or order, the earlier court sanctions what the parties have agreed between themselves and converts a mere agreement into a judicial determination upon which an issue estoppel or res judicata plea may be founded (see Spencer Bower, Turner and Handley, The Doctrine of Res Judicata, Butterworths, London, 1996 at 38-40). 67 The Commissioner accepts that an issue estoppel can arise out of a judgment or order given on an appeal from an objection decision in relation to a particular year of income, which can be pleaded in a subsequent appeal in relation to a different year of income. Nevertheless, the prerequisites for the existence of an issue estoppel must be satisfied. That is to say, it must be demonstrated that the issue in respect of which an estoppel is raised is the same issue as was determined or, by necessary implication, must have been determined as between the parties in order for the earlier order or judgment to have been made or given. Thus, it must be established that the issue raised in a subsequent proceeding in respect of which an estoppel is pleaded was an issue the determination of which was an essential and fundamental step in leading to the judgment or order in the earlier proceeding. The issue might be one of fact or law or of mixed fact and law but it must be the same issue (see generally IEL Finance Limited v Commissioner of Taxation [2006] FCA 267). 68 Clearly enough, there is some connection between the advice given by Mr Jackson QC and the advice and appearances of Mr Gageler SC and Mr Roberts SC in relation to the Third Charges, in so far as they were concerned with the litigation in the Federal Court and with an application for special leave to appeal from the orders of the Full Court dismissing the appeal from Einfeld J. Notwithstanding the references to the Second Charges in the Statement of Facts, Issues and Contentions that are highlighted in the extracts set out above and the references to the First Charges and the Second Charges in the affidavit of 22 September 2003, the product of the telephonic interceptions does not appear to have been raised in conjunction with the Second Charges. The material indicates that Mr Jackson's advice was sought only in relation to the application for special leave to appeal to the High Court from the decision of the Full Court, which related only to the Third Charges. Insofar as the Commissioner and Taxpayer referred to the Second Charges in the earlier proceeding, it is clear the reference was to use that may have been made by Customs of the product of the interceptions in considering the Second Charges. That may have been a misapprehension. 69 The fee of $6,000 paid by the Taxpayer to Mr Jackson QC was for an opinion on the proposed appeal to the High Court. That appeal related to a challenge to the use, in connection with the Third Charges, of the product of telephonic interceptions made by the Australian Federal Police. By making the order of 5 December 2003, albeit by consent, Finn J must be taken to have determined that those fees were allowable as a deduction from the assessable income of the Taxpayer for the year ended 30 June 2001. 70 The fees paid to Mr Gageler SC were paid in relation to advice and appearances in connection with the application for special leave to appeal to the High Court from the Full Court's decision. The question raised by the application for special leave from the High Court was the question that was decided by the Full Court in dismissing the appeal from Einfeld J. Thus, there appears to be substantial identity concerning the issue as between the Taxpayer and Customs that was raised in the litigation in the Federal Court and the High Court and in respect of which fees were incurred to Mr Roberts SC, Mr Gageler SC and Mr Jackson QC. 71 The issue that arises in the present proceeding is whether legal expenses paid by the Taxpayer to Mr Roberts SC and Mr Gageler SC in challenging the use by Customs of the product of interceptions by the Australian Federal Police are allowable deductions from the income of the Taxpayer as an officer of Customs. That issue arose and was necessarily determined in favour of the Taxpayer by reason of Finn J's order in the Earlier Proceeding. It is clear that, in the Earlier Proceeding, the issue was whether the fees paid to Mr Jackson QC in obtaining advice concerning an appeal to the High Court from the proceeding in the Federal Court dealing with the Interception Act in relation to the Third Charges constituted an allowable deduction from the income of the Taxpayer as an officer of Customs. In those circumstances, it is difficult to see why the issue of whether legal expenses incurred by the Taxpayer in relation to the application for special leave to appeal to the High Court from the orders of the Full Court were allowable as deductions was not decided by the orders made by Finn J on 5 December 2003. 72 The Commissioner has not suggested that the fees paid to Mr Gageler SC should be treated as being in any different category from the fees paid to Mr Jackson QC. The fees paid to Mr Roberts SC may be in a different category. However, if the fees paid in relation to the application for special leave are deductible, it would appear to follow, a fortiori , that fees paid in connection with the proceedings in the Federal Court would also be deductible. I consider that the Commissioner is estopped from contending that the fees paid to Mr Roberts SC and to Mr Gageler SC in relation to the proceedings in the Federal Court and the High Court in connection with the Third Charges are not allowable deductions from the assessable income derived by the Taxpayer as an officer of Customs. The objection decision should be set aside. The matter should be remitted to the Commissioner for determination according to law in accordance with these reasons. The Taxpayer has been only partially successful. I consider that it would be appropriate to order the Commissioner to pay 60 per cent of the Taxpayer's costs of the appeal. I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | appeal from objection decision taxpayer involved in various legal proceedings concerning his employment status whether legal fees incurred were allowable deductions whether legal fees were incurred in gaining or producing the taxpayer's assessable income taxation |
There does not appear to be any dispute as to the correctness of this background and I too adopt it. 3 In summary, the appellant is a citizen of Bangladesh who arrived in Australia on 17 January 2003; he lodged an application for a protection visa with the Minister's department on 12 February 2003; that application was refused on 3 April 2003; and on 23 April 2003 the appellant lodged an application for review to the Tribunal. 4 The appellant's essential claim was that, if returned to Bangladesh, he fears persecution on political grounds for his support for the Awami League Party, including the holding of a senior position in that party, and his political activism. 6 The Tribunal accepted that in November 2000 the appellant and his wife went to Saudi Arabia for 10 days on a pilgrimage and was satisfied that if the appellant had had a well-founded fear of serious harm for any reason whatsoever at that time, he would have used that opportunity to seek international protection. 7 The Tribunal was further satisfied that if at that time the appellant had thought there was a real chance he would be subjected to serious harm in Bangladesh, then he would not have returned to Bangladesh and, therefore, that as at November 2000, he did not have a well-founded fear of persecution for a Convention reason. 8 The Tribunal referred to various claims as to what had happened to the appellant but was unable to satisfy itself that the essential and significant reason for any of the incidents was Convention-related. 9 The Tribunal accepted that the general security situation, safety and political stability in Bangladesh were not as sound and secure as in Australia but also accepted that the appellant had a valid Bangladeshi passport issued on 15 November 2000. It was satisfied that if he had a well-founded fear of serious harm because of the incidents to which he referred, or for any other reason, he would have left Bangladesh at some time immediately after they had occurred but that he did not do so for some 10 months after his claimed attack on 27 March 2002 and over two months after he claims police beat him during a demonstration on 10 November 2002. It was satisfied that any subjective fear that the appellant may have had because of those incidents and the general security and political situation in Bangladesh was not a well-founded fear of serious harm amounting to persecution for a Convention reason. 10 The Tribunal accepted that serious charges have been laid against the appellant for 'blasting bombs' and having illegal weapons and that he would be wanted, at least for questioning, by the appropriate authorities and, therefore, accepted that the police had a legitimate reason to visit his house in December 2002 and that they were matters properly for determination by the courts in Bangladesh. 11 The Tribunal accepted independent country information ('ICI') that showed the courts in Bangladesh were independent and accordingly found that even if the appellant were to face false and politically motivated charges on his return (a claim not accepted), he could seek legal redress from the courts and that accordingly there was not a real chance that in the course of such a process he would be subjected to serious harm amounting to persecution for a Convention reason. After hearing oral argument, his Honour concluded at [5] that the appellant 'is concerned about the merits of the [Tribunal] decision' and that his submissions 'both oral and in writing struggle to rise at all above the basic dispute over the merits of the decision'. (ii) That there was no basis for the claim that the appellant was denied a fair hearing given the record of the Tribunal hearing in the court book and the transcript of the hearing: At [6]. (iii) That the appellant's assertion that the Tribunal failed to consider the real issues inherent in his claim was not supported by the decision record: At [6]. (iv) That there was no evidence to support the appellant's assertions of bias and bad faith: At [6]. 15 His Honour concluded at [8] that there was no jurisdictional error in the Tribunal's decision and that it was therefore a privative clause decision. On June 19, the High Court stated that the Government does not have any right to extend detention and, as such, SPA detainees must be released after 30 days unless the advisory board recommends an extension. The High Court judgment also made mandatory the requirement that authorities inform the court of the grounds for the detention order against the accused within 15 days and, if possible, earlier. On June 24, the Appellate Division of the Supreme Court concurred with the High Court judgment. If the Government adequately defends its detention order, the detainee remains imprisoned; if not, the detainee is released. If the defendant in an SPA case is able to present his case before the High Court in Dhaka, the High Court generally rules in favour of the defendant. However, many defendants either were too poor or, because of strict detention, were unable to obtain legal counsel and thereby moved [sic] the case beyond the magistrate level. Magistrates subject to the administrative controls of the Establishment Ministry were less likely to dismiss a case (see Section 1.e.). Detainees were allowed to consult with lawyers, although usually not until a charge was filed; however, they were not entitled to be represented by a lawyer before an advisory board. Detainees may receive visitors. The Government has held incommunicado prominent prisoners for extended amounts of time. At most, any error that may be reflected in the reasons for decision of the Tribunal that derives from the Tribunal's acceptance of the accuracy of the DFAT ICI is an error within the Tribunal's jurisdiction: See SZDLR v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 773 ; (2005) 144 FCR 368 at [44] per Branson J; see, too, NABE v Minister for Immigration & Multicultural & Indigenous Affairs (No. 2) [2004] FCAFC 263 ; (2004) 219 ALR 27 at [52] --- [54]. 22 In response to a question put to him in the same terms, counsel for the appellant said it was incumbent on the Tribunal to ascertain the appellant's means as to whether he would be able to prosecute any appeal against charges that might be made against him up to the superior courts. This was put in the context that the information in the US Department of State report was correct and the information in the DFAT ICI, to the extent of the dichotomy drawn between the lower courts and the higher courts by the US Department of State, was wrong. This, in itself, illustrates that if there was error, it was error of fact, not law. Moreover, even if the US Department of State report correctly reflected the position as at the date of the Tribunal's decision, the Tribunal was under no obligation to enquire of the appellant as to whether or not he had the means to prosecute an appeal to the higher appellate courts: Minister for Immigration & Multicultural & Indigenous Affairs v SGLB [2004] HCA 32 ; (2004) 207 ALR 12 at [42] --- [44]. 23 This ground of appeal cannot be sustained. (ii) The appellant's adviser also 'submitted by fax a number of photographs of the [appellant] and a copy of a poster of the [appellant] seeking support in the student council election of 1991'. First, it is correct to say that, as a matter of fact, the information referred to in the particulars was not given by the appellant himself; it was given by his adviser. Second it is incorrect to say that, as a matter of the proper construction of s 424A(3)(b) of the Act, such information was not given by the appellant, and therefore excluded from the obligation imposed on the Tribunal by s 424A(1). 27 Counsel for the appellant disavowed any reliance on an argument that the information given was not for the purpose of the appellant's application. His case was confined to his Honour's reference to the word 'himself', in reliance on a contention that the information was not given by the appellant himself, but by the appellant's adviser. 28 His Honour's use of the word 'himself' is perhaps unfortunate, but I do not think it conveys any suggestion that his Honour was of the view that information falling within the exclusion that is s 424A(3)(b) is confined to information which the appellant himself gives and does not include information given by others on his behalf. If it does then, in my view, that construction is wrong. 29 This ground of appeal must be rejected. NADH of 2001 v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 214 ALR 264 at [111] --- [115]. (ii) That, taken together with the selective way in which the ICI was used, the Tribunal's assessment of the appellant's evidence about the objectives etc., of the Chatra and Awami Leagues was unfair, selective and demonstrates a non- bona fide exercise of review powers in circumstances where the Tribunal member was not an expert on the Chatra League or the Awami League (cf. SZAQY v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 1382 at [29] ) and, at the same time, made representations to the appellant inconsistent with subsequent assessment of the appellant's evidence. (iii) In response to the Tribunal's question 'about the philosophy, goals, mandate, manifesto and objectives of the Chatra League and Awami League', the appellant, inter alia , said that it was about 'secularism', 'democracy', 'socialism' and 'nationalism'. (iv) In fact, the Tribunal's recitation of the appellant's evidence demonstrates that the appellant had a reasonably comprehensive knowledge of the philosophy, mandate and objectives of the Chatra League and Awami League. Yet, strangely, the Tribunal did not accept 'that outside of student politics the [appellant] had a high political profile' based on 'the generality of his answers'. (v) Concomitantly, it is asserted that the Tribunal's Q182, which was a generic, composite question covering the 'philosophy, the goals, the manifesto, the objectives of the Chatra League and the Awami League', was an unfairly long, convoluted, complex and confusing question. (vi) The appellant's confusion with regards to Q182 is most aptly demonstrated in the appellant's following request of the Tribunal: 'Could you please explain this question. 'Stands for, that mean, which area you mean?'. (vii) Equally, the Tribunal's request to 'answer in short sentences' (Q182) followed by a further request 'I don't want a political discourse' (Q183), unfairly restricted the evidence the appellant was allowed to give. (viii) Similarly, the Tribunal's representation at Q189 'Now, I think I've got that' unfairly lulled the appellant into the belief that he had covered the particular topic on which he was being questioned. (ix) Thus, it is submitted the Tribunal constructively failed to exercise jurisdiction by conducting its fact-finding task substantially in a manner that a fair-minded observer might reasonably apprehend that the conclusions had been reached with a mind not open to persuasion and unable or unwilling to evaluate all the material fairly and non-selectively (cf., NADH at [115]). Indeed, in the course of submissions, I suggested as much to counsel for the Minister although I used the word 'rigorous' rather than 'aggressive'. I stand by that response. Some of it was, with respect, also confusing and would have drawn objection had the appellant been represented by experienced counsel. However, I agree with counsel for the Minister that that process does not come close to establishing an apprehended bias that would be necessary to ground a jurisdictional error in the Tribunal's decision. 34 This ground of appeal must also be rejected. (ii) However, the appellant's evidence, inter alia , was '[t]he main objective was to organize people to develop our organisation to attract people to us and say what we're doing and all to make them aware of our activities. At that time the revolution against the BNP was very strong and we organized all these meetings, protest and all against that, I took part in organising all those things. 37 The appellant's written and oral submissions did no more than repeat these particulars although, to be fair, counsel submitted, on the back of such particulars, that the Tribunal failed to act judicially with a minimum degree of proportionality in reliance on what was said by Deane J in Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321 at 367. 38 I cannot agree. What was submitted might dress it up as jurisdictional error, however, drilling down discloses nothing but an attempt at merits review. 39 The fourth ground also fails and the appeal must be dismissed with costs. | judicial review protection visa refugee review tribunal where tribunal did not rely upon up to date country information whether error of fact within jurisdiction where advisor provided information to tribunal on behalf of applicant whether applicant gave such information for the purposes of application whether tribunal must give particulars of such information to applicant migration |
The only order made was that the proceeding stand over to a date to be fixed ( Council of the City of Sydney v Goldspar Australia Pty Limited [2006] FCA 472). During the course of submissions, it was agreed that the quantum of damages would not be dealt with before I had decided issues of liability. I have now done so and the matter will stand over to enable the hearing on damages to be scheduled and for the parties to raise any other issues arising out of these reasons. The following exchange then took place. I wasn't asked to. I mean you couldn't appeal against the order that the matter stand over. I think it's a matter of substance, but you can take it that --- well, I don't suppose I can give any assurances, but I do not believe that time will be running at the moment. I must say at the moment I would require some persuasion about that. 3 Prior to 24 May, the cross-respondent, the Council of the City of Sydney (the Council) (for whom Mr Condon appeared on 3 May 2006) sought leave to appeal in the appellate jurisdiction of the Court. That motion has not yet been dealt with. 4 When the matter came before me on 24 May, the Council requested that I make orders pursuant to O 29(2) of the Federal Court Rules for the determination of certain separate questions, the answers to which were said to follow from the Reasons for Judgment which I had delivered. It was put that, in the alternative, I should make declarations to the same effect. I indicated that I would not make declarations. Interlocutory declarations are controversial and, at least, are usually to be avoided (per Barwick CJ and Jacobs J in Neeta (Epping) Pty Limited v Phillips [1974] HCA 18 ; (1974) 131 CLR 286 at 307; per Hayne and Callinan JJ in Dovuro Pty Limited v Wilkins [2003] HCA 51 ; (2003) 215 CLR 317 at [143] ; Warramunda Village Inc v Pryde [2001] FCA 61 ; (2001) 105 FCR 437; cf Warramunda Village Inc v Pryde [2002] FCA 250 ; (2002) 116 FCR 58 per Finkelstein J at [64]---[88]). Counsel for the cross-claimant, Goldspar Australia Pty Limited (Goldspar) indicated opposition to making of any order pursuant to O 29. Argument then ensued as to that issue and I have taken time to consider the matter. I decline to make the order sought. 5 Order 29(2) can be a useful procedure. It was utilised at an earlier stage of this proceeding. However, both authority and practical experience indicate that use of it should be approached cautiously ( Save the Ridge Inc v Commonwealth [2005] FCAFC 203 at [15] ; Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495). It would be unusual for the procedure to be adopted without the consent of both parties in a case such as this. Breach of contract is a common law cause of action. The common law only envisages one result --- the ultimate verdict. As I indicated to counsel during the course of argument, if an application for an order had been made by consent in advance, I may have acceded to it. I probably would have declined to do so if it had been opposed by the moving party, in this case Goldspar. But the occasion did not arise for consideration of that question as no application was made by either party. It is not suggested that this is a case in which the Court and the parties proceeded upon the basis that an order would be made pursuant to O 29(2) but neglected to attend to that formality. 6 Whilst it may be technically possible to make the order after the event, in this case it would be wrong to do so against the opposition of the moving party. It is too late to make or change the rules at this stage. A useful summary of the position appears in the judgment of the Full Court in Australian Building Construction Employees and Builders' Labourers' Federation v Employment Advocate [2001] FCA 1443 ; (2001) 114 FCR 22 at [5] ---[7]. I did not, and do not, intend to lose control of this cross-claim. I wish to complete disposition of it to final judgment as soon as reasonably possible. The proceeding as a whole has been fragmented more than enough already. 7 Many of the arguments advanced by counsel for the parties were, in truth, directed to the question as to whether or not there should be an interlocutory appeal. That issue would have arisen if I had made dispositive orders or declarations. It is a false issue so far as I am concerned. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Ruling herein of the Honourable Justice Gyles. | whether order 29 order should be made after interim reasons delivered where opposed practice and procedure |
2 The appellant based his claim for refugee status on his alleged fear of persecution by the Chinese Government because he was an adherent of the Falun Gong doctrines and movement. Various grounds of review were relied on by the unrepresented appellant before his Honour who rightly dismissed, without the need for discussion, all of them but one, namely the failure, as his Honour found, of the Refugee Review Tribunal to send a complete copy of its decision to the appellant. Section 430B(5) provides: "If the applicant and the Secretary are present at the handing down of the decision, the Tribunal must give each of them a copy of the statement prepared under subsection 430(1). The applicant is taken to be notified of the decision on the day on which the decision is made. In this regard his Honour followed WACB v The Minister for Immigration and Multicultural and Indigenous Affairs [2004] HCA 50 ; (2004) 210 ALR 190 and SZICO v The Minister for Immigration and Multicultural Affairs [2006] FMCA 435 at [14] . As his Honour pointed out at [26]: "The potential mischief resulting from a failure to comply with sub section [430B](6) is that an applicant may hypothetically be deprived of the opportunity of seeking judicial review of a tribunal decision. Hypothetically, an applicant might challenge a purported notification of a tribunal decision which did not meet the requirements of s 430B(6) but there would be no point in doing so, given that in the absence of the required notification, it remains open to an applicant to apply in this Court or the High Court to challenge the Tribunal decision, not simply the notification. It follows, and I find that, compliance with s 430B(6) is not generally a condition subsequent to the making of a lawful decision in accordance with Part 7 of the Migration Act . It is a separate and enforceable statutory obligation on the Tribunal and a failure to comply with it, in accordance with the High Court decision in WACB, will render inoperative current statutory time limits on judicial review applications to the courts. The point is academic in this case as the judicial review application was filed within the prescribed time limit. 6 I think his Honour was right for the reasons that he gave. 7 While his Honour was speaking in the context of the case before him, it should nevertheless be pointed out that, as presently advised (and I have not had full argument on the matter), it seems to me that an unremedied failure to comply with s 430D has consequences other than the postponement of time limits for seeking judicial review. It is fundamentally important to any process of administrative review that the unsuccessful party should be told of the decision and in a reasonably timely way. It is particularly important here where questions of status are involved. An unsuccessful applicant for review by the Tribunal would not know his likely human fate. It seems to me that until such time as s 430D has been complied with, it would, for example, not be open to the Minister to seek to have the applicant concerned removed from Australia. 8 Members of the High Court were at pains in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355, at [100] (per McHugh, Gummow, Kirby and Hayne JJ), to affirm that failure by a public officer to comply with a statutory obligation, while it may or may not affect the validity of an act or decision in question, may nevertheless be attended by legal consequences and that a court may restrain subsequent administrative action predicated upon supposed compliance with the unmet statutory condition until the default has been remedied. 9 I add that the appellant sought to raise some new grounds without descending to particulars. There appears to be nothing in any of them. 10 The appeal will be dismissed with costs assessed at $3,000. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick. | migration refugee review tribunal conduct of review delays failure by tribunal to supply applicant with tribunal's decision and reasons citizenship and migration |
On the latter occasion I indicated that I was providing him with his last opportunity to provide an intelligible and unobjectionable pleading. I have, though with little optimism, recommended to him that he obtain competent legal assistance. He has to date demonstrated little understanding both of the law he seeks to invoke in his own favour and of how to present, albeit in lay form, a clear statement of the claim he seeks to prosecute. My recommendation was not accepted. As he has done in so many proceedings in this Court and in other courts and tribunals concerning his relationship with his past employer, Mitsubishi Motors Australia Ltd (MMAL), he acted without legal representation on the motion presently before me. That motion, brought by the two respondents, again seeks the summary dismissal of the proceeding pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) or else under O 20 r 5 of the Federal Court Rules . I intend to make a summary order under s 31A giving judgment for the respondents in relation to the whole proceeding. MMAL Super ("the Trustee"), a subsidiary of MMAL, was the trustee of the MMA Staff Superannuation Fund and was brought into that dispute because of claims Mr Kowalski has asserted as to his superannuation entitlements consequent upon the cessation of his employment with MMAL. It is unnecessary for present purposes to outline the many proceedings he has brought against MMAL and the Trustee. Though his complaints in substance relate to defaults of the Trustee, AMP Super has been joined in this proceeding because by a deed the trust fund was transferred to it as trustee on 15 June 2006 and the Trustee was then wound up as a superannuation entity. The relief Mr Kowalski seeks includes an order for payment of a sum of money out of the fund, hence the joinder of AMP Super. The trust rules of the fund that was administered by the Trustee and on which Mr Kowalski seeks to rely as they relate to his alleged "entitlements" provide (Rule C7) that in the event of his retirement "from the employ of [MMAL] before his Normal Retirement Date due to his Total and Permanent Disablement", he is to be paid a lump sum from the Fund in accordance with the relevant rules ("a TPD Benefit") which lump sum, it is claimed in his pleading, represented an entitlement of $181,195.00 as at 1 July 1991. If the Trustee effected a policy of insurance under which insurance was payable in the event of disablement of a member, the Deed's definition of "Totally and Permanently Disabled" permits the Trustee in designated circumstances to modify the Deed's definition so as to accord with that of the policy: cl 1. I mention this in passing because, as will be seen, the Trustee took out such insurance in respect of Mr Kowalski but allowed it to lapse. Mr Kowalski seems to consider he was prejudiced by its so doing. The Rules relating to the benefits to which a member is entitled by virtue of the circumstances of his or her retirement or resignation are set out in Schedule C to the Deed: Rules C3 to C9. While the Rules impose an obligation on the Trustee to make a prescribed payment to a member who satisfies the criteria etc for that payment, as a practical matter it is for the Trustee to be satisfied that the relevant criteria have been met before a payment of that benefit is to be made. It is his alleged entitlement to a TPD Benefit that Mr Kowalski seeks to have enforced, or else to be compensated for not receiving, in this proceeding. Given its present significance, I would add that Rule C9(2) provides distinctly for the payment of a lump sum to a member of the Superannuation Fund on account of sickness "not constituting Total and Permanent Disablement who leaves his employment before his normal retirement date". In this proceeding this type of payment has been described as an "ill health benefit". I should also note two further provisions in the Fund's Deed and Rules. Rule A7, subject to not presently relevant provisos, authorises the Principal Employer (ie MMAL) from time to time to "direct the Trustee to augment the amount of any benefit payable pursuant to the ... Rules". The documents filed (often as annexures to submissions) are for the most part unexplained; their context is often lacking; and if they refer to annexures, the annexures are often missing. The re-pleading has only added to the evidentiary morass. While the respondents have attempted to provide some order to Mr Kowalski's material they have for understandable, prudential reasons limited the Kowalski material to which they refer (supplemented by documents of their own) to what can reasonably be said to be related to Mr Kowalski's case as now pleaded. Nonetheless, they have as well dealt with certain matters (concerned primarily with events in 1998) which, while not founding any claim in the pleading, were referred to as a cause of complaint in Mr Kowalski's filed statement of issues and formed part of his oral submissions. Put in summary form --- and hence somewhat inexactly --- Mr Kowalski's claims as they emerge from the pleading (as supplemented by his filed statement of issues relating to 1998) are fourfold, the first three being founded on alleged breaches of fiduciary duty and breaches of trust. (ii) The Trustee should have considered, but failed properly to do so, his entitlement to a TPD Benefit at the time he was paid his ill-health benefit in November 1998. (iii) The Trustee should have but failed properly to consider his claim for a TPD Benefit in November 2005. (iv) The Trustee was negligent in failing to perform its duty to Mr Kowalski in not making a correct and proper determination of his entitlement to a TPD Benefit. The consequential relief sought (I disregard much of what is misguidedly claimed in the Further Amended Statement of Claim: see paras 23 to 28) is, in substance, that the Trustee be ordered to pay him his TPD Benefit with interest or else damages or compensation for breach of fiduciary duty, breach of trust or negligence. The final preliminary comment I should make is this. There is a considerable number of paragraphs in the Further Amended Statement of Claim that are manifestly irrelevant or are misconceived: see eg paras 9.1---9.10 and 23---28. I do not intend further to identify what is on any view unnecessary in the pleading. Rather I will only address the sufficiency and prospects of the four claims I have identified. As the first three arise in chronological order, I will outline them sequentially. Before doing so it is appropriate to refer both to the emerging principles informing the Court's power to give summary judgment under s 31A of the Federal Court of Australia Act and to the nature of the obligation of a trustee or fiduciary to consider the exercise of a power held by virtue of office. 1. As I have indicated, I have a plethora of evidence before me and the principal task it presents is the making of an assessment of it, as a matter of fact, as to whether Mr Kowalski has no reasonable prospect of proving each of the facts necessary to perfect the elements of the causes of action he advances in his pleading: cf Paramasivam v University of New South Wales [2007] FCAFC 176 at [41] ; see also Jefferson Ford Pty Ltd v Ford Motor Co of Australia Ltd [2008] FCAFC 60 ; (2008) 167 FCR 372 at [23] . Beyond that, as I will indicate, there is also a question whether his claims are legally untenable in any event. Section 31A is not concerned as such with the bare question whether a person's pleading discloses a reasonable cause of action. Its concern is with substance and not just form. But once that party has established a prima facie case that the applicant has no reasonable prospect of success, the applicant must respond by pointing to specific factual or evidentiary disputes that make a trial necessary: Jefferson Ford at [127]. So, for example, if the pleadings, affidavits, and other materials considered in connection with the summary judgment motion, reveal a factual dispute and that factual dispute must be resolved to determine whether or not the claim succeeds, it cannot be said that the claim has "no reasonable prospect of success" ... On the other hand, if the factual contest is unnecessary to the resolution of the cause of action pleaded, then in the absence of other relevant material, there is nothing to prevent the court entering judgment on that claim. As I then indicated there is now a significant body of Australian case law dealing with that matter and many of the cases have involved claims for total and permanent disability benefits having criteria similar to those embedded in cl 1(6) of the Deed: see eg Jeffrey Guy Baker v Local Government Superannuation Scheme Pty Ltd [2007] NSWSC 1173 ; Hay v Total Risk Management Pty Ltd [2004] NSWSC 94 ; Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945 ; Flegeltaub v Telstra Super Pty Ltd [2000] VSC 107 ; Minehan v AGL Employees Superannuation Pty Ltd (1998) 134 ACTR 1 ; Vidovic v Email Superannuation Pty Ltd (unreported, Supreme Court of New South Wales, Bryson J, 3 March 1995). For present purposes, I accept that the grounds upon which a court will review an exercise of a superannuation trustee's discretionary determination are essentially those stated by McGarvie J in Karger v Paul [1984] VR 161 , though they have been somewhat elaborated --- if not adapted: see Baker v Local Government Superannuation Scheme Pty Ltd at [8] --- in the superannuation context. They are that (i) the discretion was not exercised in good faith; (ii) there was not a real and genuine consideration of the correct question; (iii) the discretion was not exercised for the purpose for which it was conferred; (iv) if the trustee has given reasons for its exercise of discretion, those reasons were not sound; and (v) if the material before the trustee can be identified, that the trustee's decision was one that no reasonable person could come to on that material. I note in passing that, while Mr Kowalski has not been hesitant in alleging bad faith, the challenges he has made in substance seem addressed to grounds (ii), (iv) and (v) of the above. There are three additional matters I should emphasise. First, I have emphasised that it is the review of the Trustee's decision that is of present concern. The present is not a case in which the Trustee was, in substance, deciding a question that was assigned by the Deed itself to an insurer: cf Chammas v Harwood Nominees Pty Ltd [No 1] (1993) 7 ANZ Ins Cas 61-175. Secondly, while both under the general law and under cl 3(1) of the trust deed the Trustee had no duty to give reasons for a determination adverse to Mr Kowalski, a failure to give reasons in circumstances where explanation might be called for is another matter. Indeed, whilst trustees do not have to give reasons in a case where a plaintiff puts forward a prima facie case that the trustee's discretion has miscarried, the absence of reasons and the absence of any evidence before the Court as to what happened, will tend to make that prima facie case a virtual certainty. Thirdly, as the Trustee has considered Mr Kowalski's entitlement to a TPD Benefit on a number of occasions and has decided against it, an issue that presently arises is whether, if at all, it is obliged to reconsider that matter and, if so, in what circumstances. These issues have helpfully been considered by the Full Court of Western Australia in Tonkin v Western Mining Corporation Ltd (1998) 10 ANZ Ins Cases 61-397 and in a context not dissimilar from the present. It may, however, in the exercise of its fiduciary duty and as a matter of discretion, if it considers it appropriate, seek and obtain additional medical evidence. It may also, as a matter of discretion, require medical evidence to be submitted to it for the purposes of its consideration. As trustee, it is not an adversary either for or against an applicant for the benefit. Relevantly, it has a duty only to act in accordance with the trust. If it fails to perform the same, the court will compel it to do so or do so for it. It is not bound by any rules as to how it exercises a discretion conferred on it, save such as it is obliged to comply with by the terms of the Deed, provided always that it must act honestly and in good faith, on an informed view of whether or not to exercise its discretion, and exercise the power with due consideration for the purpose for which it was conferred and for no ulterior purpose. In the case of powers conferred on it and as to whether it should do or refrain from doing something, it must exercise its judgment actively and honestly and act accordingly. The court will not control a trustee in the exercise of its purely discretionary powers unless it is acting mala fide or has misconceived the nature of its discretion and acted upon that misconception. When appointed to exercise a trust according to discretion, a trustee is not bound to state reasons for any conclusion at which it may have arrived and on which it has acted, but again the discretion must be exercised with an absence of indirect motive with honesty of intention and on a fair consideration of the issues. The duty of the court generally is to see that the discretion of the trustee has been exercised in this manner and not to deal with the accuracy of the conclusion at which it may have arrived. See Jacobs' Law of Trusts in Australia , 5 th Ed, p 372-379. In such case the respondent is bound to give them proper consideration. No time limit is fixed or imposed by the Deed for making application for the Benefit or for the required consideration of medical evidence. Whether any statutory limitation might apply is not relevant to our consideration as no issue in that respect has been raised. In the event of the respondent, having considered medical evidence before it, failing to form the necessary opinion there is nothing in the Deed or rules to inhibit the appellant from providing, for its further consideration, further medical evidence relevant to the formation of that opinion. There is nothing in the Deed to lead to the conclusion that, once having failed or refused to form the necessary opinion after consideration of the medical evidence then before it, the respondent is under no obligation to consider further medical evidence relevant to the formation of that opinion. Indeed, in my opinion, on the proper construction of the Deed and having regard to the fiduciary nature of the trustee's obligations, the respondent, if requested to do so, is bound to consider such evidence relevant to formation of the opinion as may from time to time be put before it. Consequently, medical evidence, whether coming into existence prior or subsequent to any particular failure or refusal to form the necessary opinion will necessarily have to be considered if made available by or on behalf of the applicant for that purpose. Finally, though it is not a matter which it is appropriate for me to enter upon in this proceeding, I acknowledge that there remains a real question as to the appropriateness of applying to superannuation trusts as of course principles of review evolved in contexts of settlor bounty and charity --- contexts which are remote from the modern employment relationship: see eg Vidovic v Email Superannuation Pty Ltd ; Baker v Local Government Superannuation Scheme at [8]; and see generally Dal Pont and Chalmers, Equity and Trusts in Australia , 727 ff (4 th ed, 2007). In doing this I largely follow as a matter of convenience the chronology prepared by the respondents and for which I am grateful. As I noted in Kowalski (No 2) at [11], I was then unable to develop any real understanding of the sequence of events since 1991 or of the relevance or significance of much of the documentary material. (i) On 7 March 1970, Mr Kowalski joined the MMAL Super Fund. He alleges that on 16 August 1991 he suffered a psychological injury/mental breakdown at work and that from that date until 16 February 1992 he was paid "his statutory entitled sickness benefit" as a consequence of that injury/breakdown. (ii) On 20 February 1992 Mr Kowalski made a Total Disablement claim. In para 13.2 of the FASC it said the Trustee commenced paying him "Totally and Permanent Disability Benefits". (iv) On 4 August 1992, the insurer, SGIC informed the Fund's administrator that Mr Kowalski would continue to be eligible for a Total and Temporary Disablement Benefit (TTDB) but, in light of his treating psychiatrist's report, he was assessed as not "Totally and Permanently Disabled": his condition "can only be approximated with Total and Temporary Disablement. Chronicity of his condition is not implied". On 18 August 1992, the Trustee of the Fund agreed to decline Mr Kowalski's TPD claim "based on the evidence provided". I interpolate in passing that this 1992 TPD Benefit decision of the Trustee has not been challenged in this proceeding. (v) Mr Kowalski had been involved in litigation in the South Australian District Court with MMAL and then in consequential proceedings over a settlement in the period 1991---early 1993. He said that he believes Mr Kowalski's chances of a productive life are much better if a settlement is achieved. The possibility exists that he may become a chronic invalid ; for that reason an agreed settlement would be much more beneficial to him. (Emphasis added. He said that it has been demonstrated in patients with stress-related conditions that only one out of 32 patients were effectively rehabilitated back to work. That was despite the fact that their rehabilitation was very carefully monitored. Therefore, he does not see rehabilitation back to his previous employment as an option with any significant chance of success. I would also interpolate that there is nothing in the evidence to suggest that this note was supplied to the Trustee at that time. However, it is clear that by June 2001 the Fund administrator had a copy of the notes: see letter of that date from David Smett to Colonial. The letter suggests the notes were provided by Mr Kowalski at about that time. It can also be inferred from a file note of Mr Smett of 27 October 1998 that he was made at least aware on that day of what Mr Kowalski described as "Dr McFarlane's report" of April 1993. (vi) Mr Kowalski's employment contract was terminated by MMAL on 16 March 1994. Since the review hearing has concluded, you have continued to provide prescribed medical certificates that certify you totally unfit for work as a result of a pathologically intense anxiety condition. Review Officer Fender made a finding that you did not suffer a disability arising from your employment with us. She also made a finding that even if you suffered an incapacity resulting from the meeting on 16 August 1991, that incapacity was temporary in nature and has long since abated. She found that your incapacity for work has resulted from the ramifications of the common law proceedings since, at the latest, 10 th July 1992. On that ground, your contract of employment with the company is now at an end, and accordingly you are no longer required to report for work. On 31 March 1994 MMAL informed the Trustee that Mr Kowalski had "resigned" from his employment: FASC para 15. (vii) On 22 March 1994 Dr Jagermann, Mr Kowalski's treating doctor, gave a workers compensation certificate relating to an examination of Mr Kowalski of that date. He certified that his condition had "abated" and that he was fit for normal duties from "28.3.94 and continuing", with capacities "commensurate with [his] work skills, practice and experience". (viii) There does not appear to be any contemporaneous evidence of how the Trustee was notified of Mr Kowalski's termination. A letter written on behalf of the Trustee to Mr Kowalski in November 1997 suggested that that notification occurred by means of an electronic transfer to the Trustee of MMAL's payroll which indicated employees who had terminated and the termination dates. The letter went on: "If no other correspondence is received by the Fund the superannuation benefit paid is either a normal resignation or a retirement benefit, depending on the member's age. " (ix) On 23 May 1994 Mr Kowalski requested the Trustee to stop processing his superannuation entitlements until two proceedings were finalised. The first was a claim against MMAL for unfair dismissal; the second, an appeal against the WorkCover ruling of 9 March 1994 which was referred to in the letter notifying him of his termination. (x) In late August 1994 the Trustee paid Mr Kowalski a resignation benefit of $27,664.54 under Rule C9 of the Trust Rule. The 1994 claim is that, before so doing, the Trustee did not consider the 1993 conference note with Dr McFarlane or any other medical evidence (unspecified) available to it at the time "and which was satisfactory to the Trustee" which proved he was entitled to be paid a TPD Benefit instead of a resignation benefit. As I will later indicate, there is no arguable basis at all for alleging a breach of fiduciary duty or breach of trust on the Trustee's part at that time. The Trustee was not put on notice at the time that Mr Kowalski's termination was other than by way of resignation and it acted accordingly. Mr Kowalski has provided material bearing on it and has clearly relied upon it in his submissions. (i) Sometime in 1997 Mr Kowalski made a claim to the Trustee for an ill-health benefit pursuant to Rule C9(2)(a) of the Rules. As earlier noted, this benefit is payable in circumstances of resignation due to sickness that does not constitute Total and Permanent Disablement. On 27 November 1997 he informed the Trustee he did not wish it "to make a determination in regards to my entitlement [to that benefit]" until his claim for unfair dismissal had been finalised. (ii) Sometime in 1997 Mr Kowalski suffered a heart attack (or attacks). The material before me suggests both that the heart attack became the subject of a workers compensation claim and that it intruded itself in some way into the TPD Benefit discussions at the mediation and with Mr Smelt on 27 October 1998. The Trustee was not a participant in that process. The mediation occurred on 26 October 1998 and resulted in the signing of Heads of Agreement on 27 October 1998 by Mr Kowalski, his wife and MMAL. (v) MMAL prepared a document for that mediation of what it wished to achieve. Clarifying the amount payable to Mr Kowalski for superannuation. That document was initiated by Mr Kowalski, Mr Walsh and Mr Breugem for MMAL. That document identified as an issue: Any entitlement that Kazimir Kowalski has as a result of the termination or cessation of his employment with Mitsubishi Motors Australia Ltd including superannuation, sickness benefits or otherwise. (vii) At 9.00 am on 27 October 1998, Mr Kowalski had a meeting with Mr Smelt. The purpose of the meeting, according to Mr Smelt's file note, was for Mr Kowalski to discuss his arrangements with MMAL and the benefit he would receive on reaching agreement with MMAL. The note recorded: (viii) Sometime on 27 October the Heads of Agreement was signed. It recited that the parties "have reached an agreement in relation to the resolution of all issues" which it recorded as including for present purposes that: Kowalski on behalf of himself and his dependants hereby agrees to accept the sum of $200,000 in full and final settlement of any entitlements he may have to superannuation, sick leave, compensation and damages arising out of or in the course of his employment with MMAL. Would you please ensure that his benefits are paid in accordance with the relevant terms of the Superannuation Trust Deeds. The Trustee paid that sum to the designated fund on the following day. On 17 November the Trustee formally confirmed the decision to admit his claim for an ill-health benefit. As I will later indicate it is not at all obvious how Mr Kowalski reasonably could found any challenge to the decision making/actions of the Trustee in November 1998. . In dealing with the period 1999 to 2005 I rely on material filed by Mr Kowalski. (i) It is apparent that by March 1999 Mr Kowalski believed an error had occurred in relation to the calculation of his superannuation benefit for the purposes of the mediated agreement. He was sent a letter from Mr Breugem who signed the agreement for MMAL indicating that he participated in the mediation on behalf of MMAL and not as a director of the Trustee and that he excluded himself "from any consideration in regard to the issues involved with respect to your Superannuation calculation". Mr Breugem reminded Mr Kowalski that he had entered a legally binding agreement in settlement of (inter alia) superannuation entitlements arising out of his employment. The agreed total Mr Breugem stated was made up of components (which included superannuation) which were specified and allocated "at your discretion in accordance with your financial advice". On the material before me this last observation seems incorrect and that the superannuation amount was advised by the representatives of MMAL. The letter there indicated that while he understood the Trustee was considering "your issues", Mr Breugem indicated that Mr Kowalski's concerns should be dealt with in the context of the Agreement. He proposed that the matter be dealt with in a meeting with Mr Walsh QC. (ii) By June 2000 Mr Kowalski had lodged a complaint with the Superannuation Complaints Tribunal in relation to his benefits from the Fund. The Tribunal later determined it had no jurisdiction in relation to the matter. (iii) By a letter of 5 June 2001 the Trustee told Mr Kowalski that it was not authorised to give him a copy of the Heads of Agreement: it was not a party to it; only MMAL could authorise its release. Accordingly, any questions relating to this agreement should be directed to MMAL. (iv) Having been asked (seemingly in about June 2000) to review Mr Kowalski's 1992 claim for a TPD Benefit, the insurer, Colonial (the successor to SGIC), advised Mr Smelt by letter of 13 June 2001 of its decision to decline the claim. On 22 June Mr Smelt sent an email to Colonial concerning Mr Kowalski and Colonial's decision. After some discussions with our legal people in Melbourne we believe the fact that these payments continued for the period they did suggest there is a chronic situation and a full review of his case is warranted. What I would note is that it reveals plainly enough both an awareness on behalf of those acting for the Trustee of the issue posed by the TPD claim that needed address and, equally significantly, the obtaining of legal advice in relation to the issue. On 27 June Mr Smelt again requested Colonial to review Mr Kowalski's claim for the benefit and provided Colonial with further material for that purpose which included the notes from the meeting with Dr McFarlane of April 1993 and a report from McFarlane of 16 September 1998. (v) On 3 July 2001 Mr Smelt yet again requested the insurer to reconsider the TPD Benefit claim. Whilst the decision to decline may have been reasonable at that time, there is nothing on file from SGIC to indicate that the same decision was reasonable more than a year later ie at 19 February 1994 when payment of temporary disablement benefits ceased. The incident leading to the claim occurred whilst SGIC was the insurer on risk and total disability had been established. It remained to address the question of whether the disablement was temporary (as initially assessed) or in reality it was permanent. The continuance of the TTD benefit would not have been dependent upon the permanency of his condition and accordingly it appears the question of permanency was not again considered. By virtue of the fact that Mr Kowalski had not recovered sufficiently to resume any work, without such reconsideration, it is not clear whether or not he was totally and permanently disabled. Until the matter has been concluded one way or the other it is incumbent upon the insurer and the Trustee to re-assess his TPD claim in its entirety. That material was forwarded to Colonial on 31 July 2001. (vi) As appears from a letter of 8 March 2004 from the Trustee's lawyers to Mr Kowalski, both Colonial and the Trustee reconsidered his application for a TPD benefit "in July August/2001. At that time, Colonial and the Trustee rejected your application. " (vii) On 16 April 2003, Colonial wrote to Mr Smelt concerning Mr Kowalski and the life insurance policy relating to him. We note that Colonial subsequently re-examined Mr Kowalski's claim and affirmed its decision to deny the claim by letter dated 13 June, 2001. Colonial reviewed the claim at this time and communicated its decision to you via email correspondence on or about August, 2001. Mr Kowalski however, alleges that Colonial did not re-examine his claim as requested. We deny this allegation. We note that the policy is between Colonial and the Trustee. Therefore, we are writing to Mr Kowalski informing him that any future questions he has about the policy should be directed to the Trustee and not Colonial. We refer to the policy provisions for an explanation of the assessment of the insured's claim in this way. (Emphasis added. There is nothing in the material to which I have been taken to suggest that the Trustee sought the reassessment referred to in the last quoted paragraph or that it disputed the insurer's view as to the period of cover. I should add I have emphasised the paragraph where Colonial limited its liability to February 1992. While this may have been the case insofar as concerned Colonial in respect of any TPD Benefit claim, it was not the case for the Trustee. From February 1992 until the termination date in 1994, the Trustee "self insured" in respect of any possible TPD Benefit claim by Mr Kowalski: on insuring benefits see Trust Deed cl 8; see also Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913. (viii) In mid-2003 Mr Kowalski and others acting on his behalf sought to obtain a copy of Colonial's determination of August 2001. The Trustee's solicitors denied having a copy of it. (ix) In March and April of 2004 the Trustee's solicitors wrote to Mr Kowalski and to his union indicating on instructions that no formal application for a TPD Benefit was made to the Trustee in October 1998. In the letter to Mr Kowalski, the solicitors further observed that, in consequence, no such application was considered or rejected at that time. Ltd. Lonsdale Plant, to myself, dated 16 March 1994, in which he and MMAL informed me that "... As you (I) continue to be unfit for your (my) normal duties with us, your (my) contract of employment with the company is frustrated. On that ground, your (my) contract of employment with the company is now at an end, and accordingly you are no longer required to report for work ...". The letter is self explanatory, however, I draw your attention to the parts of the letter that I have underlined. The following day Mr Kowalski wrote to the Trustee attaching documents to prove that the Trustee was not a party to the mediation and settlement agreement and that he was not in 1998 paid his correct entitlement according to law. Though para 18 of the FASC refers to these documents as including "medical" documents, such if any were not exhibited, or referred to, by Mr Kowalski. (xi) On 20 December 2005 the Trustee through its solicitors indicated it had "previously considered and declined applications made by you for a TPD benefit and that you have been informed of the Trustee's decision. " (xii) On 21 February 2006, Mr Smelt wrote to the Fund's sub-committee that was to deal with the 3 November application. Mr Kowalski claims to have lodged a fresh claim for a TPD claim via Doug Clutterbuck (as representative of the Trustee) on 3 November 2005. (Emphasis in original. The same day the sub-committee confirmed the decision to decline the 3 November 2005 TPD Benefit claim "as it is not relevant to the date of cessation of employment and that the claim for TPD had previously been considered and declined by the Fund's insurer and Trustee". The trustee is of the opinion that your letter of 3 November 2005 and its annexures raise no new issues. The Trustee has made its position clear in respect to your entitlement to a TPD benefit from the Fund in previous correspondence and this position remains unchanged. (Emphasis added. I have little regard for his regular assertions of bad faith, as freely made as they are unsubstantiated. And I treat with considerable reserve his interpretation of the motives of others, his own evidence from the bar table and his general narrative of the events. Moreover, his application and pleading, as will be seen, are as notable for what they leave unchallenged as for what they challenge. Doing the best I can with the underlying material which is said to found the complaints made, and conscious of the opportunities I have given Mr Kowalski to propound a cause of action, albeit in lay terms, I have as I have foreshadowed, concluded that the proceedings should be summarily dismissed. While it will not often be the case that a Court will be required to --- or should properly --- conduct as detailed an examination of the materials put on by the parties as I have, this is not an ordinary proceeding with an ordinary and uneventful provenance. The evolving manner in which Mr Kowalski has perceived his grievances and has formulated them to secure the relief he has in mind, has necessitated that I conduct in essence a "preliminary trial": Jefferson Ford , at [23]. I intend to deal briefly with the factual material chronologically, focussing primarily upon those matters which have led me to my conclusion. It is, I consider, important to acknowledge that in 1992 both the insurer and the Trustee declined Mr Kowalski's formal application for a TPD Benefit. The Trustee's decision has not been challenged in this proceeding. I mention this decision because, as the Trustee later recognised, it did not preclude the further consideration of whether Mr Kowalski may have been entitled to a TPD Benefit when his employment terminated in 1994. Turning now to the 1994 claim in the FASC, several matters seem indisputable. First, no formal application was made of the time of termination for a TPD Benefit. Mr Kowalski does not suggest otherwise. Secondly, the Trustee was unaware that it should consider Mr Kowalski's termination entitlements with such a benefit in mind. It did not inquire into whether there was medical evidence capable of supporting such an entitlement. It had no need, or obligation, to in the circumstances: cf Tonkin , at 74,269. I note that before it could pay a member a TPD Benefit under Rule C7, the Trustee was required to be of the opinion "after consideration of medical evidence satisfactory to them [sic]" that the member is incapacitated to the extent required by the Rule. The Trustee in this matter simply paid a Rule C9 retirement benefit. If the Trustee was later presented with an application for, or medical evidence in support of, a TPD Benefit, the paying of the Rule C9 benefit would not have relieved the Trustee of its obligation to consider that application. This is not to say that the C9 decision was vitiated by some breach of duty on the Trustee's part. Rather, its correctness was examinable because an error may have been made in providing the member with his or her entitlement as a member. Under the Rules of Annex C, the member was entitled to be paid the benefits of the particular Rule which his or her circumstances required. The Trustee may have had to be satisfied that the member met the criteria of a particular rule, but it did not have an unfettered discretion to decide which benefit might be provided to a member. As I will indicate below, the Trustee subsequently considered and rejected Mr Kowalski's claim for a TPD Benefit from the cessation of his employment in 1994. Mr Kowalski's 1994 claim proceeds on two false assumptions. The first, is that the Trustee had, in the circumstances, a duty to consider whether he had an entitlement to a TPD Benefit. I need not repeat what I have said above. The second is that the Trustee was obliged to consider Dr McFarlane's "report" (as the 29 April 1993 interview notes are misdescribed). There is no evidence at all that the Trustee was informed of, or provided with the report, at any time relevant to the determination of Mr Kowalski's 1994 retirement benefit. Mr Kowalski does not contend to the contrary. Mr Kowalski's 1994 claim, in consequence, has no reasonable prospects of success as formulated or at all. This is irrespective of whether the Trustee would otherwise have had a defence to it in any event, a matter referred to later in these reasons. Notwithstanding their complexity, I will deal with the events between 1994 and 1998 relatively shortly. It needs to be emphasised that in 1997 Mr Kowalski made a claim for an ill health benefit. This benefit, as I have emphasised, was payable in circumstances of resignation due to sickness "not constituting Total and Permanent Disablement". That he did so is of no little importance in understanding the events of 1998. I will later indicate my view of the significance to be attributed to the mediation agreement of 27 October 1998. What is clear is that all parties to the mediation understood that one of its purposes was to clarify and settle the amount payable to Mr Kowalski for superannuation. That inquiry was to be made in a context in which Mr Kowalski had made a claim, reiterated in a facsimile to Mr Breugem on 18 April 1998, that he left MMAL "on account of sickness" and was entitled to an ill-health benefit. It may be the case, though it is not evident on the material before me (but has been asserted by Mr Kowalski from the bar table), that he raised the question of a TPD Benefit during the mediation on 26 October 1998. What is clear from his conversation with Mr Smelt on the following day (as revealed in the file note), is that he laboured under significant misunderstandings as to what founded his alleged TPD Benefit, eg he was then asserting he was still employed by MMAL and should "now" be considered for a TPD Benefit. Nonetheless in that conversation he did discuss the amount of his ill-health benefit. When he signed the Heads of Agreement, he must be taken as having done so on the basis that the ill-health benefit to be paid was "in full and final settlement of any superannuation payable" --- albeit he had reason to be assured from what Mr Smelt told him on the same day that Colonial would be contacted in respect of his TPD Benefit claim but "it would take some time". Unsurprisingly, and in consequence of MMAL's direction, the Trustee paid the ill-health benefit, formally confirming the decision to admit that claim on 17 November 1998. I would interpolate in passing that the figure in question was, on the material before me, supplied by MMAL's representatives as the appropriate amount for the ill-health benefit. Pausing at this point it is not obvious at all how Mr Kowalski could purport to complain about the Trustee's decision-making on, or prior to, 17 November 1998. The Trustee did not participate in the mediation. It was not a party to the Heads of Agreement. It received and finally confirmed Mr Kowalski's 1997 application for an ill-health benefit. And it foreshadowed that it would --- and it did --- ask Colonial to consider his TPD Benefit claim. Nonetheless, it is the case that there are a number of instances in correspondence by or on behalf of Mr Kowalski (eg from his union) asserting that he made a "formal claim" for a TPD Benefit on 26 October 1998. There is nothing to suggest that such a claim was more than what Mr Kowalski might have said at the mediation. Nor is there anything to reveal what was the basis of the "claim" as, for example, did it relate to his 1997 heart condition or his then apparent belief he was effectively still employed by MMAL. As the Trustee later made plain (see letter of 8 March 2004), it denied receiving a formal application from Mr Kowalski in October 1998, nor did it consider and reject any application at that time. No precise "claim" has been articulated in respect of the Trustee's supposed wrongdoing in 1998. I do not intend to speculate further on that matter. I can discern no potential basis, let alone one having reasonable prospects, for a claim for breach of trust against the Trustee for its decisions etc in late 1998. It needs to be emphasised that the Trustee did ask Colonial to reconsider its 1992 decision in light of subsequent events. I have set out in detail the exchanges between Mr Smelt and Colonial on this matter. To be emphasised, the Trustee on legal advice considered a full review of Mr Kowalski's case was warranted: "it [was] incumbent upon the insurer and the Trustee to re-assess his TPD claim in its entirety": Smelt letter of 3 July 2001. Mr Kowalski makes no claim in this proceeding in respect of the 2001 decisions of the insurer and the Trustee rejecting his application for a TPD Benefit, although there is a deal of material before me evidencing Mr Kowalski's ongoing complaint about not being supplied with a copy of the "determination". Given the absence of any claim in relation to this matter, the absence of evidence relating to it is entirely understandable. It would be unreasonable to draw any inference adverse to the Trustee from its not providing further illumination in this proceeding of its then decision. All I will note is that the correspondence to which I have referred suggests there may have been some disagreement between the insurer and the Trustee as to the significance of the period of the insurance cover. It also indicates that, unlike the insurer, the Trustee was not limiting its assessment to the situation in 1992. I should further note that by that time both the insurer and the Trustee had copies of Dr McFarlane's note. Turning finally to the 3 November 2005 application for a TPD Benefit, the material here suggests some of the confusion as to the nature and basis of Mr Kowalski's claim that began to emerge in 1997 and then later at the time of the mediation. It is clear from Mr Kowalski's 3 November letter that his claim was related to the time at which he ceased employment with MMAL. To anticipate matters somewhat, it was the claim directed to that time of cessation that the Trustee through its solicitors indicated on 24 February 2006 that they had previously considered and declined. The reasonable inference to draw from this in light of the material before me is that the reference to previous consideration related back to the Trustee's 2001 reconsideration decision. Equally, and despite Mr Kowalski's assertion to the contrary, there is no basis for regarding the statement as other than an honest reflection of what the Trustee had done. It is, nonetheless, clear from Mr Smelt's 21 February 2006 letter to the Trustee Sub-Committee, either that Mr Kowalski may have advanced additional bases for his TPD claim --- the letter refers to his 1997 heart attacks and to his belief his employment did not terminate until the Heads of Agreement was signed --- or else an error was made by Mr Smelt as to the bases he ascribed to the "fresh claim". Either may explain why the Trustee's decision refers to the claim as not being "relevant to the date of cessation". Be this as it may, the Trustee reiterated that the claim for TPD had previously been considered and declined by the Fund's insurer and Trustee. While the evidence of the 2001 reconsideration is slight and might suggest that the insurer and the Trustee then had different temporal concerns as to the operative date for Mr Kowalski's total and permanent disablement, there can be no doubt after the 24 February 2006 solicitors' letter referred to above either that the Trustee in 2005 asked itself the correct question as to the time to which the claim related, ie 16 March 1994, or that it was that question that had previously been considered and answered. It equally is clear from that letter that the Trustee did consider the annexures attached to the letter of 3 November. It was reasonably open to it properly to take the view of those annexures that they raised no new issues, hence no reconsideration of the previously rejected claim was necessary. Those annexures I would add contained nothing which would be likely to induce a reasonable trustee to take a different view. While it is a trustee's duty to act in the interests of its beneficiaries, absent an express power of dictation, a trustee is not the pawn of a beneficiary. As Tonkin indicates, a beneficiary is entitled to seek the reconsideration of a decision affecting his or her interests unless this is precluded by the nature of the decision itself or by the terms of the trust instrument. But where the decision, as here, requires the Trustee to form a particular opinion and that opinion has previously been formed adversely to the beneficiary, the Trustee is not obliged to reconsider that opinion absent some reason for so doing. Where, as here, what is raised by the beneficiary is matter which the Trustee has previously had raised before it and dealt with, the Trustee is entitled to decline to re-entertain that same matter in the future unless, because of change of circumstances or otherwise, that decision was not one that a reasonable person could then make. Such is not the position here. Accordingly, I am satisfied that having regard to the material underlying Mr Kowalski's 2005 claim, that claim has no reasonable prospects of success. I am conscious that in reaching the conclusions I have, I have made no direct reference to the medical evidence or to issues of causation. As to the medical evidence, I accept that there was material before the Trustee in 2001 which both supported and contradicted Mr Kowalski's position. The Trustee in light of this had to make its own decision. While Mr Kowalski asserts the Trustee's opinion was incorrect, that is not the question with which I am concerned. Not being aware of all of the material that was before the Trustee when it took its decisions in 2001 and 2005, I am left to consider if it can properly be alleged that there was not a real and genuine consideration of the correct question by the Trustee. There is nothing before me reasonably to suggest such was the case and hence should be examined at trial. A distinct matter which I consider to be quite unimportant but to which Mr Kowalski assigns great significance, is the reason given by Mr Beer in his letter of 16 March 1994 notifying Mr Kowalski of the termination of his employment. Mr Beer did not represent the Trustee nor did he make statements binding upon it. Whatever Mr Beer intended to convey by describing the contract as "frustrated," he clearly was not speaking with legal exactitude. It is unnecessary for me to speculate what the letter read as a whole was intending to convey as the actual reason MMAL had for the termination. What is clear is that, when the Trustee was called upon to determine whether the cessation of employment in 1994 was caused by Mr Kowalski's claimed total and permanent disability, that decision was, relevantly for present purposes, for the Trustee when the TPD claim was made. It was neither fettered, nor determined in advance, by MMAL's reason for terminating the employment. I am satisfied there is no basis in the material relied upon by Mr Kowalski that reasonably suggests a breach of trust or of fiduciary duty such as has been alleged in the FASC in relation to the 3 November 2005 claim. The pleaded assertion that the Trustee had deliberately and consciously acted in bad faith lacks any foundation and should never have been made. As I am satisfied that none of the actual or potential breach of trust or, relatedly, breach of fiduciary duty, claims have reasonable prospects of success, not only will I dismiss them, I will also dismiss the negligence claim which is premised upon the conduct said to give rise to the breaches of trust and of fiduciary duty. The basis of this defence, as I understand it, is that when considered in its context, it is clear that, while the Trustee was not a party to the agreement, it was nonetheless the beneficiary of the promises made by Mr Kowalski that (i) the sum of $64,691.43 "to be paid from the Superannuation Fund" was payment in full and final settlement of any superannuation payable by the Trustee; and (ii) that Mr Kowalski would not institute any legal proceedings in respect of the matter in (i) above. I readily acknowledge that the trust device has in practice proved "a disappointing and unreliable instrument" for circumventing the privity doctrine: see Cheshire and Fifoot's Law of Contract , [7.44] (9 th Aust ed, 2008). Nonetheless, in this particular setting both where trust and contract so obviously interact: see Dal Pont and Chalmers, at 727; and where the contracting parties intent was, on the face of the Heads of Agreement, to bring the Trustee within its purview so both to benefit and to burden it, the observations of Deane J in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44 ; (1988) 165 CLR 107 at 147-148 are singularly apposite. A fortiori, equity's requirement of an intention to create a trust will be at least prima facie satisfied if the terms of the contract expressly or impliedly manifest that intention as the joint intention of both promisor and promise. If the trustee of the promise declines to institute [proceedings for the enforcement of the promise or damages for its breach], the beneficiary can bring proceedings against the promisor in his own name, joining the trustee as defendant. It is not necessary that the contracting parties know and understand that they are creating a trust. It is sufficient that they intend to create a relationship which, in equity, conforms to that of a trust: see Twinsectra Ltd v Yardley [2002] 2 AC 164 at [71]; Ford and Lee at [2035]. While it is not strictly necessary that I express a concluded view on this foreshadowed defence, and while I share the view of Fullagar J in Wilson v Darling Island Stevedoring & Lighterage Co Ltd [1956] HCA 8 ; (1956) 95 CLR 43 at 67 that it is "difficult to understand the reluctance which courts have sometimes shown to infer a trust in such cases" --- a reluctance I acknowledge --- I am satisfied that having regard not only to the text of the agreement but also to the known surrounding circumstances and the purpose and object of the contract: cf Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at [22] ; a court would readily infer a trust intention in this matter. While ordinarily MMAL would be a necessary party to the raising of such a defence: see Lidden v Composite Buyers (1996) 67 FCR 560 ; see also Jacobs' Law of Trusts in Australia , [2303] (7 th ed, 2006); the respondents acknowledge were the matter to proceed to trial, MMAL could be joined as a party for the purpose of enforcing the trust. I should add that, while the Trustee did not seek to insist on its rights for the purpose of the 2001 reconsideration --- and properly so given Mr Smelt's assurance at the time of the mediation agreement that he would raise the TPD claim with Colonial --- the Trustee has done nothing that could be said (i) to amount to a renunciation of its rights; or (ii) to found an estoppel against it for the future. Given this available defence, I am satisfied it provides a further basis for concluding that Mr Kowalski's application has no reasonable prospects of success. I will order Mr Kowalski to pay the respondents' costs including any reserved costs and costs ordered to be the respondents' costs in the cause. I certify that the preceding ninety-eight (98) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | summary dismissal federal court of australia act 1976 (cth) s 31a federal court rules o 20 r 5 holding a "preliminary" trial" application having no reasonable prospects of success. grounds for challenging the decision of trustee alleged failure of trustee to consider an employee's entitlement to a total and permanent disablement benefit. judicial review of trustee's decisions circumstances in which trustee obliged to reconsider the exercise of a discretion previously exercised duty of trustees to give reasons to beneficiaries. contract for the benefit of a third party settlement of claims against employer in respect of superannuation entitlements superannuation trust not a party to the contract whether promises held by employer trust for the benefit of the trust interaction of contract and trust intention of contracting parties to create a trust. practice and procedure superannuation trusts contracts |
The appeal to this Court is limited to an appeal on a question of law ( Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") s 44(1)). 2 The first applicant holds both Syrian and Lebanese citizenship, and he currently resides in Beirut. He is married to Ms Karina Hneidi, who holds both Australian and Lebanese citizenship, and there are four children of the marriage. One of the applicant's children holds Australian citizenship. 3 On 30 October 2006, the first applicant made an application for Australian citizenship for himself and for the three children who did not hold Australian citizenship. On 1 June 2007, a delegate of the Minister for Immigration and Citizenship refused the application. In his reasons, the delegate did not specifically provide reasons for refusing the applications with respect to the three children. On the application for review to the Tribunal, the Tribunal member said that as the three children had been joined to the first applicant's application then "by implication" the applications by the children had also been refused. 4 On 27 June 2007, the first applicant made an application to the Administrative Appeals Tribunal ("the Tribunal") for a review of the delegate's decision. That application was made both with respect to the first applicant's application and that of his three children. The Tribunal was satisfied that it had jurisdiction to consider a review of the delegate's decision with respect to the children as well as the first applicant. The Tribunal held that it had this power where the children were joined as parties to the application before the Tribunal and, at the hearing, an order was made by consent under s 30(1A) of the AAT Act joining the three children as separate parties to the application. It was agreed between the parties that the applications by the children were not dependent on the outcome of the first applicant's application and should be separately considered on their own merits. 5 On 16 October 2008, the Tribunal decided to affirm the decision under review. The Australian Citizenship Act 2007 (Cth) came into operation on 1 July 2007. It was common ground before the Tribunal that, as the first applicant had lodged his application prior to the Australian Citizenship Act 2007 (Cth) coming into operation, his application, and those of his three children, must be considered under the Australian Citizenship Act 1948 (Cth) ("the Act"). 7 Section 13 of the Act gives the Minister the power to grant a certificate of Australian citizenship. Under s 13(9)(a), the Minister may, in his discretion, upon application in accordance with the approved form, grant a certificate of Australian citizenship to a person who has not attained the age of 18 years, and, under s 13(9)(c), the Minister may grant a certificate of Australian citizenship to a person who is a permanent resident and is the spouse, widow or widower of an Australian citizen. The first applicant's application must be considered under s 13(9)(c), and those of the second, third and fourth applicants (that is, the three children) must be considered under s 13(9)(a). There are policy guidelines relevant to the exercise of the discretions contained in s 13(9)(c) and s 13(9)(a) respectively. They are known as the Australian Citizenship Instructions ("the Instructions"). The evidence before me establishes that the relevant instructions are those which were in effect on 30 June 2007. It also establishes that the Instructions are a departmental document designed "to provide policy guidance to Departmental decision-makers in relation to the interpretation of, and the exercise of powers under, the citizenship legislation regulations". The evidence establishes that the text of the Instructions was approved by a senior departmental officer, not the Minister or Parliamentary Secretary and that, as a general principle, the department seeks the approval of the Minister or Parliamentary Secretary for significant citizenship policy changes on what is said to be an "as-needed" basis. 8 Chapter 4 of the Instructions deals with the grant of a certificate of Australian citizenship and, in particular, the criteria for the grant of a certificate of citizenship. Clause 4.1.2 states that Chapter 4 "sets out the legislative requirements and also the policy that gives guidance on how to exercise discretions". The relevant version of chapter 4 of the Instructions was cleared for publication by the Assistant Secretary, Citizenship and Language Services Branch, on 15 June 2005. I infer from the evidence put before me that the Instructions were not put before Parliament. 9 In short, the Instructions are a form of departmental policy, as they were approved by a senior departmental officer, not the Minister or Parliamentary Secretary. 10 Clause 4.5 of the Instructions addresses the discretionary power contained in s 13(9)(c) of the Act. Note: If the parties are not living together but claim that the marriage exists, the case should be decided by an officer at APS6 level or higher. The primary policy objective underpinning the residence requirements is the development and maintenance of close and continuing ties with Australia. This policy objective can be achieved through the applicant's relationship with their Australian citizen spouse, children if any, extended family, and through return visits to Australia. Evidence, however, of the Australian citizen's spouse overseas employment is required, such as, a letter from the employer, including a statement that the non citizen spouse is accompanying them. If the applicant is in the care of another person (eg brother, aunt or uncle), the case is to be referred to a delegate of at least APS 6 level. For example, it may be appropriate to approve a case outside policy if the child (other than an adopted child) has a responsible parent who is an Australian citizen and there are exceptional circumstances which would make it unreasonable for the applicant to apply for a permanent visa. The summary of the facts which follows is taken from the Tribunal member's reasons. 13 The first applicant was born in Moscow on 27 February 1996 to Syrian parents. He is a nephrologist by profession and he conducts dialysis clinics in Lebanon. Prior to 1997, he was studying and working in Syria and France, and, after that time, he has lived and worked in Lebanon. 14 As I have said, the first applicant's wife is an Australian citizen. Her mother was born in Australia to migrant Lebanese parents and is an Australian citizen by birth. Ms Hneidi's mother returned to reside in Lebanon in 1966, and Ms Hneidi was born in Beirut and has lived there throughout her life. She was granted Australian citizenship in 1971 by the Australian Embassy in London. She obtained Australian citizenship by descent. She is also a Lebanese citizen. 15 The first applicant is of good character and he speaks the English language fluently. He married Ms Hneidi on 25 August 1995 and the first applicant and Ms Hneidi continue to reside together as man and wife. Ms Hneidi has a grandmother, an aunt and uncle, eight cousins and a sister, who reside in Australia and she remains in contact with all of them. 16 The four children of the marriage are: Ramy (born on 10 September 1996), Dalia (born on 22 October 1997), Maya (born on 7 November 2001) and Tala (born on 2 August 2005). Ms Hneidi was in Australia in 2001, and Maya was born during her stay here. Maya is an Australian citizen. The other three children were not born in Australia. 17 The first applicant applied for a sub-class 100 spouse visa for himself and his two oldest children in 2001. The application was granted and the first applicant thereby became a permanent Australian resident on 27 September 2001. At the time, the first applicant was working as a medical specialist at the Mt Lebanon Hospital in Beirut. Ramy, Dalia and Tala all hold Australian permanent residency. Ramy and Dalia were granted sub-class 155 resident return visas on 14 September 2006 and Tala was granted a sub-class 101 child visa on 8 March 2007. 18 The first applicant, Ms Hneidi and two of the children came to Australia in October 2001. The first applicant stayed in Australia for 20 days and then returned to Lebanon when his father was taken ill unexpectedly. On that occasion, he and his family had planned to stay for up to a year with a view to moving to Australia permanently. The first applicant had given notice to his employer. 19 Ms Hneidi and the children returned to Lebanon to join the first applicant shortly thereafter. The first applicant has not returned to Australia since 2001. Ms Hneidi has visited Australia on a number of occasions over the years. Records show that she was in Australia for one month in 1982, for a number of weeks in 1986, for two weeks in 1992, for two months in 2001, two months in 2006 and three weeks in 2007. 20 In July 2006, hostilities broke out in Lebanon between Hezbollah and Israeli forces, and the conflict continued for approximately one month. Both military personnel and civilians were killed, and many civilians, including the Hneidi family, were forced to flee from Lebanon. Evacuation was easier for an Australian citizen as they could be evacuated directly from Beirut Airport with the assistance of the Embassy. As Karina was not willing to be separated from her family, she left with her husband and children via a much more dangerous route which involved travelling by road to Syria and then flying from Syria via Bahrain and Hong Kong to Australia. Karina had to stay in transit with all four children for many hours as she could not leave the other three children at the airport. She returned to Lebanon once it was safe for her and the children to do so. Her husband travelled as far as Syria and once the family was safe en route to Australia he returned to Beirut. He is able to live and work in Australia if he so wishes and he has a right of multiple re-entry under that visa. He established a business in partnership with others in Lebanon in 2003 and that business operates a number of clinics. 22 In 2005, the first applicant and his partners were looking to sell the business. They entered into negotiations with a German company. Those negotiations were almost complete by mid-2006 when the hostilities broke out. Thereafter, the negotiations were put "on hold". 23 The first applicant's father is in his mid-80s and in poor health. He resides near to the first applicant and Ms Hneidi and they visit him regularly. It is not possible for the first applicant's father to travel to Australia because of his age and poor health. Ms Hneidi's parents reside in Lebanon and are in quite good health. 24 The first applicant is currently owed a large sum of money by the Lebanese Government. It is not certain when he will be paid this sum of money. 25 The first applicant and Ms Hneidi opened a bank account at the Westpac Bank at Glenside, South Australia, and, in November 2007, they transferred the sum of $100,000 to that account. There was no activity on that account between November 2007 and the date of the review hearing. The first applicant and Ms Hneidi enrolled their school age children to commence school at Linden Park Primary School in Adelaide in 2008. At this point, they have not moved to Australia to enable the children to take up that enrolment. 26 In her reasons, the Tribunal member summarised the evidence given by the applicant and Ms Hneidi by telephone from Beirut, and evidence given by Ms Hneidi's maternal aunt. It is not necessary for me to set out the details. She found that the applicant and his wife were honest witnesses. The Tribunal member found that the major motivation behind the current application was the family's experience in mid-2006 when the Australian Embassy could only offer assistance to the Australian citizen members of the family in evacuating them from Lebanon. They also discovered that travel was easier on that occasion as Australian citizens did not require visas in Hong Kong. 27 The Tribunal member found that the Hneidi family hoped to come to Australia to live, but that they had not established any clear timeline for that move. The Tribunal member found that the timing of their move to Australia remained entirely uncertain. She said "it may be within the next two to five years but if it does not occur within that time then it may never occur if the children reach an age where they are more difficult to move from friends and peer groups". The Tribunal member found that the first applicant, Ms Hneidi and their children are a close family unit and will not be separated. She found that the enrolments at Linden Park Primary School were not made in anticipation of any genuine expectation of being in Australia in 2008, and that the deposit of $100,000 into a bank account in Australia was made with no immediate plans to come to Australia and was possibly done to create a financial link with Australia for the purposes of the application or to protect funds and remove them from Lebanon which can be a volatile country. 28 The Tribunal member found that, if the Hneidi family does come to Australia, they will undoubtedly become valuable members of the community. She said that the first applicant is likely to make a significant contribution to the medical profession and that the family will ultimately be welcomed by the Australian community when and if they do decide to come here. 29 After setting out the rival contentions of the parties, the Tribunal member noted that the first applicant's application was to be considered under s 13(9)(c) of the Act. She noted that that paragraph was expressed in simple terms and that no criteria were set out in the Act to govern the exercise of the discretion. The Tribunal member referred to the factors set out in clause 4.5.2 of the Instructions. She addressed first the requirement that an applicant "is likely, if granted a certificate of Australian citizenship, to reside, or to continue to reside in Australia, or to maintain a close and continuing association with Australia". The Tribunal member said that the first applicant would probably come to Australia at some stage in the next few years. However, he could not put any definite date on his entry. She found that the first applicant's major association was with his own country and that his association with Australia is through his wife. She noted that he had visited Australia once and had not exercised his right to return and live in this country. She said that his association with Australia as a culture and a nation was "not close". She referred to the first applicant's visit to Australia in 2001. The Tribunal member concluded that the first applicant did not satisfy the residency requirements set out in clause 4.5.2 of the Instructions. 30 The Tribunal member referred to clause 4.5.3 and noted that the primary policy objective underpinning the residency requirement was the development and maintenance of close and continuing ties with Australia. The Tribunal member noted the argument that the first applicant did not receive the same protection from Australian Embassy representatives as his Australian wife. The Tribunal member said that she did not accept that "this argument holds sufficient weight that the usual policy should be ignored". She said that she did not accept that the difficulty faced by the spouse of an Australian citizen in this case was "so significant or exceptional that policy should be ignored". However, those cases are distinguishable from this case. In both those cases, the applicant was living in Australia at the time of the application and had much more substantial contact and association with Australia than Dr Hneidi. In each case, they were married to resident Australian citizens and had significant ongoing connections with Australia. The Tribunal member said that she could not see a sufficient basis to depart from the Instructions. 32 The Tribunal member then turned to consider the application by the second, third and fourth applicants. She noted the relevant provisions of the Instructions and said that, based on the Instructions, the children would not usually be considered for citizenship. The Tribunal member considered whether she needed to address the issue of the best interests of the children by reason of the fact that Australia is a signatory to the United Nations Convention on the Rights of the Child and Article 3 refers to the "best interests of the child". She referred to various authorities and concluded that she must give consideration to the children's best interests in this case as a primary consideration. She considered the submission that the best interests of the children lie in coming to Australia with their family and in being able to travel as a single unit and in the safest way when travelling internationally. The Tribunal member said that she had considered that argument carefully. She said it was really a value judgment to suggest that the children would be better off coming to live in Australia. She noted that the children could come to Australia at any time and reside here as they had visas which entitled them to do so, and the fact that they have not yet done so indicated that their parents were satisfied that their current best interests were served by continuing to reside with them in Beirut. 13(9) of the Act, impermissibly fetters the exercise of its discretion by applying the policy known as the 'Australian citizenship instructions' unless there are cogent reasons not to do so. 13(9) of the Act. 13(9) of the Act, the Minister, in determining whether to grant a certificate of Australian citizenship, is bound to take into account whether members of the person's immediate family are Australian citizens. 36 The starting point is the decision of the Full Court of this Court in Drake v Minister for Immigration and Ethnic Affairs [1979] AATA 179 ; (1979) 24 ALR 577 (" Drake "). In Drake , the relevant power was the power of deportation in s 12 of the Migration Act 1958 (Cth) as it then was. The Minister had issued a policy statement on the question of considerations relating to the deterrence of others. A question which arose was whether the Tribunal had attached such importance to the policy statement as to result in a failure by the Tribunal to exercise its own independent judgment. Bowen CJ and Deane J discussed the general principles relating to the role of policy in administrative decision-making. 37 Their Honours started by stating some general principles as to the role of the Tribunal. Those principles are now well known. They include the fact that the role of the Tribunal is an administrative one and its task is to make the correct or preferable decision on the material before it. There may be cases in which the Tribunal is precluded from having regard to general government policy by the terms of the statutory power and other cases in which, again by the terms of the statutory power, the Tribunal is bound to apply principles laid down in advance. Absent statutory prescriptions of this nature, the Tribunal may take into account a policy and that is particularly so where the statute itself does not specify the criteria which are relevant to the exercise of the statutory power. In the ordinary case, a policy is a relevant factor for the Tribunal to take into account. It is desirable in terms of consistency in decision-making that a policy be taken into account by the Tribunal and that follows from the fact that the original decision-maker has applied or taken into account the particular policy. However, the Tribunal cannot apply a policy in a way which indicates that, in truth, it has abdicated its function to reach the correct or preferable decision on the material before it. The weight to be placed on a policy is a matter for the Tribunal to determine and it will ordinarily do so, balancing the need for consistency in decision-making and the need for justice in the individual case. 38 Bowen CJ and Deane J said the borderline between cases in which a Tribunal has, after an independent assessment, applied a government policy and cases in which a Tribunal has abdicated its function may well be blurred. This is particularly so in matters such as the review of a deportation order where no two cases will be identical and where personal liberty will commonly be involved. The President of the Tribunal, Brennan J (as his Honour then was), conducted the rehearing: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] 2 ALD 634 (" Drake No 2 "). Brennan J referred to the advantages which flowed from the original decision-maker being able to be guided by policy statements, guidelines or standards. The policy must be consistent with the statute and it must not be framed so as to preclude consideration of the merits of the individual case. The Tribunal may apply the policy on a review. One of the factors to be considered in arriving at the preferable decision in a particular case is its consistency with other decisions in comparable cases, and one of the most useful aids in achieving consistency is a guiding policy. His Honour said that administrative policies are best formed and amended in a political context. In the course of his discussion, his Honour referred to the chain of responsibility from Minister to government to Parliament and to the fact that the bureaucracy is best placed to advise on broad policy. Where the policy would ordinarily be applied, an argument against the policy itself or against its application in the particular case will be considered, but cogent reasons will have to be shown against its application, especially if the policy is shown to have been exposed to parliamentary scrutiny. Different considerations may apply to the review of each kind of policy and more substantial reasons might need to be shown why policies forged at the political level should be reviewed. 42 In Nevistic v Minister for Immigration and Ethnic Affairs (1981) 34 ALR 639 , the Full Court of this Court considered an appeal from the Tribunal on a question of law. The Tribunal had reviewed a decision of the Minister to deport the applicant under s 12 of the Migration Act as it then was. The Tribunal had taken into account government policy on the deportation of persons involved in growing, importation or distribution of illicit drugs and had decided that the correct and preferable decision in all the circumstances of the case was that the applicant be deported from Australia. The Tribunal said that, absent the policy, its decision may have been different. The Full Court dismissed the appeal and held that the Tribunal was entitled to take the policy into account as a relevant factor and that the weight to be accorded to the policy was a matter for that Tribunal. The Court also said that the Tribunal could not abdicate its function of determining the correct and preferable decision on the material before it by simply applying the policy without conducting an independent assessment. 43 In Re Aston and Secretary, Department of Primary Industry (1985) 8 ALD 366 (" Re Aston "), the Tribunal (of which Davies J was the President) considered the correct and preferable decision on the material before it in relation to an allocation of a quota of Southern bluefin tuna under a scheme limiting the taking of tuna adopted pursuant to the Fisheries Act 1952 (Cth). The policy affected an industry. It was a policy decided upon at the highest level, being resolved upon by the Australian Fisheries Council comprised of the six relevant Ministers of the States and the Federal Minister for Primary Industry and the Federal Minister for Science and Technology. It was a policy which could only be developed in the political arena after consultation with industry. The Tribunal, which is not accountable politically and which cannot proceed by obtaining industry consensus, must give such a policy great weight. 45 In Federal Commissioner of Taxation v Swift and Others (1989) 18 ALD 679 , this Court was required to consider a decision of the Tribunal granting the applicant relief under s 5(4) of the Taxation (Unpaid Company Tax) Assessment Act 1982 (Cth). There was a ruling of the Commissioner which specified the circumstances in which relief should be granted. Taxation ruling IT 2063 does not appear to be in that category. Nevertheless, the magnitude of the task involved in carrying out original decision-making and supervising and regulating the exercise of delegated authority under the taxation laws, is a powerful indicator that appropriate guidelines are essential for the avoidance of administrative chaos and for the achievement of reasonable consistency. The need to maintain the perception and reality of equal treatment is an important factor in the administration of all laws and not least in those relating to taxation. But such considerations go to the weight to be attributed to policy and that is ultimately a matter for the Tribunal: Nevistic v Minister for Immigration and Ethnic Affairs, supra , at 647 (Deane J); Re Aston, supra , at AAR 78 (Davies J). 47 I turn now to examine the Tribunal's reasons in light of these principles. 48 The Tribunal member did not discuss the source of the Instructions. She did not discuss whether the Instructions had been made by the Minister or by senior officers in the Minister's Department. She appears to have proceeded on the basis that the Instructions were Ministerial Guidelines rather than Departmental Guidelines. Although it is not entirely clear, it appears that, at the time of the decision in Re Dainty , that is, 1987, the relevant guidelines or policies were Ministerial guidelines or policies. 50 It seems to me that the overarching principle in this area is that the Tribunal must make an independent assessment on the material before it with a view to reaching the correct or preferable decision. The other principles referred to in the authorities are subordinate to this principle. For example, although the authorities are clear that the weight to be placed on a policy is a matter for the Tribunal, this principle cannot be pushed past the point at which the Tribunal no longer makes an independent assessment on the material before it. At the same time, although there are authorities to the effect that a policy is no more than a relevant factor to be taken into account, there may be cases where, after a consideration of the facts, it is clear that the policy must be applied and there is little to be said against such a conclusion. 51 The evidence before this Court establishes that the Instructions were Departmental guidelines. The Tribunal member erred in proceeding on the basis that the Instructions were Ministerial guidelines. In fairness to her, it does not seem from her reasons that the point was raised before her. Counsel for the applicants accepts, correctly in my view, that this error was an error of fact not law, and that of itself does not give rise to a question of law and error of law entitling the applicants to relief. However, he submits that the error is a factor which supports the conclusion that the Tribunal member did commit the error of law identified in the first ground of appeal. 52 In this case, the Tribunal member used various expressions in the course of addressing the Instructions and the facts put by the applicants against their application in the circumstances of the case. The applicants emphasised the Tribunal member's statements that a particular argument did not hold "sufficient weight that the usual policy should be ignored" or that a particular fact was not "so significant or exceptional that policy should be ignored" or that there was "no sufficient basis in this case to depart from the Instructions" or that "there is no compelling reason to go behind the policy set out in the Instructions". For his part, the respondent referred to statements by the Tribunal member "that the Tribunal must have regard to these Instructions, unless there is good reason not to do so", statements to the effect that the policy in the Instructions should not be ignored, that the Instructions are "not binding" and a guide only and that "the Instructions and underlying policy cannot be disregarded". 53 The applicants identified a number of features of the Tribunal member's reasons which, they submitted, should lead to the conclusion that she did not make an independent assessment on the material before her. 54 First, the applicants submitted that the Tribunal member did not state that her task was to make an independent assessment of the material before her with a view to reaching the correct or preferable decision. It seems to me that had she said that it might have helped the respondent meet the applicants' argument, but its absence is not of great significance. 55 Secondly, the applicants submitted that the Tribunal member had not considered the propriety of the Instructions. There are two answers to this submission. First, where a policy is lawful, the Tribunal would not normally consider the propriety of the policy as a policy. It would consider the propriety of applying the policy to the facts of the particular case. I am satisfied that the Tribunal member did that. The second answer is that, by reference to some observations in Re Sadiq and Minister for Immigration and Multicultural and Indigenous Affairs [2006] AATA 75 , the Tribunal member did give consideration to the propriety of the policy as a policy. 56 Thirdly, the applicants submitted that the Tribunal member misdirected herself in law because she referred to two cases, namely: Drake No 2 and Re Dainty , which discussed the relevant principles in the context of ministerial policy, not departmental policy. The answers to this submission are as follows. A fair reading of the Tribunal member's reasons reveals that she did not adopt an incorrect approach to the Instructions as departmental policy. In so far as it might be said that she placed greater weight on the Instructions than was called for, that was a question of weight which was a matter for the Tribunal. 57 The reasons of the Tribunal are not to be read with an eye keenly attuned to error: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259. It was not suggested that the Instructions are unlawful. In any event, I would reject such a contention. Key elements of the Instructions simply reflect important criteria in s 13(1) of the Act which deals with a grant of a certificate of citizenship. The fundamental question is whether the Tribunal member made an independent assessment on the material before her. I think that she did. 58 I reject the first ground of appeal. The applicants submitted that the matter was not taken into account and that that was an error of law. The respondent submitted that this matter was taken into account by the Tribunal both in relation to the first applicant's application and the application of the children. 60 It may appear from the Tribunal's reasons that a consideration was taken into account even though it is not expressly mentioned ( Turner v Minister for Immigration and Ethnic Affairs (1981) 35 ALR 388 at 392 per Toohey J). It seems to me that the inference that the matter was taken into account will be more easily drawn if the consideration is one of less significance than other considerations in the case. It seems to me that the fact that Maya is an Australian citizen is of less significance than other considerations in the case. 61 Plainly, the Tribunal was aware and made reference to the fact that Maya was an Australian citizen. I am satisfied that the matter was taken into account because the Tribunal member contrasted the position of Ms Hneidi and Maya with the first applicant and the three children in terms of assistance from the Australian Embassy and ease of international travel. 62 I reject the second and third grounds of appeal. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | appeal from decision of administrative appeals tribunal dismissing applicants' application for review of decision of minister's delegate refusing to grant applicants australian citizenship first applicant was married to australian citizen second to fourth applicants were children of the marriage who were not australian citizens another child of the marriage was an australian citizen where tribunal applied australian citizenship instructions whether tribunal conducted independent assessment whether tribunal failed to take into account that the first applicant had a child that was an australian citizen administrative law |
It is an appeal against a judgment of the Federal Magistrates Court of Australia ('the FMCA') ( Khera v Jones [2007] FMCA 1453) which refused to set aside a bankruptcy notice issued against the appellant on 13 October 2005. I set out historically the conduct of the matter from the original costs order which was the basis of the bankruptcy notice issued against the appellant and the subject of the appeal. The appellant filed a Holding Appeal in relation to one of the costs orders however never proceeded. The appellant lodged an application for Review of that assessment. The Appeal which was heard by Associate Justice Harrison was dismissed with costs on the 2 March 2005. The parties submissions were to be heard in chambers. The Court of Appeal of the Supreme Court dismissed the Appeal on the 21 April 2006. The application was dismissed with indemnity costs on 6 September 2007. I was informed that since the judgment of the FMCA on 24 August 2007 Mr Khera had paid out the subsequent creditor's petition and the associated costs. Mr Khera informed me that he wished, however, to pursue the appeal so that he could resist the order for costs made in the FMCA. Mr Khera made some suggestion that he wished to file some further evidence in support of the appeal. The matter is listed for directions only at 9:30 am, Friday, 14 December 2007. 4 Written submissions were filed by the appellant on 9 November 2007 and by the respondent on 23 November 2007, both in accordance with the directions earlier made. At that time Mr Khera was representing himself. On 27 November 2007 a notice of appearance on behalf of Mr Khera was filed by Abrahams & Associates, solicitors. On 14 December 2007, two weeks after the time directed, Mr Khera filed submissions in reply. Those submissions were not filed by Abrahams & Associates. Leave to file those submissions was given at a directions hearing on 14 December 2007. 5 Mr Khera's written submissions did not, as directed, set out the grounds upon which any further evidence should be admitted. Nor was the evidence upon which he said he wished to rely provided. 6 At this point some reference is necessary to the nature of the issues dealt with by the FMCA. Mr Khera there argued that he had a set-off against the debt claimed in the bankruptcy notice. The set-off was said to be constituted by an assignment to him of a judgment debt against the respondent in favour of his wife, Gita Khera. The FMCA decided that there was not a sufficient commercial interest between Mr Khera and Mrs Khera to sustain the alleged assignment and that, in any event, the purported assignment did not exhaust the amount claimed in the bankruptcy notice with the result that 'there is still an outstanding balance due and payable by the Applicant Debtor to the Respondent Creditor' . 8 When the matter came before the Court again for directions on 14 December 2007 Mr Khera was represented by counsel who informed me that Mr Khera was overseas. He also informed me that he was not aware of the orders the Court had earlier made. He sought an opportunity to confer with his instructing solicitors and his client 'in respect of the evidence sought to be adduced' and an adjournment of 'perhaps a fortnight to put on any affidavits in support of those requests to adduce further evidence or to provide the court with an indication that those requests are not pressed' . None of those things were done. 9 At a later directions hearing on 22 February 2008 further difficulties were evident. An index to the appeal books had not even been settled. The appellant file any evidence and further written submissions in support of the appeal by 4pm on 20 March 2008. The respondent file any objections to evidence and further submissions upon which it wishes to rely by 4pm on 10 April 2008. The matter be listed for hearing on 22 April 2008 at 10.15am. 10 Mr Khera did not file any evidence or any further submissions. (3) An order under paragraph (1)(b) may be varied at any time before the appeal stands dismissed for want of prosecution, and in special circumstances may be varied or revoked after that time. The notice of motion was supported by an affidavit sworn by Ms Middleton, solicitor for the respondent, also filed on 10 April 2008. That affidavit attached correspondence between the solicitors for the appellant and the solicitors for the respondent between 8 and 9 April 2008. The solicitors for the appellant informed the solicitors for the respondent that Mr Khera was in hospital 'and has been unable to progress the preparation of the Appeal papers or their index' . They suggested that the hearing of the appeal on 22 April 2008 be vacated. They indicated that any motion to strike the appeal out 'will be opposed with supporting affidavits' . The following day solicitors for the appellant provided a medical certificate from Dr Janet Rimmer indicating that Mr Khera was admitted to St Vincent's Private Hospital on 6 April 2008 and was expected to be in hospital for about ten days followed by a recovery period of up to four weeks. Dr Rimmer said that Mr Khera had a fractured rib and a chest infection. 12 In a letter dated 9 April 2008 to the solicitors for the appellant, Ms Middleton pointed out that 'The failure to prepare the Appeal Index and books for a period of over five months and the continued non-compliance of the Court's directions cannot be as the result of your client's admission to hospital on the 6 April 2008. ' She indicated that the notice of motion filed on 10 April 2008 would be pressed. 13 On 21 April 2008, the day before the appeal was listed for hearing, solicitors for the appellant obtained an ex parte order from the duty judge permitting short service of a notice of motion and affidavit on the respondent. The notice of motion sought that the hearing of the appeal be vacated. The affidavit in support was made partly on personal knowledge (on the part of the solicitor), and partly on information and belief about Mr Khera's desires and circumstances. Before 8 April 2008, we had no instructions to prepare the appeal papers and index in the matter. They have not been obtained. No appeal papers have been prepared. We have not received funds in trust in order to attend to this task. I am informed by the Appellant and believe that he is currently experiencing temporary financial difficulties and is unable to provide funds in trust. In these circumstances, it may be necessary for the Appellant to prepare and settle the appeal papers himself and for Abrahams & Associates to cease to act for the Appellant in the proceedings. That seems the logical order in which to deal with matters. Although the notice of motion filed on Mr Khera's behalf sought that the hearing of the appeal be vacated there was no application by Mr Khera that I should not deal with the respondent's notice of motion. 16 Mr Byrne, of counsel, appeared for Mr Khera in relation to the two notices of motion but had no instructions to appear on the appeal. He informed me that Mr Khera's position was that, if the appeal proceeded, Mr Khera relied on his written submissions already filed. Ms Middleton appeared for the respondent in all three matters. The evidence relied upon by the parties in relation to the notices of motion were two affidavits sworn by Ms Middleton on behalf of the respondent and one affidavit sworn by Ms Cooke on behalf of the appellant. Some reference has already been made to each of these affidavits. There were short oral submissions. As to the appeal itself, each party relied, should it be necessary to do so, on the written submissions already filed. 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 my respectful view it is equally apposite in the present case. 19 Mr Khera has been in persistent breach of the Court's directions. The position did not improve when he became legally represented. There is no doubt that the provisions of O 52 r 38 are applicable. The lack of action on his part to prepare his appeal for hearing or comply with the Court's directions cannot be excused on the basis of ill health. None of the various hearsay versions about that issue can, taking them at their highest, excuse the complete lack of action which is now revealed, and confirmed by his own solicitors. I am not prepared to countenance any further waste of the Court's time in his favour. Nor would it be proper to impose further costs upon the respondent. 20 Mr Byrne suggested that Mr Khera should have one last chance and that it would be more appropriate to make a self-executing order rather than dismiss the appeal now. I can see no reason why the matter should not be brought to finality without further delay. Mr Khera has had no lack of opportunity to deal with the matters which required attention, or bring the matter back before the Court to explain any problem he may be having. At no time prior to the day before the appeal was listed for hearing have Mr Khera or his solicitors approached the Court with a view to explaining the failure to comply with the Court's directions or seeking an appropriate variation of them. 21 I shall order that the appeal be dismissed under O 52 r 38(1)(a) for want of prosecution upon the ground that the appellant has not done acts required to be done by or under the rules and has not prosecuted his appeal with due diligence. 22 It is not necessary to deal with the appellant's notice of motion to vacate the hearing of the appeal in light of the conclusion I have reached about the respondent's notice of motion. I would have rejected it for the reasons already given. 23 At the time the appeal was listed for hearing it had been neither dismissed nor adjourned. Mr Khera was not in Court. His position was that it would proceed without him being represented. To the extent that the appeal was to be argued by reference to further evidence, no evidence was ever advanced, much less admitted. No appeal papers were ever prepared. The evidence before the FMCA was, thus, not before the Court. An index to the appeal papers was never finalised. Despite these obvious difficulties, in light of my earlier ruling it is not necessary to express any view about the merits of the appeal or to deal with the written submissions filed in support of it. 24 I can see no reason why the respondent should not have a full measure of protection in relation to its costs. The respondent has complied with each of the directions made by the Court. In order to provide Mr Khera with every opportunity to advance his own position it has been necessary to expose the respondent to additional costs. I will order that Mr Khera pay the respondent's costs of the motion and the appeal on an indemnity basis. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | application for dismissal for want of prosecution continued non-compliance with court's directions by the appellant failure to prosecute appeal with due diligence appeal dismissed indemnity costs awarded. appeal |
2 The Commission had decided under the Veterans' Entitlements Act 1986 (Cth) ("the VE Act ") that the death of the respondent's husband ("the veteran") was not war-caused. The Tribunal set aside the decision of the Tribunal and determined that the death of the veteran was war-caused. 3 For the reasons that follow, the appeal should be allowed and the decision of the Tribunal of 24 October 2006 must be set aside. The veteran served in the Australian Army from 5 October 1942 until 9 August 1946. All of the veteran's service was operational service. He saw service as a stretcher bearer and was exposed to horrifying events. The veteran's war-caused diseases were chronic eczema, mild labile hypertension and infected tonsils. 5 On 7 December 1968, the veteran was killed when a truck driven by him was struck by a train at a level crossing in Benalla, Victoria. The post mortem found that the cause of death was " Multiple Injuries including brain damage ". 6 On 12 December 1968, Mrs Codd was unsuccessful in a claim for a war widow's pension under the Repatriation Act 1920 (Cth) ("the Repatriation Act"). On 17 July 1985, Mrs Codd made a second claim for a war widow's pension under the Repatriation Act. The Veterans' Review Board ("the VRB") affirmed the Commission's decision that the death of the veteran was not war-caused. 7 On 30 March 2001, Mrs Codd made a third claim for a war widow's pension under the Repatriation Act. A delegate of the Commission decided that the veteran's death was not war-caused. On 10 October 2002, the VRB affirmed the Commission's decision that the death of the veteran was not war-caused. On 19 December 2002, pursuant to s 175 of the VE Act , Mrs Codd applied to the Tribunal for review of the VRB's decision of 10 October 2002. On 20 August 2004, the Tribunal decided that the death of the veteran was war-caused. On 30 June 2005, the Federal Court allowed an appeal by the Commission from the decision of the Tribunal, on the basis that material before the Tribunal could not support the Tribunal's diagnosis of generalised anxiety disorder ("GAD") and that if the veteran had been suffering from GAD, the Tribunal had failed to consider whether a hypothesis of connection between that disease and the veteran's operational service was upheld by the relevant Statement of Principles ("SoP"): Repatriation Commission v Codd [2005] FCA 888 at [46] - [47] and [49]. The Court remitted the matter to the Tribunal to be heard and determined according to law. 8 On 24 October 2006, the Tribunal decided again, on different grounds, that the death of the veteran was war-caused. On 20 November 2006, the Commission appealed from the Tribunal's decision. It is the Tribunal's decision of 24 October 2006 which is the subject of this appeal. Section 8(1) of the VE Act sets out the circumstances in which a veteran's death is taken to be war-caused. If the material does raise such a reasonable hypothesis, the decision-maker proceeds to the question posed by s 120(1) --- namely, is the decision-maker satisfied beyond reasonable doubt that the facts required to connect the veteran's death with his service were disproved or were displaced by other facts: Byrnes v Repatriation Commission [1993] HCA 51 ; (1993) 177 CLR 564 at 571. 12 As the language of s 120(3) makes clear, and as the High Court emphasised in Repatriation Commission v Owens (1996) 70 ALJR 904 at 904, the question whether a reasonable hypothesis is raised is to be determined on a consideration of the whole of the material before the decision-maker: see also Repatriation Commission v Bey (1997) 79 FCR 364 at 367. A reasonable hypothesis within s 120(3) of the VE Act is a hypothesis that is pointed to by the material before the decision-maker, and not merely left open (or not excluded) by that material. A hypothesis that is not pointed to, but is a matter of assertion or is merely left open by the material, is not a reasonable hypothesis: see East v Repatriation Commission (1987) 16 FCR 517 at 532-533. See also Repatriation Commission v Bey (1997) 79 FCR 364 at 366-367, 372-373; Bull v Repatriation Commission (2001) 188 ALR 756 at [18] and [41]. 13 Section 120(3) "is affected by s 120A" and, according to s 120A(1) , applies to a claim under Part II of the VE Act made on or after 1 June 1994 that relates to operational service rendered by a veteran: ss 120A(1)(a) , 120A (3) and 120A (4). Mrs Codd's claim was such a claim. 14 Section 120A was introduced by the Veterans' Affairs (1994-95 Budget Measures) Legislation Amendment Act 1994 (Cth). The intent behind the introduction of s 120A (and s 196B) of the VE Act was explained in the Explanatory Memorandum to the Bill, an extract of which was set out by the Full Court in Woodward v Repatriation Commission [2003] FCAFC 160 ; (2003) 131 FCR 473 at 489, [90] . The second basis (a determination by the Commission) is not relevant to the circumstances of this case. That is, the hypothesis raised (that is, pointed to) by the material will only be reasonable if the hypothesis is consistent with, or fits the template of, a SoP: see Repatriation Commission v Deledio (1998) 83 FCR 82 at 96, endorsing the observations of Heerey J at first instance: Deledio v Repatriation Commission (1997) 47 ALD 261 at 275. 17 It is the function of the Repatriation Medical Authority ("the RMA") to determine SoPs for the purposes of the VE Act : s 196B(1) of the VE Act . Section 196B(2) of the VE Act provides that if the RMA is of the view that there is " sound medical-scientific evidence " that indicates a particular kind of injury, disease or death can be related, inter alia, to operational service then it is for the RMA to determine a SoP in respect of that kind of injury, disease or death setting out the factors that must exist as a minimum and which of those factors must be related to service by the veteran before it can be said that a reasonable hypothesis has been raised connecting an injury, disease or death of that kind with the circumstances of that service. The phrase " sound medical-scientific evidence " is defined in s 5AB of the VE Act . 18 Section 120A(4) of the VE Act qualifies s 120A(3). It relevantly provides that s 120A(3) does not apply in respect of an injury, disease or death if the RMA has not determined a SoP under s 196B(2) nor declared that it does not propose to make such a SoP in respect of the kind of injury suffered by the veteran, the kind of disease contracted by the veteran or the kind of death met by the person. 19 The method by which ss 120(1) , 120 (3) and 120A (3) are applied was explained in Repatriation Commission v Deledio (1998) 83 FCR 82 at 97-98. The Tribunal must consider all the material which is before it and determine whether that material points to a hypothesis connecting the injury, disease or death with the circumstances of the particular service rendered by the person. No question of fact finding arises at this stage. If no such hypothesis arises, the application must fail. If the material does raise such a hypothesis, the Tribunal must then ascertain whether there is in force an SoP determined by the Authority under s 196B(2) or (11). If no such SoP is in force, the hypothesis will be taken not to be reasonable and, in consequence, the application must fail. If an SoP is in force, the Tribunal must then form the opinion whether the hypothesis raised is a reasonable one. It will do so if the hypothesis fits, that is to say, is consistent with the 'template' to be found in the SoP. The hypothesis raised before it must thus contain one or more of the factors which the Authority has determined to be the minimum which must exist, and be related to the person's service (as required by ss 196B(2)(d) and (e)). If the hypothesis does contain these factors, it could neither be said to be contrary to proved or known scientific facts, nor otherwise fanciful. If the hypothesis fails to fit within the template, it will be deemed not to be 'reasonable' and the claim will fail. The Tribunal must then proceed to consider under s 120(1) whether it is satisfied beyond reasonable doubt that the death was not war-caused, or in the case of a claim for incapacity, that the incapacity did not arise from a war-caused injury. If not so satisfied, the claim must succeed. If the Tribunal is so satisfied, the claim must fail. It is only at this stage of the process that the Tribunal will be required to find facts from the material before it. In so doing, no question of onus of proof or the application of any presumption will be involved. First, the methodology is not to be applied mechanistically or to operate in substitution for the requirements of the VE Act : Hill v Repatriation Commission (2005) 218 ALR 251 at [35] and [85]; Hardman v Repatriation Commission [2005] FCAFC 83 at [32] and Dunlop v Repatriation Commission [2003] FCAFC 201 at [33] . 21 Secondly, as was pointed out by the Full Court in Woodward v Repatriation Commission [2003] FCAFC 160 ; (2003) 131 FCR 473 at 483 at [55], the observation at step 2 of the Deledio analysis that if no SoP is in force the application must fail, must be qualified by reference to s 120A(4) of the VE Act which provides that s 120A(3) does not apply in certain circumstances. 22 Thirdly, as Selway J said in Repatriation Commission v Hancock (2003) 37 AAR 383 at [11], there are at least two additional steps before step one in the Deledio analysis. This involved the identification, on balance of probabilities, of any and all [SoP] and/or determinations under s 180A(2) of the Act and any other "kinds of death" which were applicable to that death. (For example, in the present case, it was necessary for Mrs Codd to show that her husband was a veteran; that Mr Codd had died and that Mrs Codd was a widow. It will be necessary to return to consider the phrase " kind of death met by the [veteran] " in s 120A(4) of the VE Act . " It was that hypothesis the Tribunal accepted as a reasonable hypothesis connecting the veteran's death with the circumstances of his war-service. 27 The Tribunal declared that the " kind of death " met by the veteran was death by road accident. The Commission contends that on a proper construction of ss 120 and 120A of the VE Act , the Tribunal's finding that the kind of death met by the veteran was "death by road accident" was not open to the Tribunal. (I will describe this as the " McKenna principle"). That submission should be rejected. For the reasons that follow, it is apparent that in making that finding, the Tribunal erred in the proper construction of ss 120 , 120A (3) and 120A (4) of the VE Act and, in particular, the meaning of the phrase " kind of death " in s 120A(4) of the VE Act . That is an error of law: Collector of Customs v Agfa-Gevaert [1996] HCA 36 ; (1996) 186 CLR 389 at 394-5. It is not a question about whether the death was slow, fast or the like. It asks " questions of medical causation" about the cause of death and does so in a particular context --- the VE Act and, in particular, Part VIII of the VE Act : see also Explanatory Memorandum to the Veterans' Affairs (1994-95 Budget Measures) Legislation Amendment Bill 1994 (Cth) pp i-ii. 32 The notion of "causing" has been said to be one of common sense: Environment Agency (formerly National Rivers Authority) v Empress Car Co. (Abertillery) Ltd [1998] UKHL 5 ; [1999] 2 AC 22 at 29 (per Lord Hoffman). But whatever may be conveyed by the reference to " common sense ", answers to questions of causation will differ according to the purpose for which the question is asked: Travel Compensation Fund v Tambree [2005] HCA 69 ; (2005) 224 CLR 627 at [45] ; Allianz Australia Insurance Limited v GSF Australia Pty Ltd [2005] HCA 26 ; (2005) 221 CLR 568 at [96] - [97] ; Chappel v Hart [1998] HCA 55 ; (1998) 195 CLR 232 at [63] - [64] (per Gummow J) and at [122] (per Hayne J). 33 The answer to the question of causation posed by s 120A(4) of the VE Act (the " kind of death met by the person ") requires identification and examination of the purpose for which the question is being asked. The purpose or reason for asking the question is not at large. The nature and scope of the purpose for asking the question is to be found in the VE Act . Under Part VIII of the VE Act , the nature and scope of the purpose or, to put the matter another way, the purpose for which the question in s 120A(4) is being asked, is to be found in s 120A(3) of the VE Act . Since s 120A(4) qualifies s 120A(3) of the VE Act , one identifies the nature and purpose of the causal question in s 120A(4) (the " kind of death met by the person ") by reference to the matters identified in s 120A(3) - a hypothesis connecting a veteran's death with the circumstances of that veteran's service. 34 Putting the same point another way, s 120A(3) regulates the causation enquiry. Subsection 120A(4) qualifies a particular application of that causation enquiry. Therefore, s 120A(4) is to be construed in a way that gives effect to the evident statutory objective of the Part and, in particular, s 120A(3). 35 What then is the purpose for which the question in s 120A(4) about the kind of death met by the person is being asked? As a matter of statutory construction the answer is that the purpose is to ascertain whether or not there is a SoP which addresses the question of the reasonableness of the hypothesis about the connection between the cause of death of the veteran and the circumstances of the service. 36 The " kind of death met by the [veteran]" that is to be identified requires examination of the causal connection between the death and the circumstances of the service. In particular, it requires examination of the relevant hypothesis that is said to provide the causal link between death and service. In the present case, the hypothesis was that the death was war-caused and that the cause, or at least one of the causes of death, was the veteran's "service related alcohol habit[,] the effects of which [had] impaired his concentration and contributed to the fatal collision" . 37 Section 196B of the VE Act and the SoP the subject of this proceeding provide further support for the view that the " kind of death met by the [veteran] " that is to be identified presents a question about medical causation --- that the kind of death is a medical cause of death. Sections 120A and 196B were inserted into the VE Act to address questions of medical causation: see also Explanatory Memorandum to the Veterans' Affairs (1994-95 Budget Measures) Legislation Amendment Bill 1994 (Cth) pp i-ii. Section 120A(3) requires that a claim for pension be measured against a SoP. Moreover, a SoP is not determined unless the RMA is of the view that there is " sound medical-scientific evidence " that indicates that a particular injury, disease or death can be related to inter alia war service. If such a determination is made by the RMA, the SoP sets out the factors that must as a minimum exist and which of those factors must be related to service by the veteran before it can be said that a reasonable hypothesis has been raised connecting an injury, disease or death of that kind with the circumstances of that service. The phrase " sound medical-scientific evidence " in relation to a particular kind of injury, disease or death is defined in s 5AB of the VE Act by reference to, inter alia , published medical or scientific publications that have been subjected to peer review process. All of these matters point to the conclusions earlier expressed. 38 Finally, the SoP which is the subject of this appeal is itself directed to questions of medical causation. To take just one example, cl 8 of the SoP defines " death from alcohol dependence or alcohol abuse " to include " death from a terminal event or condition that was contributed by the person's alcohol dependence or alcohol abuse ". The phrase " terminal event " is defined to mean " the proximate or ultimate cause of death and includes ...(e) cessation of brain function ". 39 On the proper construction of the VE Act , consistent with its evident statutory purpose and existing authority, the " kind of death met by the [veteran] " that is to be considered is the question of medical causation or the kind of death, being a medical cause of death, including the contributing or underlying medical cause of death. 40 In the present case, the kind of death met by the veteran was not death by road accident but death from (in the sense of arose out of, or was attributable to) alcohol dependence or alcohol abuse. 41 The respondent submitted that the expression " kind of death " was " concerned with the way in which a veteran met his or her death ". That submission should be rejected for a number of reasons. First, for the reasons already given, to read the expression in the way suggested by the respondent would be contrary to the scheme of the VE Act and its evident purpose and would be contrary to existing authority. Secondly, the suggested construction of the expression conflates several distinct inquiries including the inquiry about the " way in which " a veteran met his death (as to time or place) and the inquiry about the medical cause of this death. If such an approach were adopted it would circumvent the scheme of the VE Act and in particular, the SoPs determined by the RMA under s 196B of the VE Act . As the Commission submitted, on the respondent's approach, death by suicide could be characterised as death by the means employed, the place where the death occurred or by the time of day when the death occurred. Such a characterisation, if adopted, would permit a veteran to circumvent any SoP which did not uphold the claimant's hypothesis seeking to link the death with war-service. Such an approach should be rejected. 42 Despite the respondent's submissions to the contrary, the decision of Tamberlin J in Repatriation Commission v Towns (2003) 38 AAR 77 does not assist the respondent's case. The decision must be understood having regard to the matters that were in issue in the case. In Towns , there was consensus that there was no relevant SoP and so it was unnecessary to make any analysis of the kind of death met by the veteran: at [28]. It would be wrong, then, to take what was said in that case as supporting or establishing the general proposition that the expression " kind of death " was not concerned with medical causation where the medical cause or causes can be identified. Likewise, the decision of Branson J in Brown v Repatriation Commission [2006] FCA 914 makes plain that the decision in that case was not the occasion to provide general and definitive guidance about the meaning of the expression. 43 It is sufficient, in the present case to say that, for the reasons stated, I consider the Tribunal failed to properly construe ss 120 , 120A (3) and 120A (4) of the VE Act and, in particular, the meaning of the phrase " kind of death " in s 120A(4) of the VE Act . The Tribunal did not ask the correct question. That was an error of law. 45 In McKenna , the Commission had determined that ischaemic heart disease and atherosclerotic peripheral vascular disease suffered by Mr McKenna were each a war-caused disease within the VE Act . The effect of the decision of Goldberg J at first instance was to reach a contrary conclusion. So stated, the hypothesis has to point to a connection which starts with the disease in respect of which the application is made and ends with the service. That connection will comprise a number of links or factors each of which must be upheld by a [SoP] and, if need be, by more than one [SofP]. It is therefore necessary to identify whether there is in force a [SoP] which upholds the whole, and not just part, of this hypothesis..". It was only entitled to form the opinion that they were reasonable if they were upheld by, in the sense of consistent with, the relevant [SoP]. In our view, for either of the hypotheses to be upheld by a [SoP], as required by s 120A(3) of the Act, each of its sub-hypotheses would have to be so upheld . A complex hypothesis (that is, one comprising more than one element or part) can be no stronger than each of its elements or parts. It explicitly rejected that approach. That was an error of law. On any view, one of the sub-hypotheses was that the effects of the veteran's "service related alcohol habit ... [had] impaired his concentration and contributed to the fatal collision" . As the Tribunal failed to ask the question about the alcohol related sub-hypothesis, it failed to consider whether there was a SoP which upheld that sub-hypothesis. 48 Mr Green SC, counsel for the respondent, contended that even if the Tribunal had applied the McKenna principle to the SoP, it would have reached the same conclusion on the basis that there was no SoP which covered the hypothesis (and one assumes the sub-hypothesis) that the veteran was a heavy drinker. In those circumstances any alcohol residue at the time of the collision would have been so minuscule to safely permit a finding that at the time of the collision the deceased was not under the influence of alcohol. First, it is well established that a SoP covers the field: see Woodward v Repatriation Commission [2003] FCAFC 160 ; (2003) 131 FCR 473 at [100] and the Explanatory Memorandum to the Veterans' Affairs (1994-95 Budget Measures) Legislation Amendment Bill 1994 (Cth) which provided that the RMA will prepare SoPs based on " sound medical-scientific evidence " that will exclusively state what factors related to service must exist to establish a causal connection between particular diseases, injuries or death and service. 50 Secondly, the threshold question posed by s 120(3) is whether the whole of the material before the decision-maker raises a reasonable hypothesis connecting the veteran's death with the circumstances of his service. This branch of the respondent's argument seeks to rely on only part of the material before the Tribunal. 51 The evidence before the Tribunal was that the diagnosis of Dr Epstein was that the veteran was a 'chronic alcoholic'. Dr Epstein's criteria for an alcoholic was " a person whose drinking interfered with their health, with the family life and their working capacity" . Dr Epstein's evidence was that there was " certainly no doubt that [the alcohol habit] interfered with his family life" . That view was consistent with the respondent's own evidence to the Tribunal that there was disharmony in the marriage because of the veteran's alcohol consumption. Having regard to diagnostic criteria A(1) and (4) for alcohol abuse in the SoP for alcohol abuse or alcohol dependence, the whole of the material before the decision-maker would appear to suggest that at least some of the diagnostic criteria were satisfied. That however is a question of fact for the Tribunal. The matter will be remitted to the Administrative Appeals Tribunal to be heard and determined according to law by a differently constituted Tribunal. 53 The applicant did not seek an order that the respondent pay the applicant's costs. There will be no order as to costs. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon . | appeal from decision of administrative appeals tribunal pension entitlement for dependent spouse of veteran alcoholism whether reasonable hypothesis connecting veteran's death and service application of principles relevant to analysis error of law social security |
2 The Applicant on the Motion is the Fourth Respondent in the principal proceeding. Counsel for the First Applicant in the proceeding appeared at the hearing of the Motion and opposed the relief sought. Counsel for the Third Respondent in the proceeding also appeared, but neither opposed nor supported the relief sought in the Motion . 3 The order setting down the proceeding for hearing in December 2008 was made on 16 September 2008. On that date the Applicant on the present Motion advised the Court of a medical condition that he maintained prejudiced his ability to meaningfully participate in any hearing. The dates for final hearing, however, were nevertheless selected with his concurrence and to accommodate his medical condition. 4 On 14 November 2008 the present Applicant on the Motion foreshadowed that he would be seeking a vacation of the December 2008 dates. Directions were then made for the filing of any Motion seeking such relief together with any such evidence that he would wish to rely upon. 6 The Affidavit in support of the Motion was that sworn by the Applicant on the Motion on 19 November 2008. 7 The relief sought in the Motion is refused. But any further application he may wish to make after he has seen his specialist on 8 December 2008 may be made at the outset of the final hearing on 17 December 2008. 8 Considerable reservation was expressed during the hearing of the Motion as to the authenticity of the medical reports as annexed to the Affidavit. Those reports were not on any recognisable letterhead and were expressed in terms not characteristic of a medical practitioner. But there was no cross-examination of the Applicant and, in those circumstances, the reports were accepted as providing some evidence of the Applicant's medical condition. 9 That medical evidence, however, fails to establish any reason to vacate the present hearing dates. One joint medical report was provided by a " Consultant " and an " Associate Professor " who had operated upon the Applicant in Sweden. The " Consultant " and " Associate Professor " were apparently medical practitioners practising in Uppsala in Sweden. But the joint medical report is dated 2005 and says nothing as to the Applicant's present medical condition. 10 Also annexed to the Applicant's Affidavit was what was said to be notes from the Applicant's psychologist, Ms Tara Stern. No report was provided by that psychologist. The notes state in part that the Applicant presented with " issues " including " feeling overwhelmed " and " Anger at medical system, incompetence, corrupt institutions/business & govt apathy ". 11 What purported to be notes from a Dr Dailey were also annexed. His biggest concern is that his anxiety now. He realises having problems coping and he is now willing to see one of the psychologist. His general condition is fairly good. He has had minimal diarrhoea and now flushing. He remains lethargic and tires easily and finds concentration some difficult. There is no evidence that his medical condition is such that he will not meaningfully be able to participate in the hearing. But, if a particular difficulty is experienced, it can be accommodated at the hearing. 12 The alternative basis upon which the application is being made is an outstanding request for legal assistance. 13 An application for legal aid was made. But the application which was annexed to the Affidavit remained undated. It would appear to have been an application made after the dates for final hearing were set down in September 2008. But, and whatever may have been the date upon which it was made, it was apparently that application which was refused on 15 October 2008. ... I enclose an application form for Pro Bono assistance which may be available from the Law Society of NSW. 14 An appeal to the Legal Aid Review Committee was filed on 17 November 2008. Perhaps not surprisingly there is no further account as to the status of that appeal. An " Application for Pro Bono Referral " was also filed on 17 November 2008. 15 Again, it is not considered that this alternative basis upon which the relief is sought in the Motion should prevail. The present proceeding was commenced by way of an Application filed on 14 December 2007. A Statement of Claim was filed on 8 August 2008. Directions hearings were held in December 2007 and in April, June, August, September and November 2008. At some of those direction hearings the Applicant on the Motion attended; on other dates there was no attendance by him. 16 Any application for legal assistance should have been made by the Applicant on the Motion at a far earlier date. It is not considered that a party can fail to appear at directions hearings, delay seeking legal advice, and thereafter rely upon an outstanding application for legal aid or assistance as a reason to vacate dates -- especially dates set down with his concurrence. 17 The application for the vacation of the December 2008 hearing dates is thus refused. 18 To the extent that the Applicant on the Motion asserts that his financial circumstances are such that he cannot afford to photocopy documents relevant to the final hearing, it is anticipated that that difficulty can be accommodated in a practical and sensible manner by those appearing for the Applicants. All documents upon which the Applicants wish to rely have apparently already been provided to him. It is further hoped that copies of documents produced by a third party to the Applicants pursuant to a subpoena, and which may have some relevance to the issues to be resolved in December 2008, can also be provided to the Applicant on the Motion in a practical and sensible manner. 19 The Applicant on the Motion may make any such further application as he sees fit at the commencement of the final hearing on 17 December 2008. If there is to be reliance upon further medical reports, it may be prudent for him to ensure that those medical practitioners upon whom he may wish to rely are available for cross-examination -- at least by means, perhaps, of telephone. But such reservations as have been expressed in relation to the medical reports as presently filed are a matter for the Applicant on the Motion to address in such a manner as he sees fit. 20 Even short of again applying for the vacation of the December 2008 hearing dates, the Applicant on the Motion should feel free to make such applications as he sees fit during the course of the final hearing. To the extent that any such difficulties as he may then experience can be accommodated, they will be accommodated in a manner consistent with the evidence then before the Court and the interests of the proper administration of justice. The Notice of Motion as filed on 30 September 2008 is dismissed. 2. The Applicant on the Motion , the Fourth Respondent in the principal proceeding, is to pay the costs of the First Applicant in the principal proceeding of and incidental to the hearing of the Motion . 3. There be no order as to costs as to the Third Respondent in the principal proceeding on the hearing of the Motion . I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | application for adjournment of hearing dates claimed medical condition not supported by evidence lateness of application for legal assistance practice and procedure |
The proceeding was commenced on 5 December 2008. The only order sought in the proceeding against the respondent is the order of the kind which I have mentioned. No jurisdiction of the Court is invoked apart from any jurisdiction which might be given pursuant to s 48 of the Act. The order is opposed by the respondent. The applicant is the trustee of the respondent's bankrupt estate. The respondent commenced a proceeding in the Western Australian District Registry on 16 November 2008 seeking a review of a decision of Mr Macks dated 17 September 2008 in which Mr Macks refused to review the admission of proofs of debt in Mr Garrett's bankrupt estate on 24 May 2008 (the Western Australian proceeding). It is not entirely clear what jurisdiction Mr Garrett is invoking in the Western Australian proceeding but I think he is probably invoking s 178 of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act ). Mr Garrett has also brought other proceedings against Mr Macks in the Administrative Appeals Tribunal in Western Australia but they are unimportant. Mr Garrett presently resides in Western Australia. He moved to Perth, I think, for the purpose of gaining employment since he became a bankrupt. 2 The Western Australian proceeding is listed for a directions hearing tomorrow in Perth. The proceeding with which I am concerned was commenced solely for the purpose of obtaining an order removing the Western Australian proceeding to Adelaide in advance of the first directions hearing of the Western Australian proceeding in Perth. 3 That section has been given a very wide construction by the Full Court of this Court in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155. It should be exercised flexibly having regard to the circumstances of the particular case. It would be regrettable and unwise if the Court was to circumscribe the general power conferred by section 48 with inflexible rules or impose inelastic constraints upon its exercise. As the power may be exercised subject to conditions, the Court or a judge is in a position to mould orders under the section to take account of the many and varied circumstances that arise in particular cases. 4 The power conferred by s 48 recognises the national character of this Court. The factors which the Court is entitled to take into account in considering whether one place is more appropriate than another for interlocutory hearings or for the trial itself are numerous. The Court must weigh those factors in each case. Residence of parties and of witnesses, expense to parties, the place where the cause of action arose, and the convenience of the Court itself are some of the factors that may be relevant in particular circumstances. The balance of convenience will generally be a relevant consideration but not necessarily determinative of each case. 5 A party commences a proceeding by filing an application in a particular Registry of the Court. If that party or another party wishes to have the proceeding conducted or continued in another place, he may apply to the Court for an order under s 48 or O 10 r 1(2)(f) or O 30 r 6, as the case may be. 6 In this case, of course, the applicant, Mr Macks, who is the respondent in the Western Australian proceeding, has not applied in that proceeding for the transfer of the proceeding to this Registry but has himself initiated another proceeding solely for the purpose of obtaining an order in advance of the first directions hearing in Western Australia for the transfer of the Western Australian proceeding to this Registry. In other words, Mr Macks is asking a judge of this Court in this Registry to make an order in advance of the matter listed before another judge of this Court in Western Australia to transfer the proceeding to this Registry. 7 The application was said to be sanctioned by a decision of Justice French in Southern Oceanic Hotels Pty Ltd v Ocean City Ltd [1993] FCA 314 ; an unreported decision of his Honour of 10 February 1993. It is not entirely clear what proceedings his Honour had before him when he considered the application that was made in that proceeding. A motion was also filed in these proceedings on 1 February 1993 by OCL seeking an order that Anthony Hayes Douglas-Brown be appointed as provisional liquidator of SOH. The application was supported by an affidavit from David John Coates, a chartered accountant, of Pier Street, Perth, who is the receiver and manager of OCL. On 5 February 1993, SOH filed a fresh application in the West Australian District Registry seeking an order that the proceedings and the winding-up application be transferred to the West Australian District Registry. That application was heard today on affidavit. 10 It is not clear to me whether the proceeding that was commenced in Western Australia was only a proceeding of the kind which has been commenced and which I am presently considering, that is a proceeding for an order that another proceeding in another Registry be transferred to this Registry. The difficulty I have with an application of the kind made by the applicant in this proceeding, Mr Macks, is that it is simply an application for an order under s 48 and does not identify the jurisdiction which this Court is said to have to support the application. Section 19 of the Federal Court Act gives this Court such original jurisdiction as is vested in it by laws made by the Parliament. 11 There is nothing in this proceeding which is before me to indicate what jurisdiction is being invoked for the purpose of the order which is being sought. The order which is being sought is purely procedural. One would have expected that the order would be sought in the proceeding which has been commenced in the Western Australian Registry and which will be heard by a judge of that Registry tomorrow for directions. 12 The other problem that I have with the procedure which has been adopted arises out of the words of s 48 itself. Section 48 empowers the Court at any stage of a proceeding to direct that "...the proceeding or a part of the proceeding ..." be conducted or continued at a place specified in the order. The draftsman has used the definite article in relation to "the proceeding" second mentioned. It seems to me, as I think counsel recognised, that the draftsman was there directing his or her attention to the proceeding first mentioned in the section. That would seem to me to be the proper reading of s 48. That is, s 48 empowers the Court to make an order at any stage of a proceeding in the proceeding, that the proceeding be conducted or continued at a place specified in the order. That recognises the national aspect of this Court. Section 48 however, is a provision whose purpose, as enunciated by the Full Court in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 , is to serve the ends of justice and the most efficient administration of the Court. It would require clear language, in my opinion, to impose a purely procedural fetter upon its operation. In this case in which the application in New South Wales has not reached its first return date and is not under the administrative control of any judge at the present time it is, in my opinion, open to the Court to consider the application presently before it upon the merits so that if well-founded the parties seeking the transfer is not put to the expense and inconvenience of having to instruct solicitors and brief counsel in New South Wales in order to achieve a proper result. In my opinion, the material presently before the court is strongly supportive of the proposition that the application would have been better commenced and should, in any event, now continue in the Western Australian District Registry. 14 If in fact his Honour reached that conclusion upon an application before him which only sought an order under s 48 and sought no other relief then, with respect, I cannot agree with his Honour's decision. In my opinion, s 48 empowers a court in a proceeding to transfer that proceeding to any place specified in the order. The purpose of s 48 is, as was said by the Full Court in National Mutual Holdings Pty Ltd v The Sentry Corporation 19 FCR 155 to give the Court an unfettered discretion to make orders to allow a proceeding issued in this Court to proceed anywhere within Australia. However, in my opinion, s 48 does not empower a party to apply in a separate proceeding for an order for the transfer of another proceeding in another place to the place in which the proceeding seeking to invoke s 48 has been made. 15 If it were otherwise, it would mean that the parties would be put to the cost of filing applications and affidavits in two separate proceedings to deal with the same subject matter relating to where the matter ought to be heard. Also, if it were otherwise, it would mean that an applicant who has chosen to bring the proceeding in a particular Registry would never have the opportunity of bringing the matter to the attention of a judge in that Registry before the matter might be taken away by another judge in another Registry to that other Registry. Section 48 , in my opinion, does not provide a substantive right to a party to bring a proceeding and does not confer a jurisdiction in the sense contemplated in s 19 of the Federal Court Act. 16 In my opinion, the application insofar as it relies upon the decision of French J should be dismissed. Two other matters, however, were put before me. The first was that in National Mutual Holdings Pty Ltd v The Sentry Corporation 19 FCR 155 the Court had said that if that party or another party wishes to have the proceeding conducted or continued in another place, he may apply to the Court for an order under s 48, or O 10 r 1(2)(f). It was put, in those circumstances that the Full Court contemplated that an application either could be made under s 48 or under O 10. 17 In my opinion, that argument must be rejected. Order 10 is the rule which deals with directions hearings. Order 10 rule 1(2)(f) empowers the Court to direct the proceeding be transferred to a place where there is a Registry, other than the then proper place. The proper place would be at the time that the application was made in the directions hearing the place at which the proceeding was commenced. That would empower an application to be made by the respondent in the Western Australian proceeding in Perth. That does not, however, mean, as was suggested in argument, that s 48 has some wider application than O 10 r 1(2)(f). In fact, in National Mutual Holdings Pty Ltd v The Sentry Corporation 19 FCR 155 the Court was simply not considering that matter. The third matter that was put before me was that I ought to give leave to Mr Macks to file a notice of motion in the Western Australian proceeding to seek to transfer the proceeding to South Australia. As I explained, that was procedurally impossible. The Western Australian proceeding is not listed before me but is listed before a judge in the Perth Registry tomorrow. In circumstances where the proceeding is not listed and the parties not warned that the matter would be called on, and the matter is to be heard by a judge of the Perth Registry tomorrow, it does not seem to me to be appropriate that I would give any leave to issue any notice of motion of that kind. 18 None of what I have said ought to be considered as going to the merits of any application as to where the proceeding ought to be heard. Because the Western Australian proceeding is listed in the Perth Registry tomorrow for directions, I have been asked to consider whether I would make an order under s 48 where no other jurisdiction has been invoked, to transfer the Western Australian proceeding to South Australia. For the reasons I have given, I am not prepared to make such an order and the application will be dismissed. I think I should also dismiss the proceeding. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application for order pursuant to s 48 of the federal court of australia act 1976 (cth) transferring action commenced in western australian registry to south australian registry nature of s 48 application did not identify jurisdiction under which the court could grant application whether appropriate to issue separate proceeding seeking transfer of existing proceeding in another place application dismissed proceeding dismissed. practice and procedure |
The Tribunal affirmed a decision of a delegate of the Minister not to grant the applicant a protection visa. 2 The only issue which arises is whether the notice requirements of s 425A of the Migration Act 1958 (Cth) ("the Act ") apply to notice of a rescheduled hearing when the hearing is rescheduled at the request of an applicant. He claims to be a Hindu from Tamil Nadu who supported Shiv Sena as a teenager. He claims that in 1994, he and some relatives experienced problems with members of the Muslim Community and that he received death threats. The appellant left India and worked in Singapore from March 1995 to April 2000. 4 The appellant claims that during that period, his cousin was killed in Tamil Nadu and his father advised him not to return to India. When the appellant did return to India, he claims that the problems persisted, and unable to return to Singapore, the appellant went to Malaysia for three months, as permitted. 5 On return to India, the appellant lived in Mumbai. He claims that in Mumbai "those people" found where he lived and attacked him, breaking his leg. The appellant claims he reported the assault to police, but under pressure from the Muslim community, the police not only refused to investigate the complaint, but brought "false cases" against him and harassed his family. The appellant's father was falsely charged and tortured solely due to his relationship with the appellant. The appellant claims that he and his family were attacked by persons because of his previous support for Shiv Sena. On 10 September 2003, the appellant advised the Tribunal by facsimile that he wished to attend the hearing, but on 22 September 2003 the appellant faxed to the Tribunal a medical certificate which stated that he was unfit to attend the hearing during the period 22-23 September 2003. 7 By letter dated 23 September 2003, the Tribunal advised the appellant in writing that, at his request, the hearing would be rescheduled, and would take place on 2 October 2003. However, the appellant did not attend this rescheduled hearing, nor contact the Tribunal to explain his absence. In the circumstances, the Tribunal made its decision in the review without taking further action, pursuant to s 426A of the Act . 8 The Tribunal found the appellant's claims to be mere assertions. The Tribunal observed that the appellant's absence from Tamil Nadu for six years suggested it was implausible that he was traced by people from his past who wished to harm him; the Tribunal observed that the appellant's inability to identify the assailants indicated it was much more likely that he was a victim of an opportunistic attack. 9 The Tribunal noted that the appellant had offered no further details about the assaults or threats, nor taken the opportunities offered by the Tribunal to speak to his claims or offer any material in support. The Tribunal was not satisfied that the appellant has a well founded fear of persecution. 10 The Tribunal made its decision on 10 October 2003. It notified the appellant by letter dated 13 October 2003 that the decision would be handed down on 4 November 2003. The decision was duly handed down on that date. 12 The letter sent on 23 September 2003 was deemed to have been received on 2 October 2003 which was the date of the proposed rescheduled hearing. The period of notice which was given was less than the fourteen day prescribed period stated in s 425A(3) and Reg 4.35D of the Migration Regulations 1994 (Cth) ("the Regulations "). The issue which arose was whether the Tribunal was bound to give fourteen days' notice, in accordance with those provisions, where the hearing was rescheduled at the appellant's request. 13 Nicholls FM referred to the decision of Conti J in SZDQO v Minister for Immigration, Multicultural and Indigenous Affairs [2005] FCA 1026 ; (2005) 144 FCR 251 (" SZDQO") which addressed this issue. The learned Federal Magistrate followed SZDQO as authority for the proposition that where the Tribunal reschedules a hearing at the request of an appellant, s 425A(3) does not apply in relation to the notice of the rescheduled hearing. 14 The Federal Magistrate concluded that the appellant was given a reasonable period within the requirements of the law, notwithstanding that it was not the full 14 days required under s 425A. He went on to observe that the Tribunal did not make its decision for some eight days after the rescheduled hearing date, and did not hand down its decision for a month after the rescheduled hearing date. The Magistrate noted that the appellant did nothing to notify the Tribunal of his reason for a failure to attend the rescheduled hearing date, nor to seek any further hearing date. In the circumstances, the Magistrate did not accept the applicant's complaint and found that the ground was not made out. 15 FM Nicholls observed at [15] that even if he had found jurisdictional error, he would have declined to exercise the discretion to grant relief, for two reasons. First, the appellant did not contend that he did not receive the letter notifying him of the rescheduled hearing date and he did not approach the Tribunal to explain his failure to attend. Secondly, there was no evidence put before His Honour to indicate that the appellant wanted to attend the rescheduled hearing, or that the appellant had further evidentiary material he would have wanted to put before the Tribunal. 16 There were six further grounds of review. They were bias, failure to properly conduct a hearing, failure to take into account relevant considerations, failure to apply the correct test, illogicality, and failure to give reasons. 17 The learned Federal Magistrate considered each of these grounds and dismissed them. 18 As the appellant was unrepresented, the Federal Magistrate also considered whether any issue arose in relation to s 424A of the Act , in light of the High Court's decision in SAAP v Minister for Immigration, Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162. He concluded that there had been no breach of s 424A. His Honour was of the view that, subject to the operation of s 422B of the Act , the requirement of notice of the rescheduled date would be governed by the general law of natural justice. 23 Support for the view that a distinction is to be drawn between the situation where the Tribunal itself reschedules the hearing date and when it does so at the applicant's request is found in the decisions of Sackville J in NBBU v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 767 and Barnes FM in SZBAZ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FMCA 790 (" SZBAZ") . Conti J referred to both of these authorities. 24 The rationale for the distinction is that where the Tribunal itself reschedules the hearing it may be thought to have issued a fresh invitation. However, where the applicant requests a postponement, s 425A does not apply because the section is limited to the situation where an applicant "is invited to appear before the Tribunal"; see SZBAZ at [28] --- [29], quoted by Conti J at [21]. 25 The conclusion reached by Conti J that s 425A(3) does not apply where an applicant requests a rescheduling is supported by the language of s 425A. It is also consistent with the detailed statutory provisions of Division 4 of Part 7 of the Act , as was observed by Barnes FM in SZBAZ . 26 It is to be noted that s 426A appears to draw a distinction between an invitation to appear before the Tribunal as required by s 425(1) and the power of the Tribunal to reschedule the hearing; see s 426A(2). This might be thought to provide further support for the view that s 425A is limited to the initial invitation but it does not explain the distinction between a rescheduling by the Tribunal itself rather than at the request of an applicant. 27 The difficulty which seems to me to arise on the approach adopted by Conti J is whether the common law rules of nature justice govern the requirement of notice of a hearing which is rescheduled at the applicant's request. As His Honour correctly observed, this must be subject to the provisions of s 422B which provides that Division 4 of Part 7 is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with. 28 Section 422B applies to applications to the Tribunal for review of a decision filed after 4 July 2002; see SZATG v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 83 ALD 596 at [31]; see also SZBDF v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1493 (" SZBDF") at [11]. It therefore applies to the present case. 29 As Branson J pointed out in SZBDF at [12], there is a division of opinion within the Court as to the ambit of s 422B(1). One view is that the phrase "in relation to the matters it deals with" imports a limitation upon the extent to which Div 4 is to be read as a code and doe not, in effect, completely exclude common law rules of natural justice; see WAJR v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 204 ALR 624 ( WAJR") at [47] --- [59] and Moradian v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1590 ; (2004) 142 FCR 170 (" Moradian") at [35] --- [37]. 30 The other view is that s422B applies to a larger subject matter than the exact text of the requirements stated in Div 4; see NAQF v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 130 FCR 356 (" NAQF") at [50] --- [87] and Wu v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1249 ; (2003) 133 FCR 221 (" Wu") at [21] --- [23]; see also VXDC v Minister for Immigration, Multicultural and Indigenous Affairs [2005] FCA 1388 ; (2005) 146 FCR 562 ("VXDC") at [30] --- [31] per Heerey J. 31 Branson J preferred the approach adopted by Lindgren and Hely JJ in NAQF and Wu respectively, to that of French and Gray JJ in WAJR and Moradian; see SZBDF at [17]. Bennett J found it unnecessary to decide the question in Minister for Immigration and Multicultural and Indigenous Affairs v Katisat [2005] FCA 1908 at [46] --- [49]. 32 In VXDC, Heerey J was of the view that an examination of the explanatory statement of the Migration Legislation Amendment (Procedural Fairness) Act 2002 (Cth) and the second reading speech made it plain that the intention of the 2002 amendment was to reverse the effect of the decision of the High Court in Re Minister for Immigration and Multicultural Affairs; Ex Parte Miah [2001] HCA 22 ; (2001) 206 CLR 57; it was also to provide a comprehensive code for procedural fairness which excluded the common law natural justice hearing rule. 33 The question of which view is correct is presently under consideration by a Full Court. I will proceed on the basis that the question is still open. Of course, if the view expressed by Heerey J is correct, no question of breach of procedural fairness arises, the matter being governed by the code contained in Div 4, which does not contain any notice requirement in the circumstances of the present case. 34 In the present case notice of the rescheduled hearing was sent on 23 September 2003 and it was deemed to have been received on the date of the reschedule hearing; see s 441C(4). But it does not follow that the letter was not received before that date. 35 The learned Federal Magistrate pointed out that the appellant did not contend that he did not receive the letter. It was sent by registered post to the appellant's Migration agent and to the appellant at his home address. His home address was recorded on the response to hearing invitation (for the original hearing date) which he signed and forwarded to the Tribunal. 36 Moreover, the Tribunal's record sheet states that on 1 October 2003, the day before the scheduled hearing, a Tribunal officer rang the appellant's agent twice only to be informed that the agent could not contact the appellant because his mobile phone was switched off. The officer told the agent that if the appellant appeared the Tribunal would schedule another hearing time. 37 In those circumstances it is difficult to see what more the Tribunal could have done to notify the appellant of the hearing. 38 What seems to me to be important is that the appellant did not adduce evidence that he was unaware of the rescheduled date. The tenor of the Federal Magistrate's findings is that he was aware of it. 39 Furthermore, as the learned Federal Magistrate found, there was no evidence put before him that the appellant would have wanted to attend the rescheduled hearing or that he had evidentiary material he wanted to put before it. 40 I am therefore satisfied that if there was an obligation of procedural fairness to give the appellant reasonable notice of the rescheduled date, there was no breach of the rule. 41 An alternative approach to the determination of the content of the Tribunal's obligation to give notice of the rescheduled hearing was suggested by counsel for the Minister. He submitted that its content would be governed by the statutory obligation of the Tribunal under s 425 of the Act to provide a "real and meaningful" invitation to attend the hearing; see Minister for Immigration and Multicultural and Indigenous Affairs v SCAR [2003] FCAFC 126 ; (2003) 128 FCR 553 (" SCAR") at [37]. 42 However, there are two difficulties with this approach. First, on the construction of s 425A adopted by Conti J in SZDQO , s 425 would bear the same limitation as s 425A. It would have to be confined to an invitation to attend a hearing and would not extend to a hearing rescheduled at the request of an applicant. 43 In any event, it may be that the statement of principle to which I have referred in SCAR is not correct. A Full Court has pointed out that the statement may not be correct because it is based upon a misconstruction of a decision of Hely J in Applicant NAHF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 140 ; (2003) 128 FCR 359; see NALQ v Minister for Immigration, Multicultural and Indigenous Affairs [2004] FCAFC 121 at [34] . 44 In summary, I respectfully agree with the approach to construction of s 425A adopted by Conti J in SZDQO which, for the reasons given above, disposes of the only substantial point in the appeal. At very least, His Honour's decision is not plainly wrong and I would follow it, especially as His Honour was exercising the appellate jurisdiction of the Court. There is no substance in them and they must be dismissed, essentially for the reasons given by the learned Magistrate. There was no apparent error in His Honour's approach. 46 One of the grounds of appeal alleges failure to consider the availability of effective state protection. This ground was not advanced below. I will not give leave to raise it on appeal. 48 This issue can be disposed of shortly. The remarks of Allsop J in SZEZI v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1195 at [29] and SZCIA v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 238 (" SZCIA ") at [12] are equally applicable in the present case. The reason for the decision of the Tribunal was "an evaluative conclusion founded on the perceived inadequacy of the information in the sense of an absence of detail and extrinsic explanation". 49 As His Honour said in SZCIA at [14] this view of the operation of s 424A is in conformity with the approach of the Full Court in SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | invitation by refugee review tribunal to attend hearing hearing rescheduled at request of applicant notice requirements for rescheduled hearing procedural fairness ambit of s422b migration |
2 The reason for the present application is that on 16 November 2006 JM Properties was ordered to be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth) ("the Act ") and Nicholas David Cooper was appointed liquidator of the company. Section 471B of the Act provides that while a company is being wound up in insolvency a person cannot begin or proceed with a proceeding in a Court against the company except with the leave of the Court and in accordance with such terms, if any, as the Court imposes. The Registrar has applied under that provision for such leave. 3 The contempt proceedings against JM Properties are proceedings to which s 471B applies. That proceedings, as also parallel proceedings against Mr and Mrs Balalis, were founded on alleged breaches of Mareva orders made against them by Judge Simpson in relation to dealings with a number of the assets of JM Properties and of another company. I need not enlarge upon the orders and their breach as it is clear, as her Honour found (at [78] of her reasons for judgment), that the transactions entered into by Mr and Mrs Balalis in encumbering and otherwise dealing with properties of JM Properties constituted a wilful and therefore contumacious breach of the orders. Mr and Mrs Balalis were directors of the company at the time. 4 The immediate reason for the leave application is occasioned by provisions of the District Court Rules 1987 (SA). Lunn's commentary relies upon the decision of Luxmoore J in Iberian Trust Ltd v Founders Trust and Investment Co Ltd [1932] 2 KB 87 where it was said of a rule in relevantly identical terms, that as the remedy given against the directors was an alternative one, the rule was not applicable unless the party seeking to enforce the order was in a position to pursue the original remedy against the company: at 98. 6 While there may be a question whether the legislative bar to proceedings against a company in insolvency ought be taken to have the consequence suggested by Luxmoore J when a party seeks to rely upon r 84.21, it is unnecessary for me to consider that matter as the Registrar is seeking (even if only as an abundance of caution) to proceed against the company as well as the directors. 7 The Registrar's lawyers wrote to the liquidator, Mr Cooper, on 15 January advising him that they had received instructions to make this leave application. They indicated in that letter that, while the Registrar wished to continue the contempt proceedings against JM Properties, "the principal reason for this is to pursue the Directors, Mr and Mrs Balalis, for attachment pursuant to r 84.21 of the District Court Rules 1987 in relation to the alleged breaches of the Mareva Injunction Order by JM Properties". The letter to Mr Cooper went on to note that "subject to our receiving final instructions, we are likely to give an undertaking to the Federal Court that we will not pursue any financial penalty against JM Properties in relation to the alleged contempt of court". 8 On 19 January 2007 Mr Cooper indicated to the Registrar's lawyers that he had no objection to the application being made and he confirmed he would not be making any submissions in relation to the matter. 9 Though the present application is an unusual one, I am satisfied I ought give the leave that is sought but on the condition I will mention below. 10 There can be no doubting the seriousness of the question to be raised in the Registrar's proceedings. Its concern is to maintain the integrity and authority of court orders. Subject to what I have to say about the imposition of a financial penalty if the contempt is made out, the proceeding will not impede the ordinary winding up of the company and is unlikely to cause prejudice to the creditors of JM Properties. 11 The liquidation is an insolvent one. I have not been provided with evidence concerning the probable dividend that will be paid to creditors. It may be that ultimately they will be fully paid out, but I have no reason to believe this is so. It would in my view be inappropriate in this state of affairs to permit the possibility of a financial penalty being imposed on JM Properties in the event that the Registrar successfully prosecutes the proceeding against it. Such a penalty would necessarily deplete the assets available to the creditors and to that extent would burden them with satisfying the penalty imposed on JM Properties. For this reason, as a condition of granting the leave sought, I have required the Registrar to given an undertaking not to pursue any financial penalty against JM Properties. Such, as I have already indicated, was foreshadowed by the Registrar and has now been given to the Court. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn J. | application for leave to proceed with contempt proceedings against a company which is being wound up in insolvency s 471b of the corporations act 2001 (cth) consideration of possibility of financial penalty against the company being wound up requirement of undertaking that no financial penalty to be sought against the company if leave was to be granted. interlocutory application |
Is the assignee entitled to the orders that it seeks? For the reasons that follow, the answer is "No". A company, Lawrenson Light Metal Die Casting Pty Ltd (ACN 081 829 790) ("LLMDC"), commenced operating a die casting business in January 1999. Its operation lasted less than one year. On 10 September 1999, the Third Respondent, Cosmick Pty Ltd (ACN 065 356 149) ("Cosmick") was granted a charge over the assets and undertaking of LLMDC ("the Charge"). In November 1999, Cosmick (as mortgagee in possession) sold the assets and undertaking of LLMDC to the Fifth Respondent, Melbourne Gravity Pty Ltd (ACN 490 584 339) ("Gravity"), a company incorporated for that purpose by the sole director and shareholder of Cosmick, the First Respondent, William Graham ("Graham"). On 10 September 2004, LLMDC assigned to the Applicant, Mijac Investments Pty Ltd (ACN 084 820 280), ("Mijac"), "all of [LLMDC's] right title and interest in any Cause of Action that [LLMDC] may have otherwise had". The "Cause of Action" was not defined but Recital C to the Deed of Assignment stated that prior to LLMDC going into liquidation, LLMDC had been "involved in dispute (sic) and litigation with several parties and consequently believe[d] it ha[d] a cause of action against those parties". As these reasons for decision will demonstrate, Mijac's application must fail. Although made in a factually different context, the statements by the High Court in Fysh v Page [1956] HCA 13 ; (1956) 96 CLR 233 at 243 are apposite --- equitable relief may be, and in my view in this case should be, denied where an applicant asks the Court to "rip up a transaction years after it has been completed", being a transaction to which Mijac was not a party (because it sues as an assignee) and where Mijac would get a radically different business now worth a lot more than that sold by the mortgagee in possession in 1999. However, although on the facts Mijac was entitled to an accounting for wilful default on the part of the mortgagee, that right is worthless because even if the mortgagee had conducted a "proper" sale of the assets and undertaking, there is no basis for concluding that such a sale would have generated any additional proceeds of sale above those paid to Cosmick. These reasons for decision are structured as follows: Content Para(s) I Relevant Legal Principles [6] --- [34] (a) Corporations legislation [7] (b) General law in relation to mortgagees in possession [20] (c) Equitable Remedies [22] (d) Property Law Act 1958 (Vic) ("the PLA") [27] (e) Assignment --- Effect on causes of action [30] II Facts [35] --- [141] (a) Introduction [35] (b) 1946-1997 [36] (c) 1998 [47] (d) 1999 --- January to October [55] (e) 1999 --- November and December [90] (f) 2000-2009 [131] III Analysis [142] --- [187] (a) Was Graham a controller within the meaning of s 420A of the Corporations Law ("the Law") as it applied in November 1999? [143] (b) Was Graham an officer of LLMDC within the meaning of the Law? [152] (c) Did s 418 of the Law apply? Was Graham a receiver of the property of LLMDC and, if so, what consequence(s) follow? [154] (d) Did Graham owe any and, if so, what duties in selling LLMDC's assets? [155] (e) If the answer to (d) is yes, did Graham breach those duties? [158] (f) What duties if any did Cosmick owe to LLMDC in selling its assets? [159] (g) If yes to (f), did Cosmick breach those duties? [162] (h) Is there an absolute prohibition on a mortgagee in possession selling the assets to himself or a related party? [167] (i) Did Cosmick sell LLMDC's assets to itself? [168] (j) Did s 103 of the PLA apply and, if so, was it breached? [169] (k) Did a demand have to be made before Cosmick entered into possession of LLMDC's assets? [170] (l) Is Mijac entitled to damages from Graham and / or Cosmick and, if so, what is the measure of damages and at what time are they to be assessed? [172] (m) Is Mijac entitled to have the sale by Cosmick to Gravity set aside and, if so, is it too late by reason of delay? [179] (n) Is Mijac entitled to any and, if so, what statutory remedies? [183] (o) What is the effect of the assignment by LLMDC to Mijac in 2004 on the available remedies? [184] (p) Should Mijac be required to elect which remedy it takes? In particular, it is necessary to consider the legislative history of Pt 5.2 of the Law and the manner in which that Part interacts with the general law dealing with mortgagees in possession. 45 " General Insolvency Inquiry " (known as the "Harmer Report") considered and rejected the idea that the existing law on receivers should be codified. ... The central issue, then, is whether those sections which only cover a receiver (however appointed) should be extended to cover an agent for a mortgagee in possession and a mortgagee in possession. ... More importantly, however, the exclusion of mortgagees and their agents other than receivers discriminates between differing methods of enforcing charges in a way which is difficult to justify. It should be recognised that, in some cases, the choice of a secured creditor to take possession (whether itself or by an agent) rather than appoint a receiver is largely the result of the application of the Income Tax Assessment Act 1936 (Cth) s 221P which gives a priority to the Commissioner of Taxation where a receiver is appointed to the property of the corporation. If the priority afforded by s 221P is abolished as the Commissioner recommends, the recent practice of appointing an agent of the mortgagee to take possession would rarely, if ever, be used as a means of enforcing a charge. There would be no reason to prefer that method (in view of the potential liability of a mortgagee in possession) to the appointment of a receiver. Nevertheless, whether the Parliament decides to repeal s 221P or not, there is, for the most part, no logical reason for many of the provisions relating to receivers to distinguish between different methods of enforcing a charge and for the operation of those provisions to be confined merely to receivers. However this cannot be done by providing a comprehensive definition of receiver to include a mortgagee in possession since such a definition would be inappropriate in several cases. For example, it is not within the province of a mortgagee to report to the CAC [Corporate Affairs Commission] on the conduct of the mortgagor company or the company's officers under s 324C of the companies legislation. 188. Recommendation. (Footnotes omitted). Four years later, in 1992, the Corporate Law Reform Act 1992 (Cth) implemented part of the recommendations of the Harmer Report. It did not codify the existing law on receivers. By the amendments, however, most of the powers and duties conferred and imposed on insolvency administrators under Pt 5.2 of the Law (as it then was) were extended to apply to all receivers and others who controlled company property under a charge: see para [25] of the Explanatory Memorandum to the Corporate Law Reform Bill 1992 ("EM"). The objectives of the Harmer Report (identified in [7]) were achieved by imposing most of the powers conferred and duties imposed on insolvency administrators under Pt 5.2 of the Law on the "controller" and "managing controller" of the property of a corporation: s 9 of the Law and para [339] of the EM. (The term "controller" was inserted for the "purposes of provisions imposing duties on receivers and others who control company property, to include receivers and all other persons (for example, mortgagees in possession) who have control of company property for the purpose of enforcing a charge"). "Controller" includes, by definition, a receiver and manager, (see e.g. s 9 (definition of "controller") and s 419(1)). However, a controller is not always a receiver, or receiver and manager: see e.g. ss 90 , 416, 418, 420, 420C, 425. (The Law expressly provided for the appointment of two or more managing controllers of property of a corporation and a function or power of a managing controller of property of a corporation may be performed or exercised by any one of them or by any two or more of them together, subject to the terms of the order or instrument appointing them: s 434G). The need for a "managing controller" arose because the drafters realised that the conferral of one power (power to dispose of property subject to a prior charge (s 420B)) and the imposition of one duty (duty to report within two months about the company's affairs (s 421A)) was appropriate in relation to only those controllers who had a general management role in addition to their role in taking possession of the property under the charge. Accordingly, that one power, and that one duty, were imposed on "managing controllers", being defined as those controllers who had a management function: para [354] of the EM. The person entitled to the benefit of the charge does not constitute a mortgagee in possession simply by reason of s 419(1): s 419(2). (ii) in exercising a power of sale in respect of property of a corporation, a controller must take all reasonable care to sell the property for not less than market value or if no market value, the best price that is reasonably obtainable in the circumstances: s 420A. As the Harmer Report recommended (see [7] above), these statutory powers and duties were not a code but were in addition to the general law duties of mortgagees in possession. The statutory provisions dealing with the duties, powers and liabilities of controllers assume that a person is in control of the property of a corporation for the purposes of enforcing a charge and impose powers and duties on that person. The general law governing mortgagees in possession does not. The differences between the statutory and general law duties do not create any practical difficulties to the resolution of the present matter because the dominant (and I consider more persuasive) view is that s 420A of the Law does not expressly confer a right to damages or any other remedy on the corporation or anyone else: see Florgale Uniforms Pty Ltd (Receiver and Manager Appointed) (in liq) v Orders (2004) 11 VR 54 at [357]-[388] and the authorities cited including Bryson J in GE Capital Australia v Davis [2002] NSWSC 1146 ; (2002) 180 FLR 250 at [45] . If that view is correct (and I consider that it is), then as a matter of statutory construction, what s 420A of the Law does is to redefine the general law duty and what must be done to protect the corporation and its property when affected by exercise of a power of sale so that "the corporation, as mortgagor ... retain[s] its existing available remedies, tested by reference to the [higher] duty in s 420A(1)": see Florgale Uniforms 11 VR at [370]. That 'higher' standard was described in Florgale Uniforms 11 VR at [410]ff in terms which I adopt. A breach of s 420A is not established merely because the market value or the best price is not achieved. It requires a failure to take all reasonable care to sell the property for not less than market value or the best price that is "reasonably obtainable, having regard to the circumstances existing when the property is sold": s 420A of the Law. That enquiry requires a Court to look at the process that a controller of property has undertaken to sell the property: see also Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Ltd (2002) 10 BPR 19,565 at [126] and Ultimate Property Group Pty Ltd v Lord (2004) 60 NSWLR 646 at [69]. Examples of a failure to undertake an appropriate process include (summarising the analysis of Florgale Uniforms 11 VR at [416] to [429]): Where an auction of mortgaged property was well advertised and competitive, but deliberate steps had been taken which would result in a 'seriously interested' potential bidder failing to attend the auction, therefore constituting a reckless disregard of the interests of the mortgagor: see Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Ltd (2002) 10 BPR 19,565; Where the sale of cattle on a per kilogram basis, locked into a sale of land transaction, was a misconceived estimate of value directed at the wrong market as the cattle had special characteristics that would have increased their value if marketed correctly, particularly when there was a failure to act in accordance with advice obtained, to provide sufficient notice to attract prospective purchasers and that alternate buyers may have been interested in the cattle sold separately from the land: see Jeogla Pty Ltd v Australian and New Zealand Banking Group Ltd (1999) 150 FLR 359 ; Where, during the sale of a business, the worth of a contract was devalued in a situation where that contract represented the major asset of the business, without sufficient justification at the time of sale and without encouraging competitive bidding for the business where several offers were made: see Kyuss Express Pty Ltd v Sellers [2001] VSC 10 ; (2001) 37 ACSR 62. Conversely, the Courts have found that the "process" adopted in selling the relevant property was not in breach of the duty: Where the controller had failed to consider relevant GST implications of a sale, but the controller was found to have determined that there was negligible benefit in adopting the course proposed by the plaintiff (as the purchaser was ultimately interested more in net value and not the GST implications of the disposal) and thus had rejected the proposed course of action for reasons which had logical force: see Ultimate Property Group Pty Ltd v Lord (2004) 60 NSWLR 646 ; Where a controller had allegedly sold plant and equipment for less-than-value where those assets had previously been the subject of an administrator's attempt to sell to a wide range of interested persons and there was a need to sell quickly given accruing liabilities (such as outstanding rent), particularly given that neither the debtor companies nor the director had protested and no market value for the assets could be determined: see GE Capital Australia v Davis [2002] NSWSC 1146 ; (2002) 180 FLR 250. (3) A procedure, proceeding or remedy in respect of the substituted right or liability may be instituted after the commencement under the new corporations legislation (as if that provision applied to the conduct or circumstances that gave rise to the pre-commencement right or liability). Throughout these reasons for decision, reference is made both to the Law as it applied in November 1999 and to the Corporations Act . Except where expressly noted, there is no dispute between the parties that the provisions in the Law which are central to the resolution of the disputed issues correspond to rights or liabilities which are found in provisions in the Corporations Act : see also ss 1370 and 1398 of the Corporations Act. Equity however required a mortgagee exercising that power to act in good faith and not to deal with the property "in such a manner that the interests of the mortgagor are sacrificed". Lindley L.J. in the Court below, says that "it is not right or proper or legal for him either fraudulently or wilfully or recklessly to sacrifice the property of the mortgagor". Well, I think that is all covered really by his exercising the power committed to him in good faith. It is very difficult to define exhaustively all that would be included in the words "good faith", but I think it would be unreasonable to require the mortgagee to do more than exercise his power of sale in that fashion. Of course, if he wilfully and recklessly deals with the property in such a manner that the interests of the mortgagor are sacrificed, I should say that he had not been exercising his power of sale in good faith. ( Kennedy v de Trafford [1897] AC 180 was followed by the High Court in Barns v Queensland National Bank Ltd [1906] HCA 26 ; (1906) 3 CLR 925 and Pendlebury v Colonial Mutual Life Assurance Society Ltd [1912] HCA 9 ; (1912) 13 CLR 676). Mason J in CAGA v Nixon 152 CLR at 502 commented that, after much debate, equity decided that a mortgagee was not a trustee of the power of sale and the power was not a fiduciary power. By that time English cases such as Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] 1 Ch 949 had accepted that the more onerous requirements were referrable to a selling mortgagee. Salmon LJ in that case held that that duty was owed by a mortgagee on "neighbour" principles (see at 966). The High Court did not need to resolve the debate in Forsyth v Blundell [1973] HCA 20 ; 129 CLR 477. Menzies J, however in a dissenting judgment, viewed the statements in Cuckmere Brick Co Ltd [1971] 1 Ch 949 in light of the equitable duty and was of the view that they were not at odds with the rule stated in Kennedy v De Trafford [1897] AC 180 , because to take reasonable precautions to obtain a proper price was "but a part of the duty to act in good faith" (at 481). More recently a Full Court in Gomez v State Bank of New South Wales Ltd [2002] FCA 442 at [20] commented that there is much to be said for this view, one which has more recently been elaborated upon in Medforth v Blake [2000] Ch 86 at 101-102. The Full Court did not however suggest that this approach had been adopted by Australian courts. The differences of approach have been regarded as irreconcilable: CAGA v Nixon 152 CLR at 494 per Gibbs CJ. The question has not been authoritatively ruled upon by the High Court. Australian courts have not applied the more stringent requirements: see Fisher and Lightwood's Law of Mortgage (2005) at [20.21] and the cases there cited; Gomez v State Bank of New South Wales Ltd [2002] FCA 442 at [24], [26]; Jovanovic v Commonwealth Bank of Australia [2004] SASC 61 ; (2004) 87 SASR 570 at 593 at [91]. They have continued to regard a mortgagee's duty as equitable but they do not appear to have accepted that the duty is as extensive as that described by Menzies J in Forsyth v Blundell [1973] HCA 20 ; 129 CLR 477. The reliance placed by the appellant upon Ultimate Property Group Pty Ltd v Lord (2004) 60 NSWLR 646 at 650, as indicative of an approach towards some wider obligation on the part of a mortgagee, is misplaced. In that case Young CJ in Eq held that authority compelled the view that there was no duty on a mortgagee in New South Wales to render a mortgagee liable for common law damages if a good price was not obtained for the mortgaged property. The duty of which his Honour spoke, and which the appellant sought to adopt for the purposes of his argument, that to act "conscionably" (see at [38]), was that of good faith and no more. See also Florgale Uniforms 11 VR at [336]-[349] and the authorities cited. In exercising the power of sale, a mortgagee is liable for the defaults of its agents: see Commercial and General Acceptance Ltd v Nixon [1981] HCA 70 ; (1981) 152 CLR 491 at 508-516 per Aickin J; Goldcel Nominees Pty Ltd (Provisional Liquidator Appointed) v Network Finance Ltd [1983] 2 VR 257 at 262; Nolan v MBF Investments Pty Ltd [2009] VSC 244 at [280] ; Florgale Uniforms 11 VR at [350]. That view is of course consistent with general agency principles: see Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at [69] - [82] ; Legione v Hateley [1983] HCA 11 ; (1983) 152 CLR 406 at 452-454; Combulk Pty Ltd v TNT Management Pty Ltd [1993] FCA 89 ; (1993) 41 FCR 59 at 66-68. As Gibbs CJ said in Commercial and General Acceptance Ltd v Nixon 152 CLR at 498, in the context of a statutory duty to take reasonable care to ensure that the property was sold at market value, that duty is "not discharge[d] ... simply by delegating the duty to another, whether that other be an agent or an independent contractor". Australia and New Zealand Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd [1978] HCA 21 ; (1978) 139 CLR 195 at 202-3 per Jacobs J and at 228 per Aickin J; Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17 ; (1965) 113 CLR 265 at 273-275 and Tse Kwong Lam v Wong Chit Sen [1983] 1 WLR 1349. In each of Latec Investments [1965] HCA 17 ; 113 CLR 265 and Tse Kwong Lam [1983] 1 WLR 1349 , the mortgagee sold to a related company and the mortgagor delayed for a long time before seeking relief in respect of that sale. Each is authority for the proposition that it is for the mortgagee to demonstrate that the sale was proper i.e. in good faith. If the mortgagee fails to do so, ordinarily the mortgagor would be entitled as of right to have the sale set aside. However "setting aside the sale" is not actually what occurs. In fact, the purchaser is treated as having bought the mortgage and the debt and the mortgagor retains its right of redemption of the mortgaged property against the purchaser. But not always. As the High Court said in Fysh v Page 96 CLR at 243, equitable relief may be denied where an applicant asks "the Court ... to rip up a transaction years after it has been completed[,] the lapse of time itself [being] one of the elements bearing upon the equities that exist entitling the [applicant] to relief". In that case, the Court refused to set aside the sale of a farm 12 years later because it meant that the plaintiff would have got back a property worth twice or three times the amount paid. (On the question of laches see also Edmunds v Pickering (No 3) (1999) 75 SASR 407 at 574-78 (refusing to apply laches after a five year delay); Jad International Pty Ltd v International Trucks Australia Ltd (1994) 50 FCR 378 at 387-89 (refusing to apply laches to bar rescission of sale of a truck where the relevant period of delay was one year); and Reader v Fried [2001] VSC 495 at [26] - [29] (refusing to apply laches even after an eight year delay in bringing proceedings)). In other circumstances, the rights of third parties will have intervened so that the result of the purchaser being treated as having bought the mortgage and the debt and the mortgagor retaining its right of redemption of the mortgaged property against the purchaser cannot be achieved. In both those circumstances (changed subject matter and / or the intervention of third party rights), the Privy Council suggests that the mortgagor will have a right to damages: Tse Kwong Lam [1983] 1 WLR 1349. In ELG Tyler, PW Young and C Croft, Fisher & Lightwood's Law of Mortgage (2nd Australian ed, 2005) at [19.34], the learned authors suggest that if the mortgagee in possession has sold the property, and there is an inquiry into the propriety of the sale or the adequacy of the price, the mortgagee in possession will be liable to account not only for the proceeds of sale received by him but also for those proceeds which he might have received "without wilful default": Mayer v Murray (1878) 8 Ch D 424 ; Farrar v Farrars Ltd (1888) 40 Ch D 395 ; Commonwealth Bank of Australia v Hadfield [2001] NSWCA 440 ; (2001) 53 NSWLR 614 ; and Ultimate Property Group Pty Ltd v Lord (2004) 60 NSWLR 646. The mortgagee in possession's liability to account in the manner described (see [25]) has been held to extend in favour of all those who are interested in the equity of redemption (including an assignee) whether or not the mortgagee has assigned the mortgage: ELG Tyler, PW Young and C Croft, Fisher & Lightwood's Law of Mortgage (2nd Australian ed, 2005) at [19.34] citing Hinde v Blake (1841) 11 LJ Ch 26 and Hall v Heward (1886) 32 Ch D 430. (Emphasis added). (Emphasis added). Mijac submitted that there had been a failure to satisfy the conditions in ss 103(a) -(c) of the PLA and that "where the mortgagee has not complied with s 103 , the power of sale will have not been (sic) properly exercised and may provide the basis for setting aside the contract". I reject that contention. In the present case, these provisions are not engaged. Where an express power of sale is granted under a mortgagee document, as was provided by cl 5.1 of the Charge (see [145] below), it is unnecessary for a mortgagee to rely upon the power provided by the PLA: see Emerald Securities Pty Ltd v Tee Zed Enterprises Pty Ltd (1981) 28 SASR 214 at 220; ELG Tyler, PW Young and C Croft, Fisher & Lightwood's Law of Mortgage (2nd Australian ed, 2005) at [20.5] and [20.11]. In other words, the power of sale under the PLA does not replace the power of sale under the mortgage document --- it provides an alternate source of such a power and regulates how it is used. In the present case, Mijac's contention that there has been a failure to comply with s 103 of the PLA is rejected. Cosmick's power of sale was not exercised under s 101 of the PLA --- it was exercised as an express power of sale under the mortgage. As noted earlier, the right to equitable relief in form of an accounting is capable of assignment: see [26]. However, as Gyles J stated in Tosich v Tasman Investment Management Ltd [2008] FCA 377 ; (2008) 250 ALR 274 at 284, "a bare right to litigate requires special consideration". To that group of actions or rights requiring special consideration I would add statutory causes of action. For example, Davies J held in Park v Allied Mortgage Corporation Ltd [1993] ATPR (Digest) 46-105 at 53,469 that "a right to claim damages under ss 82 and 87 of the Trade Practices Act 1974 (Cth) ("TPA") is, in general, a bare right of action which cannot be assigned". This was followed in Allstate Life Insurance Co v ANZ Banking Group Ltd [1994] FCA 814 and upheld by Rares J in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 236 ALR 720 at 733 and cf Beatty v Brashs Pty Ltd [1998] 2 VR 201 at 215. The reason that statutory causes of action have been held not to be assignable is attributable to the distinction between personal causes of action and an impersonal right in the nature of a proprietary right. As Rares J stated in Boston Commercial Services 236 ALR at 733, "[o]nly a person who suffers loss or damage by the conduct done in contravention of a relevant provision of the [TPA] can recover under s 82 ". This distinction is well established: see Poulton v Commonwealth (1952) 89 CLR 540 at 571 per Fullagar J (and on appeal at 602 per Williams, Webb and Kitto JJ); Trendtex [1982] AC at 702 per Lord Roskill; TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151 ; (2007) 158 FCR 444 at 465 per Finkelstein J. Thus, even if s 420A of the Law does create a separate cause of action (which view I reject), the purported deed of assignment by LLMDC in favour of Mijac is ineffectual if it seeks to assign what is asserted to be a personal right under s 420A. Section 420A imposes a duty to take all reasonable care on the controller of a property of a corporation in exercising a power of sale. A right to sue for the breach of that duty would be a personal right. It is owed by the controller to the company, creditor and shareholders. The duty the controller owes is not property and cannot be assigned as a chose in action. That analysis applies equally to allegations of breaches of s 232 of the Corporations Act by a controller. Finally, it is unclear whether the Trendtex [1982] AC 679 exception, where an assignee may show they have a genuine and substantial or genuine commercial interest in enforcement of another's claim and to that extent takes an assignment, applies in Australia: see TS & B Retail Systems 158 FCR at 465 per Finkelstein J; Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2004] NSWSC 1041 ; (2004) 220 ALR 267 at 281-2 per McDougall J. However, the exception is irrelevant here as Trendtex [1982] AC 679 concerns the assignment of rights which affect the applicant's commercial interest or his interest in property. That is not this case. II. The principal cast members, roughly in order of appearance, include: Alan Jorgensen ("Jorgensen"), a man with a history of failed business enterprises who at various times was banned by ASIC from being involved in the management of a corporation or bankrupt or both. He was well known at the race track. He attended Court each day, controlled the prosecution of Mijac's application, but did not give evidence; Janine Brodie, Jorgensen's fiancé and de facto wife from 1990 to 2001 who lived with him for most of those years and who unquestionably acted at his direction. She describes her current occupation as "secretary". Janine Brodie gave evidence. She presented as submissive to Jorgensen with little real understanding of what she had got herself into except that she understood that if Mijac was successful in these proceedings, she would benefit financially; Paul Brodie, the brother of Janine Brodie and a bankrupt; Barbara Craven ("Craven"), a director of LLMDC at first with Paul Brodie among others, and subsequently, the sole director and secretary of LLMDC. Her willingness to be involved in these events at the behest of Jorgensen was not explained; Alexander (known as Sandy) McGregor ("McGregor"), a businessman who had a background as a chartered accountant specialising in insolvency. McGregor knew Jorgensen from the race track as "a fellow punter". At the request of Jorgensen, one of McGregor's companies (Callawadda Equities Pty Ltd (ACN 082 952 814) ("Callawadda")) loaned funds to LLMDC, secured by a charge over the assets and undertaking of LLMDC; and Graham, the First Respondent, who also knew Jorgensen. He was the sole director and shareholder of Cosmick (see [2] above) which advanced money to LLMDC at the request of Jorgensen but did so on the basis that Cosmick took priority ahead of Callawadda. In 1957, Consolidated Diecasters Pty Ltd (ACN 000 221 081) ("Consolidated Diecasters") was incorporated. In June 1970, T&P Pty Ltd (ACN 004 832 311) ("T&P") was incorporated. Both were part of the Townsend & Parker Group. John Cumming ("Cumming") commenced as the general manager of the Townsend & Parker Group in 1982 and was appointed as Principal Executive Officer of T&P on 23 April 1985. On 27 October 1989, Jorgensen took over T&P and was appointed a director of T&P. That resulted in Cumming ceasing to be the Principal Executive Officer and leaving the business. Jorgensen was appointed a director of Consolidated Diecasters on 25 May 1991. Things did not go well for Jorgensen. As the following summary of the facts demonstrates, that is not uncommon for Jorgensen. The following list of problems for Jorgensen or those associated with him is by no means complete. On 22 January 1992, a receiver and manager was appointed to T&P and Consolidated Diecasters as well as three other entities not in the Townsend & Parker Group but connected to Jorgensen --- Pelcar Pty Ltd (ACN 006 372 676), Phoneflasher.com Pty Ltd (ACN 006 104 534) and Teksid Pty Ltd (ACN 004 359 979). Less than three months later, on 8 April 1992, another Jorgensen entity, ESS Goods Pty Ltd (ACN 007 961 300), was wound up in insolvency. On 3 February 1993, 12 months after the appointment of the receiver and manager, T&P was wound up in insolvency with a deficiency of $11,497,685 and Consolidated Diecasters was wound up in insolvency with a deficiency of $9,918,333. On 18 May 1995, Riton Holdings Pty Ltd (ACN 069 470 891) ("Riton") was incorporated. The directors were Paul Brodie and Janine Brodie. Janine Brodie was appointed secretary. On 21 July 1995, this entity changed its name to "Townsend and Parker Pty Ltd". On 12 October 1995, Jorgensen was appointed a director of Riton. On 10 April 1996, Jorgensen ceased to be a director. He was appointed secretary on 1 July 1996 but ceased to be so on 21 November 1996. On 6 July 1995, Townsend & Parker Holdings Pty Ltd (ACN 070 242 189) was incorporated. Again, Janine Brodie and her brother Paul were appointed as two of the directors. This entity subsequently changed its name to Lawrenson Metal Casting Pty Ltd ("LMC"). On 13 November 1995, Jorgensen was appointed a director of LMC but ceased to be so less than one month later. In many documents, LMC is recorded as being the trustee of the Townsend & Parker Unit Trust. On 21 March 1996, LMC acquired the Coburg Premises. This fact is important. It will feature later in these reasons for decision. One reason why Jorgensen had ceased to be a director or secretary of these entities was due to the fact that, on 30 August 1996, Jorgensen entered into a composition with his creditors under Pt X of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act "). To complete the 1996 year, Lotusdale Pty Ltd (ACN 068 893 550), another Jorgensen entity, was wound up in insolvency on 18 December 1996. The start to 1997 did not improve. On 29 January 1997, Machland Pty Ltd (ACN 071 758 293), another Jorgensen entity, was wound up in insolvency. On 27 November 1997, Dynacast (Aust) Pty Ltd (ACN 080 883 423) was incorporated ("Dynacast (Aust)"). On 3 March 1998, LLMDC was incorporated. Paul Brodie was appointed one of the directors. On 18 March 1998, an administrator was appointed to Riton. On 28 May 1998, the creditors of Riton resolved to wind the company up in insolvency. The creditors included the Australian Taxation Office ("ATO") ($668,148.94), FAI Workers' Compensation ($179,810.67) and the State Revenue Office ($206,077.31). On 18 March 1998, LLMC Ltd (ACN 081 982 354) ("LLMC") was incorporated with Paul Brodie as one of the directors. On 30 September 1998, LMC changed its name from Townsend & Parker Pty Ltd to Light Metal Casting Pty Ltd and on 20 October 1998, changed its name again to Lawrenson Metal Casting Pty Ltd. On 24 November 1998, Jorgensen was banned by ASIC for a period of three years from being a director or promoter of or being concerned in the management of a company. That does not appear to have hindered him. On 29 December 1998, Janine Brodie was appointed secretary of LMC. On 31 December 1998, LMC and LLMDC executed an agreement entitled "Ratification and Amendment of Sale of Business and Assets Agreement". The recitals to that agreement recorded that LMC (as Vendor) had sold "the Assets and the Business" to LLMDC under an earlier agreement dated 17 April 1998, that settlement under that earlier agreement had not occurred and that the parties had agreed to enter into this agreement to amend various matters in the earlier agreement but otherwise ratify and confirm the terms of the earlier agreement. $400,000 of the purchase price was satisfied by the issue of shares in LLMDC to LMC. The agreement was conditional upon execution by LMC and LLMDC of an agreement under which LLMDC had the option of acquiring all of LMC's interest in the Coburg Premises and the entry by the parties into a lease of the Coburg Premises: cll 2.2 and 8. On the same day, Craven was appointed a director of LLMDC. The agreement was executed on behalf of LMC by Paul Brodie and Janine Brodie and on behalf of LLMDC by Craven and Paul Brodie. On its face, it was not an arm's length dealing. The invoicing for the business however continued to be performed by LMC. This "arrangement" was not formalised. On 26 February 1999, Paul Brodie ceased to be a director of LLMDC. Despite the ASIC ban, Jorgensen was appointed a director and secretary of Dynacast (Aust) on 18 March 1999. He ceased to be a director on 31 March 1999. On 1 June 1999, Janine Brodie was appointed a director of Dynacast (Aust). On 20 April 1999, an administrator was appointed to LLMC. On 22 April 1999, LLMC was wound up in insolvency with creditors of $943,349. The liquidator's report described the company as "inadequately capitalised and poorly managed". On 12 May 1999, Paul Brodie was banned by ASIC under s 600(3) of the Law for a period of two years and two months from being a director or promoter of or being concerned in the management of a company. He ceased to be a director of LMC, Riton and LLMC. During the course of May or June 1999 (and it matters not which month), Jorgensen approached McGregor and told him he needed about $400,000 urgently to settle the purchase of some die casting equipment in Sydney. On 11 June 1998, Callawadda was incorporated. Using that entity, a syndicate of lenders advanced approximately $120,000. The loan was described by McGregor as "on the basis of a substantial establishment fee, a high interest rate and was secured by a debenture". As with many facts and matters in this case, the evidence about it was devoid of detail. According to McGregor, the loan was repaid and yielded a profit to Callawadda. One or two months later, Jorgensen contacted McGregor and requested a further loan as he urgently needed funds for his die casting business at the Coburg Premises. The "business" was conducted by LLMDC: see [53] and [55] above. At that point in time, the ASIC extract for LLMDC records Craven as the sole director and a secretary. Janine Brodie was also a secretary until 6 July 1999 having been replaced by a "Jmieale Jorgensen" (spelt various ways throughout the documents) on the same date. On 8 July 1999, LLMDC executed a fixed and floating charge over its assets and undertaking in favour of Callawadda. The prospective liability was $100,000. The Deed of Charge was executed by Craven and what appears to be the signature of a person with the surname "Jorgensen". In addition to the Charge, McGregor's evidence was that there was a Loan Deed between LLMDC and Callawadda which provided for interest at a rate of about 32.5% per annum. He was unable to produce the Loan Deed. In late July 1999, LLMDC faced serious challenges. On 23 July 1999, Simon Wallace-Smith ("Wallace-Smith") was appointed as interim receiver and manager of LLMDC and Dynacast (Aust) upon the application of ASIC. On 29 July, Gregory Andrews was appointed administrator of Dynacast (Aust). Over the next three weeks, Wallace-Smith incurred fees of about $130,000. On 26 July 1999, Gregory Andrews was appointed administrator of LMC. (A receiver and manager had been appointed on 2 July 1999). As noted earlier, LMC was the registered proprietor of the Coburg Premises. Two days later, on 28 July 1999, the receiver and manager of LMC served a Notice of Forfeiture on LLMDC in relation to the lease from LMC of the Coburg Premises: see [54] above. At this point in time, the sole director of LMC was Jmieale Jorgensen who had been appointed on 4 July 1999. She remained the sole director until 3 September 1999 when she was replaced by Trudy Jorgensen. On 8 August 1999, Craven borrowed $50,000 against her residential home in Bundoora to lend funds to LLMDC to meet a current liability of $49,000 to the ATO. On 20 August 1999, LMC was wound up in insolvency with a deficiency in excess of $2.5 million. Four days later, on 24 August 1999, Dynacast (Aust) was wound up in insolvency with a deficiency of $406,000. Six days later, on 30 August 1999, Jorgensen filed a composition under the Bankruptcy Act . On 1 September 1999, Paul Brodie was made bankrupt on petition by the ATO. At this point in time, the Coburg Premises, on which LLMDC conducted its business, were still in limbo: see [65] above. In early September 1999, Jorgensen asked McGregor for $250,000 which he said he urgently needed for a settlement with ASIC to facilitate the removal of the receiver and manager of LLMDC. McGregor refused to advance the funds. Jorgensen then approached Graham for funds. Graham agreed to advance $250,000 to LLMDC for six weeks on the following terms and conditions: if the loan was not repaid within four weeks, there would be a further penalty of $50,000; if the loan was not repaid within six weeks, there would be a further penalty of 30% interest per annum payable on all outstanding monies; and a first ranking Deed of Charge over LLMDC. Shortly after McGregor's meeting with Jorgensen (see [68]), McGregor was asked to, and did, attend a meeting with Henry Kalus ("Kalus") at Kalus Kenny. Kalus acted for Graham. Kalus told McGregor that Graham had agreed to lend LLMDC $250,000 on the security of a fixed and floating charge over the assets and undertaking of LLMDC, the funds were to be advanced by an entity related to Graham, being Cosmick, and that in addition to the charge, Graham wanted Cosmick to have priority ahead of Callawadda not only for the loan of $250,000 but also an establishment fee of $110,000, interest and costs. McGregor agreed on behalf of Callawadda to execute a Deed of Priority in favour of Cosmick in respect of the sum of $300,000. On 10 September 1999, a number of documents were executed. First, ASIC and LLMDC executed a Deed of Settlement. Craven was the sole director of LLMDC. In general terms, ASIC agreed to the discharge of the orders and termination of the appointment of Wallace-Smith as the receiver and manager to LLMDC subject to a number of conditions including: the appointment of an administrator to LLMDC "to pursue the realisation of the assets of [LLMDC] in an orderly fashion and without being placed in liquidation"; and Craven entering to an agreement with Cosmick for the advance of $250,000 to LLMDC for its use in prescribed ways. Other deeds and agreements dated 10 September 1999 were also executed. One bundle concerned the advance of $250,000 by Cosmick to LLMDC evidenced and secured by a Loan Agreement, a Debenture (defined as the "Charge" (see [2] above) and a Guarantee and Indemnity all dated 10 September 1999. The guarantors were Craven, Jorgensen and Jmieale Jorgensen. The last document was a Deed of Priority between Callawadda, Cosmick and LLMDC. Kalus recalled meeting Jorgensen and a woman and telling Jorgensen that he was putting his business at risk and that Jorgensen expressed confidence that the loan would be repaid. On 10 September 1999, the appointment of Wallace-Smith to LLMDC was discharged and Anthony Cant ("Cant") was appointed administrator of LLMDC. At the same time, however, the receiver and manager of LMC commenced proceedings in the Supreme Court of Victoria against LLMDC for possession of the Coburg Premises: see [65] above. First thing in the morning on 30 September 1999, LLMDC's solicitor, Mr Robin Settle ("Settle") telephoned Kalus and asked whether Cosmick would be voting in favour of a proposed Deed of Company Arrangement ("DOCA"). Kalus responded by saying that he did not have instructions and he was interested to know about the progress of the refinancing and the likelihood of the repayment of the Cosmick loan by the due date. That same day, Jorgensen telephoned Kalus and told Kalus that Cosmick would be repaid $200,000 from factoring debts and $100,000 from another source. 30 September 1999 was also the last day for LLMDC to exercise the option to renew the lease for a further term of one year. LLMDC did not exercise that option. As a result, LMC was the registered proprietor of land with a tenant with a lease that was due to expire on 31 December 1999. The status of the Property Option under the Ratification and Amendment of Sale of Business and Assets Agreement (see [54] above) was uncertain. It could be exercised for up to two years from 31 December 1998. On 1 October 1999, Kalus was sent a copy of a letter from ASIC to Cant dated 29 September 1999 concerning the administration of LLMDC. Amongst other things, ASIC suggested that it was "not appropriate [for Cant] to publish and proceed with the draft [Report to Creditors] in its current form". ASIC specifically referred to a number of inconsistencies in the material on which Cant had relied in preparing the draft report. The issues identified by ASIC included: LLMDC had been highly profitable in the past which suggested that the accounting material relied upon by Cant was wholly or substantially unreliable and required thorough investigation; the recommendation that LLMDC enter into a DOCA was on the assumption that LLMDC was a going concern and that it would continue to operate from the Coburg Premises when, in fact: the LLMDC Draft 1999 Annual Report recorded unpaid capital of $890,000. ASIC noted that the draft report referred to the fact that Craven had given evidence in the Supreme Court of Victoria that she held 760,000 shares paid to one cent and that the "majority of the balance of shares paid to one cent are owned by parties whom [Cant] indicates he is not able to identify". However, ASIC noted that under the terms of the draft DOCA, Craven would avoid the call on her unpaid capital and yet at the same time would inherit a profitable corporation. A copy of the Administrator's Report and the draft DOCA sent to creditors was attached to an affidavit filed by Wallace-Smith seeking assessment of his remuneration: see [87] below. On 5 October 1999 (and despite ASIC's concerns), LLMDC executed a DOCA. On the same day, Cant exercised a lien over $300,000 of LLMDC's debtors. At the same time, without the knowledge or consent of Cosmick or Callawadda (each with the benefit of a Charge over LLMDC's assets and undertaking), there was a purported contract of sale of LLMDC's assets to Dynacast (Int) Pty Ltd (ACN 061 234 642) ("Dynacast (Int)") for $650,000. This was another of the issues raised by ASIC in its 29 September 1999 letter: see [75] above. On 7 October 1999, LLMDC's solicitor, Mr Settle, telephoned Kalus and told him that Cant had retained all LLMDC's debts and that "his client" wanted to pressure Cant into releasing the debtors so that the debts could be factored. During this conversation, reference was also made to a refinance with Colonial, the detail of which would be explained to Kalus by Jorgensen or Craven. That did not occur and, on 11 October 1999, LLMDC failed to repay $310,000 to Cosmick. In accordance with the Loan Agreement terms (see [69] above), the amount owing by LLMDC to Cosmick increased to $360,000. On the same day, a number of significant events occurred: Kalus sent a letter to LLMDC (marked to the attention of Craven) advising her that the amount of $360,000 was now due on 29 October 1999. Kalus' letter reiterated some of the issues raised by ASIC including the alleged non disclosure of unpaid capital on the shares in LLMDC offered as security to Cosmick and the tenuous rights of occupation of LLMDC's business at the Coburg Premises. In the circumstances, Kalus requested to be provided with weekly financial information. Payment was not made on that date. The consequences of [LLMDC's] failure to make the repayment due by 29 October 1999 are likely to be disastrous for all concerned including all unsecured creditors. I understand that you propose retaining control of all preadministration and administration debtors in the amount of some $511,000.00. We were advised by the Director, Barbara Craven that [LLMDC] hopes to raise an advance on available debtors in order to assist in repayment of monies owing to Cosmick. We would like to explore with you the possibility of taking control of certain debtors on behalf of our client after retention by you of those that you consider necessary to discharge your responsibilities. Our client's rights in relation to its security documentation are obviously reserved and as each day passes my client becomes increasingly inclined to exercise those rights. Between Melb & Mauritius contacts, I haven't been successful, but am confident that it won't be far away. A letter was sent to [Kalus] last week, which I presume you got a copy of ... I tried to explain that it would help our refinancing very much, if [Kalus] is able to negotiate with the ex administrator (Tony Cant) or his office, about COSMICK taking control of the $500,000 of Debtors we now have, less an allowance for the Administrator to cover his liabilities (as per the letter). This will then allow you (Cosmick) to hand back to our COMPANY, say $300,000 of debtors (under your entitlement of your debebture charge) to FACTOR and raise say 80% of ie $260,000? I know this sounds messy but I believe it's (sic) quite straight forward. Why doesn't [Kalus] call Cant's office & feel them out? ... I note [Kalus'] comment about the tenancy of Coburg. We have a contract to purchase it from the Hong Kong Bank for $650,000. We also have a lease til 31/12/99, with 2 x 2 year options! Accordingly, there is no worry about our right to occupy the premises. The contents of this handwritten facsimile indicate the problems faced and caused by Jorgensen. To name just a few: Jorgensen was managing a company when he was subject to an ASIC ban. Jorgensen asserted factual and legal positions which were erroneous --- LLMDC did not have an ongoing right to occupy the Coburg Premises: see [43], [54], [65], [67], [73] and [74] above. Jorgensen (or some entity or person associated with him) had contracted to buy the Coburg Premises. This last fact (whether or not accurate at the time) is important. Its importance stems from the nature of the equipment in the die casting business and the manner of its attachment to the floor of the premises. That requires some explanation. A list of equipment sold by LMC to LLMDC was attached as Annexure A to the Ratification and Amendment of Sale of Business and Assets Agreement: see [53] above. At least some of that equipment was, or ran the risk of being considered, a fixture which an owner of the Coburg Premises would inherit if LLMDC was placed into liquidation or simply no longer occupied the Coburg Premises. As will become evident, that issue would be (and subsequently was) of serious concern to the secured lenders --- Cosmick and Callawadda. Moreover, the practical outcome of Jorgensen (or some entity or person associated with him) buying the Coburg Premises was possibly that he (or some entity or person associated with him) would end up with the die casting machines which constituted fixtures, being machines which were critical to operate the die casting business, at nil cost. Jorgensen contacted McGregor again in about mid October and asked McGregor to lend him funds to refinance the Cosmick debt. McGregor told Jorgensen he would wish to inspect LLMDC's business. McGregor's evidence was that he spent about a week or two at the Coburg Premises and concluded that the business was in a very poor state. Although McGregor was cross-examined on this subject, that cross-examination did not challenge McGregor's sworn evidence that in his view, amongst other problems, the plant and equipment was run down and out of date, a proportion of the equipment did not work, the asbestos roof of the Coburg Premises was in disrepair and there was a lack of books and records. That is not surprising. A valuation of LLMDC's plant and equipment by Dominion Valuers & Auctioneers dated 11 November 1999 came to a not dissimilar conclusion: see [99] and [102] below. Regardless of the truth about the condition of LLMDC's business, McGregor obtained Graham's contact details from Kalus and spoke to Graham directly for the first time. Prior to this, he did not know and had not spoken to Graham. McGregor telephoned Graham and told Graham he needed to go and look at LLMDC's business. McGregor met Graham at the Coburg Premises. This inspection took place before 13 October 1999 (a fact recorded in the facsimile at [84] below). McGregor told Graham that if LLMDC defaulted on the Cosmick loan, as seemed inevitable, then Cosmick would need to go into possession and that nothing could be ruled in or out including that they might need to buy LLMDC's business to protect their investment in the LLMDC. On 13 October 1999, Jorgensen sent another handwritten facsimile from Mauritius to Kalus which referred to Graham's visit to the Coburg Premises and asked him to consider "picking the eyes" out of LLMDC's debtors and claiming those debtors under Cosmick's security. At about the same time that McGregor and Graham inspected the Coburg Premises, McGregor was asked to attend a meeting with ASIC. During that meeting, ASIC told McGregor that ASIC was investigating Jorgensen's companies, Jorgensen personally was under investigation for dishonesty and fraud offences and that many companies associated with Jorgensen had been liquidated and millions of dollars had been lost. As a result of his time at the Coburg Premises and attending the meeting with ASIC, McGregor formed the view that the LLMDC business was in a poor state. McGregor became concerned that LLMDC would lose the bulk of its plant and equipment and the secured lenders would lose the value of their security. McGregor telephoned LMC's receiver and manager, Malcolm Orders ("Orders"), who confirmed that he had an offer on the table from Jorgensen to buy the Coburg Premises which he might accept because it was above the bank's valuation. Orders told McGregor that if McGregor wanted to make an offer he had better be quick because he was selling it, he "could not care less" about LLMDC's business, he had been instructed to sell the property and that under no circumstances would he give any warranties regarding occupation to a purchaser of LLMDC's assets. McGregor decided that either he and / or Graham needed to buy the Coburg Premises before Jorgensen. McGregor contacted Graham and told him his views. On 15 October 1999, Kalus was told by Cant's solicitors that Cant would not release the debtors. On the same day, Cosmick was served with a copy of a summons filed by Wallace-Smith seeking assessment of his remuneration. Ordinarily that event would go unannounced but the documents exhibited to the affidavit in support included the First Report by Wallace-Smith of 30 July 1999 where he concluded that he had no option but to permanently close LLMDC's business and noted that an amount of $480,177 was still owing to LMC under the Ratification and Amendment of Sale of Business and Assets Agreement (see [54] above) but that the debt was probably $350,000 higher because Orders had told him that there was no evidence that the original purchase price was received by LMC. A copy of the Administrator's Report and the DOCA was also attached to the affidavit of Wallace-Smith. On 29 October 1999, a Notice of Demand was issued by Cosmick on LLMDC for $324,744.90 comprising $250,000 principal, $110,000 establishment fee and $12,744.90 interest. The facsimile transmission sheet recorded that the Notice of Demand was sent to Craven at LLMDC at 17:31pm in the afternoon. 29 October 1999 was the Friday before the Melbourne Cup Long Weekend. The "race that stops the nation" is the first Tuesday in November. The Monday preceding the Tuesday is often taken as a holiday. Not long afterwards, McGregor learnt that LLMDC had failed to repay the Cosmick loan. At about this time, McGregor offered Orders $625,000 to purchase the Coburg Premises and paid a deposit of $62,500. A receipt for the deposit was issued dated 1 November 1999. Cosmick took possession as mortgagee. Offers for purchase of the above will close at 5.00pm on Friday 12 th November 1999. All offers must be accompanied by a deposit of 10% payable by bank cheque. The advertisement was published in the Australian Financial Review on Friday 5 and Monday 8 November 1999. Mijac attacked the timing and content of the advertisement including that there was no description of the assets, no telephone number, no address, no area code for the facsimile number and that offers were required to be lodged no more than a week after the first advertisement was published. Kalus' evidence was that he would not have made up the wording. That was true. He did not. McGregor's evidence was that in response to a question from Kalus regarding the advertising of the property, he "cut an advertisement out of the Financial Review that looked appropriate, and said, 'Henry, model it on this and advertise. '" Not only was the advertisement published, it was seen. It was seen by Craven and by Cumming. In response to the advertisement, on 8 November 1999 Kalus received facsimiles from five separate parties expressing interest and, on 9 November 1999, he received two further facsimiles and four telephone calls from other parties expressing interest. On 5 November 1999, Kalus sent a letter by facsimile to Craven at LLMDC confirming that Cosmick was in possession of all the assets and undertaking of LLMDC and requiring a separate bank account to be established. On the morning of 10 November 1999, Kalus sent a facsimile dated 9 November 1999 enclosing the list of plant and equipment to 10 parties who had expressed interest. The cover sheet stated that if they wished to take the matter further, they should register their desire to inspect the plant and equipment and they would then be advised of available inspection times. Our client is of the opinion that the form of the advertisement is something of a "token" attempt to discharge the legal obligation your client has to achieve the best price that is reasonably obtainable having regard to the circumstances. In this regard, we are instructed that brokers approached by our client have indicated a potential going concern sale price of in excess of $1 million. In any event, we are also instructed that our client has executed a contract to sell the business to a company called Dynacast International Pty Ltd, a copy of which we have requested and will forward to you shortly. We are further instructed that our client is not in breach of that contract. For your information, we are instructed that the first payment due to the Deed Administrator under the [DOCA] will be made tomorrow. We hereby request your client's confirmation that it will not attempt to sell our client's assets without its consent and the formal release by both parties of their respective obligations to each other under the contract of sale referred to above. If such confirmation is not received by 5.00 p.m. today, our client intends to seek an injunction retaining such a sale without further notice to you. There are a number of points to be made about the letter from Lennon Settle. Someone associated with LLMDC had obviously read the advertisement. The alleged contract of sale to "Dynacast International Pty Ltd" was not in the possession of the company's own solicitors. On the assumption that "Dynacast International Pty Ltd" was in fact Dynacast Int (see [77] above), the directors on 9 November 1999 (according to ASIC records) were Craven (appointed 5 August 1999), Patrice Kervicie (appointed 5 October 1999) and Jmieale Jorgensen (resigned 10 November 1999). Jorgensen had resigned as a director on 1 June 1999. (The ASIC extract records Patrice Kervicie as having been born in Mauritius and the company ultimately subject to external administration). Kalus responded by facsimile the same day. He denied the allegations concerning the advertisement and asked that a certified copy of the alleged contract of sale be forwarded to him so that he could obtain instructions. During the afternoon of 10 November 1999, Kalus sent further facsimiles enclosing the list of plant and equipment to other parties who had expressed interest. Again, the cover sheet stated that if any party wished to take the matter further, they should register their desire to inspect the plant and equipment and they would then be advised of available inspection times. Over the course of 9 and 10 November 1999, an equipment valuer, Graham Roberts ("Roberts"), of Dominion Valuers & Auctioneers, inspected the Coburg Premises. Roberts observed that the plant was "very, very poor", that the plant was not busy, there were no depreciation schedules or other records relating to the plant available and that two thirds of the die casting machines had been pulled out of production and parked in a shed. Robin Settle is arranging a meeting with him & his city solicitor & ... Craven in AM, & hopefully yourself. It is the intention to transfer Cosmic's (sic) securities to Norman Brodie / his company, and settle Friday aro' (sic) or Monday Am, if [Graham] is unavailable til then. Norman will provide evidence today that he in fact, has the cash at bank (& further confirmed by his solicitor, I suspect). As I believe the meeting between all parties will lead to the quickest settlement, it would appreciated if you could liase (sic) with ... [Settle] on this matter. Despite this facsimile from Jorgensen, Kalus continued with the recovery process and, on 11 November 1999, sent a facsimile to four parties that had expressed interest advising them that the plant and equipment could be inspected at the Coburg Premises that day between 6:00 pm and 7:30 pm, that McGregor would be available to meet them to discuss any enquiries they had and that the dead line for offers had been extended to 4:00 pm on 16 November 1999. McGregor did attend the Coburg Premises. The only other party to attend was Gary Tyler ("Tyler"), an accountant, on behalf of Jorgensen. During the course of the day, Dominion Valuers & Auctioneers provided Kalus with a valuation of LLMDC's plant and equipment at $298,000 based on installed existing usage and $144,915 based for onsite auction realisation. Consistent with usual valuation practice, the equipment was listed. The report stated, in part, that the "industry [was] to some degree in decline [and] without significant sales evidence being available [they] had to err on the conservative in [their] estimate of values". In the preparation of the valuation, Dominion did not attempt to "pre-empt a potential purchaser with a specialist interest in the plant" and assumed that the assets were, or were capable of, being utilised as assets of a profitable undertaking. Also during the course of 11 November 1999, Kalus' file records a telephone call from a Mark Butler at Cash Resources about factoring LLMDC's debts. Butler told Kalus that a factoring application may require real estate security and that they were a "long way yet" from lending. Although by this time it might be said that Jorgensen had shifted his focus from factoring to a loan from Norman Brodie (see [100] above]), it was apparent that Jorgensen's previous idea of release of trade debtors for factoring was not well advanced and not a viable prospect, at least in the short term. The shift in focus by Jorgensen to Norman Brodie was confirmed by Craven and Norman Brodie. Both gave evidence. Craven gave evidence that during the morning on 11 November 1999, she sent a facsimile to Sue Brodie which set out the previous year's financial information for LLMDC. Four pages were tendered. The document on its face records that it in fact comprised three pages. I find that the second page of the exhibit did not comprise part of the document Craven sent by facsimile to Sue Brodie. It bears a different time in its header. A number of points should be made about the contents of the facsimile of 11 November 1999. It described the information as "the previous years financials". LLMDC had only been running the business since January, less than 12 months. In addition, at least the following additional facts and matters were not recorded: the debts to the secured creditors; the previous appointment of the receiver and manager; the previous appointment of an administrator as well as the lien claimed by the administrator, Cant, over the debtors; the DOCA; that one of the mortgagees was in possession. We have been in touch with ... Graham yesterday and was informed that he would be in Tasmania until Friday evening. If this is the case, could you please advise when settlement can occur, given that the settlement will require a transfer of Cosmick's securities to the new lender. To avoid any unnecessary delays, could you also please provide details of the payout figure together with information relating to monies Cosmick may have collected from our debtors, or ... Cant and also monies paid on our Company's behalf. Please confirm your client's view on this, together with the status of negotiations, as we also have had several interested parties contact us for information, including our competitors. That same day, 12 November 1999, Kalus telephoned Settle and left a message for him to return his call. Kalus subsequently spoke to Settle. Kalus' file note records that Kalus was told an agreement (presumably the Sale of Business Agreement with Dynacast (Int)) was being couriered to him. The note recorded Kalus as responding saying that when Settle had the money, Settle should let Kalus know and Kalus would get instructions. The note further recorded that Settle agreed that was appropriate and that he would call Kalus when he had the money, that Kalus did not know the pay out figure and would have to get instructions, but that in the meantime Kalus was pushing on with the recovery process that had been commenced. The note finally recorded Settle stating that Kalus' client was mad if they did not push on with the recovery process. Kalus' evidence was that he had no independent recollection of the conversations recorded in the file notes on the file but explained his practice of recording file notes and the contemporaneous nature of them. I find that the conversation not only took place but did so substantively in the terms recorded in the file note. That conversation is important. LLMDC and its solicitors were on notice that the recovery process was continuing, a process which LLMDC's solicitor said was a course they were mad not to adopt. Secondly, and unsurprisingly given the unfulfilled assertions of LLMDC, Jorgensen and Craven over the previous months, the solicitors agreed that Kalus would not seek instructions in the absence of concrete evidence that Settle (i.e. LLMDC / Jorgensen) had the necessary money to pay out LLMDC's debts. Our client proposes that in return for the necessary payment your client assigns its securities to the new lender. We request that you get your client's instructions in relation to this and provide us with an all inclusive payout figure as soon as possible. Kalus' evidence was that he would have passed the letter on to his client and sought instructions but, as with other aspects of this matter, he simply could not recall doing so. What is certain is that Kalus advised at least 12 parties that had expressed interest in LLMDC's assets that the deadline for offers was extended to 4:00 pm on 16 November 1999. On Monday, 15 November 1999, Kalus received a notice from ASIC dated that day, pursuant to s 33 of the Australian Securities and Investments Commission Act 1989 (Cth), requiring him to produce at 1:00 pm at his offices to a named ASIC officer a "copy of the sale of business agreement between [LLMDC] ... Dynacast International Pty Ltd ...". A handwritten note on the coversheet indicates that someone would collect the agreement that afternoon. On 16 November 1999, Cant as the DOCA Administrator of LLMDC issued a Notice to Creditors calling a meeting of creditors because the first cheque for $20,000 required to be paid under the DOCA was dishonoured. Cant recommended the DOCA be terminated and LLMDC wound up. Just before lunch on 16 November 1999, Kalus sent a facsimile to a number of parties who had expressed interest in LLMDC's assets confirming that the deadline for offers had been extended to 4:00 pm that day and inviting parties to advise his office if they required any further information in relation to the assets being sold. Kalus received three "offers" for LLMDC's assets: McGregor offered $400,000 for LLMDC's assets comprising $300,000 in cash, assumption of employee liabilities of $100,000 and stock valued up to $25,000. A cheque for $30,000 was enclosed by way of deposit; Equity Die Casters offered $250,000 less employee entitlements plus stock at valuation. The offer was subject to finance; Tyler on behalf of Jorgensen did not make a formal offer. Instead he made an "introductive offer for the plant and equipment and goodwill" of $600,000 plus the value of the stock in trade. The last paragraph stated that "there [were] a number of other relevant issues that [had to] be clarified prior to a formal offer being made". The "offer" was said to form the basis of further negotiations. Cosmick decided to accept McGregor's offer that night. That decision was not disclosed at that time to Jorgensen or to Settle. It was however disclosed to another party that was possibly interested. We are instructed that the necessary funds are being provided from a number of sources and that discussions are required for this reason. We again request that you provide us with an up to date "payout" figure. Both Cosmick and Callawatta (sic) are aware of the contents of your fax of 17 November 1999. Both parties have instructed me to be (sic) request that you put in writing the matters which your client wishes to discuss. Settle never responded to this letter. On 22 November 1999, Eric Vadarlis ("Vadarlis") for Tyler (on behalf of Jorgensen) spoke with Kalus. Kalus' file note records Vadarlis telling Kalus that his instructions were uncertain and that although he had been instructed that they could settle the next day, he did not know that for a fact. That morning Vadarlis sent a facsimile to Kalus seeking a copy of the Cosmick Charge, the Priority Agreement between Cosmick and Callawadda and the DOCA. Vadarlis "confirm[ed] that [his client was] considering taking an assignment of [Cosmick's] security, that is the debenture mortgage charge held by it over [LLMDC]. " Later on 23 November 1999, Kalus informed Dynacast (Int) that he acted on behalf of Cosmick, the mortgagee in possession of all of the assets and undertaking of LLMDC, and that neither Cosmick nor Callawadda consented to release of the assets and the business of LLMDC the subject of a Sale of Business and Assets Agreement between Dynacast (Int) and LLMDC. That same day a Sale of Business and Assets Agreement between Cosmick as vendor and Gravity was executed. Although the historical company information of Gravity was not adduced at trial, it was the evidence of McGregor that he and Graham "set up Gravity on 17 November 1999 as equal shareholders in order to make the acquisition". The Respondents admitted Graham was a director of Gravity at the time of these transactions. And although they originally denied McGregor was a director, he certainly acted as if he was a director or secretary --- the Agreement referred to above was executed on behalf of Gravity by both McGregor and Graham in their capacity as directors or directors / secretaries. Later that day, Settle again telephoned Kalus. Kalus' file note records Settle stating that the shareholders of the mortgagor and the mortgagor (LLMDC) knew from McGregor that the business had been sold and wanted to know the details. The note records Kalus having told Settle that the sale was for $400,000 plus stock. Finally, the note records Settle telling Kalus to ignore the facsimile from Vadarlis, that if Dumbrell wished to take the matter further, he would make an offer to purchase LLMDC's business rather than take over the securities and that if Dumbrell was serious, Vadarlis would put a firm offer in writing but obviously he could not do that yet. Kalus' file note records Settle telling him that LLMDC would be seeking an injunction to prevent the sale from Cosmick to Gravity and that if Settle did not hear from Kalus, he would presume there were no offers of undertakings from Kalus' client not to proceed with the sale. No undertakings were proffered by Cosmick. Kalus responded to Vadarlis' facsimile of the previous day. Kalus referred to his conversation with Settle that Vadarlis' client had no interest in acquiring Cosmick's security but was interested in acquiring the business. Kalus went on to record the fact that Settle had told him that if Vadarlis' client was serious, Vadarlis would correspond with him and he had not. Our clients are outraged given that you were yesterday contacted by ... Vadarlis on behalf of a client of his who, on our instructions has sufficient funds to repay your client in full or purchase the business for a price of around $550,000. We have been instructed to indicate that our client will retain our firm, in conjunction with David Grace QC, to make an application to the Supreme Court seeking an order that the sale effected by your client be restrained (if it is, in fact, incomplete) or set aside ... unless we receive your confirmation by noon today that the sale will not be completed pending the repayment of your client by ... Vadarlis' client, in relation to which, we are instructed you will be placed in funds today. Finally, on 24 November 1999, Dynacast (Int) lodged a caveat over the Coburg Premises. On 25 November 1999, LMC (receiver and manager appointed and in liquidation) sold the Coburg Premises to Gravity for $650,000. The next day, 2 December 1999, LLMDC served a summons seeking to restrain the sale by Cosmick to Gravity. On 7 December 1999, Beach J of the Supreme Court of Victoria not only refused LLMDC's application for injunction because the sale had already been completed but LLMDC was wound up in insolvency by resolution of creditors. The summary is by no means comprehensive or intended to be so. Instead, the summary identifies some of the events which further support the conclusion that any order of the kind sought by Mijac should not be made. In April 2000, Gravity sold its plant and equipment to Gaffney Street Holdings Pty Ltd (ACN 091 261 773) ("GSH"), an entity which was incorporated on 19 January 2000 and since 29 February 2000 had McGregor and Graham as its sole shareholders and directors. Over the next year, Gravity automated the high volume dies on the casting equipment thereby increasing the casting speed by 20% to 25%. By 2003, Gravity had replaced all the furnaces with new furnaces which were quicker and easier to load. In the first three months of 2001, Gravity secured seven new customers which generated additional sales of in excess of $5 million over the next three years. On 15 November 2000, Cosmick, not Graham, submitted accounts to ASIC in relation to LLMDC for the period from 1 November 1999 to 30 April 2000 in its capacity as controller or managing controller. Graham signed the form in his capacity as "Director of Cosmick Pty Ltd, Controller". From 2001 to 2008, as a result of Gravity becoming eligible to participate in the Automotive Competitiveness Investment Scheme, it received grants of in excess of $1 million. In December 2001, Gravity expanded by acquiring another business, Impregnation Services. That business increased Gravity's profits. For the 2008 financial year, it added just under $200,000 to Gravity's annual profit. In late 2003, Gravity installed fettling shop conveyors to increase output with the same number of employees. In April 2006, Gravity successfully tendered for a contract with the Ford Motor Company and, to satisfy those contractual arrangements, Gravity installed low pressure die casting equipment at a cost of $1.6 million. During the same period, on 31 October 2003, Jorgensen commenced separate Federal Court proceedings against Graham, McGregor, Cosmick, Callawadda and Kalus Kenny. On 3 May 2005, those proceedings were dismissed and Jorgensen was ordered to pay the Respondents' costs. As noted earlier (see [3] above), on 10 September 2004, LLMDC allegedly assigned to Mijac, "all of [LLMDC's] right title and interest in any Cause of Action that [LLMDC] may have otherwise had". Jorgensen's business success did not improve. On 2 November 2004, the Federal Court declared by consent that Dynacast (Int) breached the TPA by making misleading and deceptive representations about a Phoneflasher mobile phone accessory and then, in March 2007, Dynacast Int was found guilty of contempt of Court for breaching those orders. On 21 June 2007, Jorgensen was made bankrupt on petition from Slater & Gordon. That bankruptcy was set aside two months later when he paid $200,000 to his creditors. On 29 June 2007, Jim's Water Tanks Pty Ltd (ACN 123 918 721) ("Jim's Water Tanks"), of which Jorgensen was a director, entered into an enforceable undertaking with the Commissioner of Fair Trading in Queensland to rectify the company's advertisements. In the following month, August 2007, ASIC obtained orders restraining Jorgensen from approaching any point of international departure, requiring him to surrender his passport and freezing his personal bank account and those of Jim's Water Tanks. On 31 December 2007, an administrator was appointed to Jim's Water Tanks and on 16 March 2008, Jim's Water Tanks entered into a DOCA. On 4 September 2008, Jorgensen filed a debt agreement under the Bankruptcy Act which was subsequently cancelled on 9 October 2008. III. I now turn to consider each of those issues. (A) WAS GRAHAM A CONTROLLER WITHIN THE MEANING OF S 420A OF THE LAW AS IT APPLIED IN NOVEMBER 1999? Mijac contended that Graham was a "controller" within the meaning of s 420A of the Law. Initially the Respondents agreed but, at the conclusion of the hearing, the Respondents sought to withdraw that admission and submit that he was not a controller. For the reasons that follow, Graham was a controller within the meaning of s 420A of the Law. The first limb of the definition of "controller" (sub-para (a)) is not relevant. Graham was not appointed a receiver of the property of LLMDC under the Charge: see cl 6.1 of the Charge. Put another way, under the Charge, Cosmick had a choice - appoint a receiver or take possession as a mortgagee in possession. Cosmick chose the latter. Pursuant to cl 5 of that Charge, Cosmick took possession of the "Mortgaged property" (as that term is defined in cl 2.1 of the Charge) for the purposes of enforcing the Charge. Clause 5.1 of the Charge provided that "the powers of sale, ... entering into possession and every other power conferred ... upon the Mortgagee by this Deed may be fully exercised by the Mortgagee or its officers, employees, managers and agents in respect of the Mortgaged property without the necessity for any demand". As the Respondents submitted: Cosmick, not Graham, was granted the Charge over the Mortgaged property (see [70]-[72] above); Cosmick, not Graham, entered into possession of the Mortgaged property by service of the Notice of Possession (see [90] above); Cosmick, not Graham, assumed control of the Mortgaged property (see [90] above); Graham (as the sole director of Cosmick) instructed Kalus to advertise the Mortgaged property for sale. The advertisement described Cosmick as the "Controller of the assets" (see [91] above); Cosmick, not Graham, sold the Mortgaged property to Gravity (see [122] above); and Cosmick, not Graham, submitted accounts to ASIC in relation to LLMDC for the period from 1 November 1999 to 30 April 2000 in its capacity as controller or managing controller. Graham signed the form in his capacity as "Director of Cosmick Pty Ltd, Controller" (see [133] above). Notwithstanding those facts, Mijac submitted that Graham was a controller within the meaning of s 420A of the Law. I agree. As the legal analysis explains (see [7] to [14] above), the express words of the Law and the Corporations Act recognise that a person will be a controller. That is important not because it provides or creates additional causes of action (it does not as explained at [15] above) but because of the other powers and duties addressed to and imposed on controllers in Pt 5.2 , some of which are listed in [13] above. Leave to withdraw admission? In light of those findings, it is not necessary to determine the Respondents' application to withdraw their prior admission that Graham was a controller. In my view, if the Respondents had required leave to withdraw the admission, then the Respondents should have been granted leave to do so. That conclusion requires explanation. Paragraph 33 of the Third Further Amended Statement of Claim ("TFASC") pleaded that, on 1 November 1999 Cosmick "as mortgagee in possession appointed Graham as Controller of [LLMDC]". Paragraphs 35B --- 39 of the TFASC contained additional references to Graham as Controller of LLMDC. The Respondents' Amended Defence to the previous pleading admitted that Graham was a controller. The Respondents sought leave to withdraw any admission that Graham was a controller. A proposed amended defence to the TFASC was provided by the Respondents. Mijac opposed the Respondents being granted leave to withdraw the admission. The relevant principles governing the grant of leave to withdraw an admission are well established: e.g. Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] FCA 1390 at [4] and the authorities cited; G and M v Armellin (2008) 219 FCR 359 at [116]. Applying those principles to the facts of the present case, it is both necessary and in the interests of justice that leave to withdraw the admission be granted for the following reasons: whether Graham was a controller within the meaning of s 420A is a question of law: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287 (per 5 th proposition as outlined). As Fullagar J said in Hayes v Federal Commissioner of Taxation [1956] HCA 21 ; (1956) 96 CLR 47 at 51, "[w]here the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law"; questions of law (and even mixed questions of fact and law) cannot and should not be resolved by admissions in pleadings: The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] (2008) 225 FLR 1 at [4528] and Shine v Williams [2007] WASCA 194 at [27] ; Mijac would not suffer prejudice by reason of the withdrawal of the admission; the matters identified by Mijac as supporting a contention that it would have conducted its case differently if the admission had been absent related solely to the ASIC form referred to in [13(1)(i)] above. That document was not and cannot be conclusive: see also s 1305 of the Corporations Act . Moreover, I reject Mijac's contention that Graham's subjective intent at the time of completing the form was relevant; finally, Mijac was not taken by surprise. At my suggestion before the close of trial the parties agreed on the issues to be addressed in final submissions. The first agreed issue for resolution was whether "Graham [was] a controller within the meaning of section s 420A of the Corporations Law? " (B) WAS GRAHAM AN OFFICER OF LLMDC WITHIN THE MEANING OF THE LAW? An "officer" under s 232 of the Law as it then applied includes "a receiver, or receiver and manager, of property of the corporation, or any other authorised person who enters into possession or assumes control of the corporation for the purposes of enforcing any charge". However, because Mijac takes the benefit of any cause of action by way of assignment, it is unnecessary to further consider the application of this section. That cause of action was not capable of assignment to Mijac: see [30] to [34] above. (C) DID S 418 OF THE LAW APPLY? WAS GRAHAM A RECEIVER OF THE PROPERTY OF LLMDC AND, IF SO, WHAT CONSEQUENCE(S) FOLLOW? The answer to both questions is no. Graham was not a receiver. Clause 6.1 of the Charge permitted the mortgagee to appoint a receiver by instrument in writing. That did not occur. There was no notification to ASIC of such an appointment. Accordingly, s 418 was not engaged. (D) DID GRAHAM OWE ANY AND, IF SO, WHAT DUTIES IN SELLING LLMDC'S ASSETS? Section 420A of the Law is a "carried over provision": s 1400 of the Corporations Act . As a matter of statutory construction, what s 420A of the Law does is to redefine the duty and what must be done to protect the corporation and its property when affected by exercise of a power of sale so that "the corporation, as mortgagor ... retain[s] its existing available remedies, tested by reference to the [higher] duty in s 420A(1) ": Florgale Uniforms 11 VR at [370]: see [7] to [21] above. As a result, it is necessary to consider s 420A in considering the duties owed by Cosmick in exercising its power of sale as mortgagee in possession. (E) DID GRAHAM BREACH THOSE DUTIES? As previously noted, s 420A is not a separate cause of action: see [15] above. Accordingly, it is unnecessary to answer this question. (F) WHAT DUTIES IF ANY DID COSMICK OWE IN SELLING LLMDC'S ASSETS? Two duties owed by Cosmick were relevant --- a mortgagee's general law duty in relation to its power of sale to act in good faith and the statutory duty under s 420A of the Corporations Act . A mortgagee's general law duty means that a mortgagee must in the exercise of its power of sale act without fraud and without wilfully or recklessly sacrificing the interests of the mortgagor: Commercial and General Acceptance Ltd v Nixon 152 CLR at 525. As Kiefel and Besanko JJ said in Upton v Tasmanian Perpetual Trustees Ltd 158 FCR at [22], the mortgagee's duty in relation to the power of sale "does not require the mortgagee to act in protection of the interests of the mortgagor, unless the mortgagee's failure to do so would be fraudulent or would amount to a wilful or reckless sacrificing of those interests". As the Respondents submitted, these duties are far more limited than those of a receiver: see cl 6 of the Charge and s 420 of the Corporations Act . As explained earlier (see [14] to [16] above), the statutory powers and duties are not a code but are in addition to the general law duties of mortgagees in possession. However, that regime does not create practical difficulties because the better view is that s 420A of the Law does not expressly confer a right to damages or any other remedy on the corporation or anyone else: see [156] above. (G) DID COSMICK BREACH THOSE DUTIES? As noted earlier (see [17]), the question is whether there was a failure to take all reasonable care to sell the property for not less than market value or the best price that is "reasonably obtainable, having regard to the circumstances existing when the property is sold": s 420A of the Law as applied in Florgale Uniforms 11 VR at [370]. For the following reasons, Cosmick failed to take reasonable care to sell the assets and undertaking of LLMDC for not less than market value or the best price. It follows that the failure to attain this 'higher' duty also leads to the conclusion that Cosmick breached its obligations under the general law regarding a mortgagee's duty to sell the mortgaged property in good faith by not wilfully and recklessly sacrificing the interests of the mortgagor. That failure is demonstrated by the process it adopted. First, Cosmick failed to adequately advertise the property: see [91] above. The contact details in the advertisement were incomplete, the advertising period was excessively short and contrary to the substantive offer from the related party which was ultimately accepted the advertisement did not offer to sell the assets as a going concern: Pendlebury v The Colonial Mutual Life Assurance Society Limited [1912] HCA 9 ; (1912) 13 CLR 676 and Barns v Queensland National Bank Ltd [1906] HCA 26 ; (1906) 3 CLR 925. It only offered the assets, not the undertaking. I accept that Cosmick as the mortgagee in possession could not advertise or offer the assets as a going concern because there was no existing lease capable of assignment to a purchaser, but the subsequent offer received by the related entity to purchase the assets as a going concern did provide a possible basis for further negotiation with other parties. Secondly, the property was sold to a related entity: see [35(6)] and [122] above. Thirdly, the "process" adopted by Cosmick falls short of what has previously been found by Courts to be necessary. In addition to the matters identified in [163], there was a failure by Cosmick to investigate other offers for the mortgaged property or at the very least a failure to encourage competition between offers made. Moreover, the process of obtaining the mortgaged property for sale and selling that property appeared to ensure a sale to a related entity (particularly in circumstances where the sale was the subject of considerable protest by the mortgagor). Those facts lead to the conclusion that there was a failure by Cosmick to take all reasonable care to sell the assets and undertaking of LLMDC. Of course, it is not necessary to prove that the property was in fact sold for less than its market value: Florgale Uniforms 11 VR at [410] and [413]. In fact, in the present case, although the process adopted by Cosmick may have been flawed, the evidence does not disclose that the mortgagor suffered any compensable loss. That issue is addressed in further detail in [172] to [178] below. (H) IS THERE AN ABSOLUTE PROHIBITION ON A MORTGAGEE IN POSSESSION SELLING THE ASSETS TO HIMSELF OR A RELATED PARTY? It was common ground that there is no absolute prohibition on a mortgagee in possession selling the property to another corporation which is separate but related to the mortgagee: Re One.Tel Networks Holdings Pty Ltd (2001) 40 ACSR 83 ; Tse Kwong Lam [1983] 1 WLR 1349. (I) DID COSMICK SELL LLMDC'S ASSETS TO ITSELF? This question is unnecessary to answer: see [146] and [167] above. (J) DID S 103 OF THE PROPERTY LAW ACT 1958 (VIC) APPLY AND, IF SO, WAS IT BREACHED? The answer is no: see [27] to [29] above. (K) DID A DEMAND HAVE TO BE MADE BEFORE COSMICK ENTERED INTO POSSESSION OF LLMDC'S ASSETS? No. First, cl 5.1 of the Charge expressly empowered Cosmick to exercise its powers as mortgagee at any time without the necessity for any demand or notice. Cosmick's powers to enter into possession were triggered as soon as LLMDC defaulted under the Loan Agreement: cl 4.1 of the Charge read with cl 1.1(a). LLMDC was in default: see [79] above. Secondly, even if a demand or notice was required (and it was not), such a demand or notice was prepared, signed and served: see [88] above. (L) IS MIJAC ENTITLED TO DAMAGES FROM GRAHAM AND / OR COSMICK AND IF SO, WHAT IS THE MEASURE OF DAMAGES AND AT WHAT TIME ARE THEY TO BE ASSESSED? No. Mijac is not entitled to damages from Graham. Against Graham there was no separate cause of action. Against Cosmick, Mijac is limited to the taking of an account in the manner described at [25] above. However, despite Mijac's entitlement to an accounting for wilful default on the part of Cosmick as mortgagee in possession, there was no basis for concluding that had there been no default, the mortgagee might have received more than it did. That last conclusion requires explanation. First, as the following summary of the facts demonstrates, the evidence did not disclose that if Cosmick had conducted a "proper" sale of LLMDC's assets and undertaking it would have generated any additional proceeds of sale above those paid by Gravity (see [25] above). In relation to the assets of LLMDC, Dominion Valuers & Auctioneers: inspected the Coburg Premises in early November 1999 and concluded that the plant was "very, very poor", that the plant was not busy, there were no depreciation schedules or other records relating to the plant available and two thirds of the die casting machines had been pulled out of production and parked in a shed: see [99] above; valued the listed plant and equipment at $298,000 based on installed existing usage and $144,915 based for onsite auction realisation: see [102] above. The distinction drawn by the valuers is important --- the equipment was far more valuable if it remained installed on site than if it was removed; reported, in part, that the "industry [was] to some degree in decline [and] without significant sales evidence being available [they] had to err on the conservative in [their] estimate of values". In the preparation of the valuation, Dominion did not attempt to "pre-empt a potential purchaser with a specialist interest in the plant" and assumed that the assets were, or were capable of, being utilised as assets of a profitable undertaking: see [102] above. Consistent with the views of the valuers, it was by no means certain that all of the equipment the subject of the sale was in fact available for sale. At least some of the equipment the subject of sale ran the risk of being considered a fixture which the owner of the Coburg Premises would inherit if LLMDC no longer operated from the Coburg Premises: see [81] above. LLMDC ceased to retain the right to operate from the Coburg Premises and the receiver of the landlord, LMC, had instituted proceedings for possession of the Coburg Premises: see [73] above. In fact, both McGregor's offer and the Sale of Business and Assets Agreement (cl 2) were conditional upon Gravity obtaining rights of occupation of the Coburg Premises and / or entering into an unconditional contract to acquire the Coburg Premises. Even if one was to consider a theoretical sale of the undertaking of LLMDC the evidence did not disclose that a "proper" sale of the assets and undertaking might have generated any additional proceeds of sale above those paid to Cosmick. As at November 1999: LLMDC, as the entity operating the business, was insolvent, a fact conceded by Craven in cross examination; LLMDC had no right to occupy the Coburg Premises as the lease had been forfeited for non payment of rent and the receiver and manager of the landlord, LMC, had instituted proceedings for possession of the Coburg Premises. Even if possession of the Coburg Premises was secured, the premises were unsafe with rain falling through holes in the asbestos roof; much of LLMDC's assets were built into the Coburg Premises and therefore ran the risk of being considered as fixtures or, at the very least, could not quickly and cheaply be relocated to new premises; apart from a six week debtors ledger, there were no books and records available to potential purchasers to assess the financial viability of the underlying business. Both the receiver and manager and the administrator of LLMDC had concluded that LLMDC's financial records were in a poor state; ten customers of LLMDC including three substantial customers had been lost since June 1999 with a resulting diminution in sales by one third; the Valuers had expressed their view on the state of the plant and equipment which underpinned the value of LLMDC's undertaking --- the plant was in a "very, very poor state" and "two thirds of the [die casting machines] had been pulled out of production and parked in a shed" and about one third was not working at all and needed replacement or repair: see [173] above; the die casting machines in operation were the subject of Workcover notices. To the extent that Mijac sought to rely upon the views of Mr Lom, an expert accountant, in support of the contention that the underlying business of LLMDC was profitable, I reject his evidence. He was an unsatisfactory witness who, contrary to the role of an expert (and for that matter the Federal Court expert evidence guidelines), was an advocate for Mijac who appeared willing to accept, often on the basis of flimsy material and without critical analysis, any position which he considered advanced Mijac's position. In addition, his opinion proceeded upon some incorrect factual premises including, but not limited to, the fact that (1) he assumed that LLMDC had an ongoing right to occupy the Coburg Premises and he was unaware that LMC had commenced proceedings for possession of the premises; (2) he did not know that LLMDC had lost substantial customers; (3) he did not know about the threat to the industry from China and (4) he did not know enough about LLMDC's customer base. Mr Lom accepted that each of these facts or matters would have affected the value he ascribed. As Mr Blashki, an expert accountant called by the Respondents concluded, having regard to the concerns about the reliability of the financial performance of LLMDC, the lack of satisfactory explanation for LLMDC's insolvency problems and the lack of verifiable financial information, it was not possible to have any confidence in the future profitability of LLMDC's business. To that list of factors, Mr Blashki added security of tenure of the Coburg Premises and the likely significant cost of relocation. I would add the additional facts and matters listed in [175] above. Having regard to each of those factors, I accept Mr Blashki's view that a purchaser was "unlikely to value the business more than on an auction realisation basis". In other words, the value of LLMDC's business was more properly represented by the value of its individual assets less liabilities. Moreover, even if (contrary to the views I have formed), additional proceeds might have been received "without wilful default", other amounts would need to be deducted from those additional proceeds, including the sum of approximately $130,000 owed to Callawadda as described in [117] above which remained unpaid and the recovery costs incurred by the secured lenders. If those amounts were conservatively assessed at say $150,000, there was no evidence to suggest that any sale of the assets by a mortgagee in possession might have generated sufficient funds to pay these additional amounts. Accordingly, it is inappropriate to order any accounting even if the claim for loss and damage was to be understood as encompassing a claim for the taking of an account. For completeness I should add that I do not regard the claim for loss and damage as extending to the radically different remedy of account. (M) IS MIJAC ENTITLED TO HAVE THE SALE BY COSMICK TO GRAVITY SET ASIDE AND, IF SO, IS IT TOO LATE BY REASON OF DELAY? Mijac is not entitled to have the sale by Cosmick to Gravity set aside. Equity would not intervene to set aside the sale. As noted above (see [22] to [23]), if, as here, a mortgagee's equitable duty in relation to its power of sale is breached, equitable relief ordinarily would include orders setting aside the sale where there is no independent bargain between the mortgagee in possession and the purchaser of the property the subject of the mortgage. Moreover, as noted above, "setting aside the sale" is not actually what occurs. Instead, the purchaser is treated as having bought the mortgage and the debt and the mortgagor retains its right of redemption of the mortgaged property against the purchaser. However, in the present case, equity would not intervene to set aside the sale in the manner just described. Here, Mijac asks "the Court ... to rip up a transaction [10] years after it has been completed[,] the lapse of time itself [being] one of the elements bearing upon the equities that exist entitling the [applicant] to relief": Fysh v Page 96 CLR at 243. If that was not itself a sufficient reason to refuse relief, Mijac makes that application as an assignee of a cause of action in respect of property that has not only transmogrified into substantially different property worth a considerable amount more than the purchaser paid but has since been sold to a third party: see [132] to [136] above. For those reasons, Mijac is not entitled to have the sale set aside and delay is just "one of the elements bearing upon the equities that exist entitling the [applicant] to relief": Fysh v Page 96 CLR at 243. (N) IS MIJAC ENTITLED TO ANY AND, IF SO, WHAT STATUTORY REMEDIES? No. First, statutory remedies are not capable of assignment and secondly, the only statutory remedies identified by Mijac concerned Graham. (O) WHAT IS THE EFFECT OF THE ASSIGNMENT BY LLMDC TO MIJAC IN 2004 ON THE AVAILABLE REMEDIES? As noted above (see [30]), choses in action in general are assignable and the right to equitable relief in form of an accounting is capable of assignment. On the other hand, "a bare right to litigate" and statutory causes of action require special consideration: see [31] to [34] above. Consistent with those principles, Mijac is left to its equitable remedies. Mijac submitted that the question of the effect of the assignment was a new question of law not previously pleaded and about which they had no notice. I reject that contention. The question of the effect of assignment is a question of law that cannot be put aside from consideration and moreover, it was one of the questions that the parties agreed required resolution. Turning then to the substantive argument, Mijac sought to rely upon a number of cases where it had been found that certain "personal" causes of action for example, under Pt V of the TPA may be assigned by a liquidator pursuant to s 477(2)(c) of the Corporations Act or by a trustee in bankruptcy pursuant to ss 134(1)(a) and 135(1)(a) of the Bankruptcy Act . That may well be the case. However, as the Respondents correctly submitted, these cases either reinforced or failed to address (as was discussed at [31] to [34] above) the proposition that an assignee will not be able to recover where they themselves have suffered no loss or damage: see Brookfield v Davey Products Pty Ltd (1996) 14 ACLC 303 at 305. Thus, in the circumstances of this case, no remedy is available to Mijac regarding the statutory causes of action. Moreover, s 477(2)(c) of the Law does not permit a statutory cause of action not otherwise assignable to be assigned: Pritchard v Racecage Pty Ltd (1997) 72 FCR 203 at 218-221; UTSA Pty Ltd v Ultra Tune Australia Pty Ltd [1997] 1 VR 667 at 698; Pearl Coast Divers Pty Ltd v Cossack Pearls Pty Ltd [2008] FCA 927 ; (2008) 249 ALR 591 at [6] - [8] . Finally, the above analysis proceeds on the assumption that the assignment did not fail for other reasons including, but not limited to, a lack of definition about what in fact was assigned (the subject matter of the assignment was labelled "a Cause of Action") or a failure to comply with requirements at common law and / or in equity. The copy of the assignment tendered in evidence was not executed by Mijac. The Deed recorded it was executed by the liquidator of LLMDC on 10 September 2004, at a time when, according to the ASIC records, LLMDC was subject to external administration in the form of the appointment of Mr McVeigh, as liquidator of that entity. Although Recitals B and E of the Deed recorded that Mijac was the holder of a registered charge over LLMDC and an existing creditor of LLMDC, neither the existence nor the terms of that charge or indebtedness were proved. Finally, the subject matter of the assignment was labelled "a Cause of Action". As a matter of construction, the Respondents accepted that the Deed effected an assignment of a bare right to bring an action and not an assignment of the assets of LLMDC. Given the views I have earlier expressed and in the absence of detailed submissions from the parties, it is unnecessary for me to consider further the proper construction of the Deed and, in particular, the phrase "a Cause of Action": Pacific Brand Sport & Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40 ; (2006) 149 FCR 395 at 411. (P) SHOULD MIJAC BE REQUIRED TO ELECT WHICH REMEDY IT TAKES? Having regard to the views that I have formed about the relief available to Mijac, this question is unnecessary to answer. However, having regard to the merits of the parties' respective positions, I will make no order as to costs. The costs should lie where they fall. I certify that the preceding one hundred and eighty-eight (188) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. | duties of a "controller" under s 420a whether duties breached assignment of statutory cause of action duties of mortgagee in possession whether duties breached adoption of proper process of sale equitable and statutory remedies assignment of cause of action and remedies available taking account on wilful default corporations mortgages |
The decision was made by the delegate on 24 May 2007. The jurisdiction of the Court to review a decision of the Registrar not to accept a claim for registration is enlivened by s 190D of the Act , with the Court being seized of broad powers pursuant to that section ( Western Australia v Strickland [2000] FCA 652 ; (2000) 99 FCR 33 at 49-50). The application covered a broad area of country in Central Queensland, the eastern boundary of which abutted and extended to offshore islands beyond the coastline to the north and south of Mackay and the western boundary of which was located well inland of the coastline. 4 On 30 September 1998 section 190A was amended to subject native title applications to a registration test. In 1999 and 2000 the Wiri #2 Application was amended to decrease the country to "all parcels of unallocated state land" within the original broad area of country. Each amendment was subjected to the registration test and each amendment was successful in being registered. 5 The Wiri #2 Application was again amended on 7 November 2006 and referred by the Court to the Registrar on 10 November 2006. 7 The delegate of the Registrar found that the application met the requirements under ss 61 , 62 , 190B and 190C (5) of the Act . 8 The delegate found that the application failed to satisfy the requirements of s 190C (4)(b). The Wiri #2 applicant makes serious allegations against the CQLC in relation to the performance of its certification functions. These allegations are strenuously denied by the CQLC, who continue to act for the Wiri Core applicant and who have provided me with the details of the research they have undertaken in relation to the identity of the apical ancestors for the Wiri People. It is the position of the Wiri #2 applicant that it is not for the CQLC to impose a description of their group of society, but for the Wiri People themselves to define how they are to be described. The meeting notice... for the authorisation meeting at which the native title claim group description was finally agreed in fact only invited the very persons ultimately described in the Wiri #2 application. I do not accept that such a process can be seen as having some kind of binding or ultimate authority as to the identity who must authorise the applicant, pursuant to either s. 190C(4)(b) or 61 (1). I refer to O'Loughlin J in Risk at [60] where he said that a native title claim group is not established or recognised merely because a group of people (of whatever number) call themselves a native title claim group. Justice O'Loughlin in Risk went on to say at [60] that it is incumbent on the delegate to be satisfied that the claimants truly constitute such a group, and the applicant should be seen to be authorised by all persons who relevantly hold the common or group rights (cf s61 (1)). And finally at [60] Justice O'Loughlin said that where the group named or described in the application is not the native title claim group defined in s.61 (1) but a part only of the group it becomes impossible to accept the application for registration. It seems to me that the identity or composition of the Wiri People native title claim group is an intractable dispute of many years standing. I have conducted searches of the Tribunal's records and see that the Wiri #2 application and the Wiri Core application are but just two of a number of applications that have been made over the years by differently described or differently composed groups of Wiri People. The dispute amongst those who claim to be Wiri is not one that I can decide or resolve in the course of this administrative decision as it is not my role to determine the identity of all the persons who, according to their traditional laws and customs, hold the common or group rights and interests comprising the particular native title claimed in the area of this application. The evidence about the identification of the native title holders is contentious and uncertain. In conclusion I cannot be satisfied that the group described in the application before me is the whole of the native title claim group, as that group is defined in s.61 (1). It follows then that I cannot be satisfied that the applicant is authorised to make the application and deal with matters arising in relation to it by all the other persons in the native title claim group. 2. The Registrar erred in not forming the opinion that the application and accompanying documents revealed that the Applicant is a member of the native title claim group and is authorised to make the application, and deal with matters arising in relation to it, by all the other persons in the native title claim group, and that the condition provided for by s 190C (4)(b) is thereby satisfied. 4. In other words, the Registrar's role goes beyond merely accepting the correctness of an applicant's assertion that the persons who, according to their traditional laws and customs, hold communal rights and interests comprising the particular native title claimed are confined to those named or described in the application. 17 Reading together ss 190A (6) and 190C (4)(b), the logical conclusion is that, unless the Registrar or his delegate is satisfied that the applicant is a member of the native title claim group and is authorised to make the application, and deal with matters arising in relation to it, by all the other persons in the native title claim group, the Registrar or his delegate must not accept the claimant application for registration. The information which the Registrar or his delegate can consider in making a decision as to whether the claimant application should be accepted is defined broadly by s 190A (3), and includes not only information contained in the application and other documents provided by the applicant (s 190A (3)(a)), but also any information obtained by the Registrar as a result of any searches conducted by the Registrar of registers of interests (s 190A (3)(b)). Similarly, the decision by the Registrar or his delegate that he is, or is not, satisfied of the requirement under s 190C (4)(b) is an administrative decision under the Act . It is not for the Court, in reviewing the Registrar's decision, to substitute its own view of the sufficiency of the native title rights and interests for those of the Registrar unless it can be shown that the Registrar's state of satisfaction is based upon some error of principle. 19 Further, the Full Court in Western Australia v Strickland [2000] FCA 652 ; (2000) 99 FCR 33 at 53, in considering the state of satisfaction required under s 190C (4)(b), agreed with French J that the decision of the Registrar or his delegate should stand if the decision was reached on material available to the Registrar's delegate, and it was not shown that the delegate had been informed by any error in principle in so doing. The finding of the delegate that she was not satisfied that the applicant was authorised to make the application and deal with matters arising in relation to it by all the other persons in the native title claim group was, in my view, available on the material. 22 In relation to grounds 1 and 2 of the applicant's claim I consider that the applicant has itself misconstrued the basis of the delegate's decision, and incorrectly described the principles on which the delegate was required to make her decision. I take this view for the following reasons. 23 First, as I have already observed, s 190C(4)(b) does not confine the Registrar or his delegate to the statements made in the affidavit or the information provided in the application in reaching the relevant state of satisfaction : Western Australia v Strickland at 52. The existence and nature of, and information in, the Wiri Core Application, which had been before the Native Title Tribunal previously, was both available to the delegate and relevant to her consideration of whether the applicant in the Wiri #2 Application was authorised to make the application on behalf of all the other persons in the native title claim group. 24 Second, in written submissions the applicant contended that the delegate erroneously considered that she was required to adjudicate between differing descriptions of a native title claim group, and make a factual determination as to the "correct" description of the group. However, it is clear from reading the delegate's Reasons for Decision that the delegate carefully avoided making such a determination. The dispute amongst those who claim to be Wiri is not one that I can decide or resolve in the course of this administrative decision as it is not my role to determine the identity of all the persons who, according to their traditional laws and customs, hold the common or group rights and interests comprising the particular native title claimed in the area of this application. 25 While the delegate did consider at some length the fact, and nature, of the Wiri Core Application, there is no indication the delegate was adjudicating between that group and the group identified in the Wiri #2 Application. As I have already found however, it was open to the delegate, in reaching her decision under s 190C (4)(b), to take into consideration, inter alia , the existence of that overlapping and competing application, the fact that the native title claim group it described was broader than the description in the Wiri #2 Application, and the fact that it had been certified pursuant to s 203BE by the Central Queensland Land Council. 26 Third, the applicant submitted that the delegate failed to appreciate that, in so far as the registration test is concerned, an assessment of the composition of a native title claim group is a function of the duty contained in s 190C (2), not s 190C (4)(b), and is limited to an assessment of the description of the claim group as it appears in the application and accompanying material. 28 Fourth, I do not accept the applicant's argument that s 190C (4)(b) restricts the Registrar to considering whether he is satisfied that the applicant is authorised to make the application by the persons described in the application as the native title claim group. Indeed, this argument runs contrary to findings in other cases, including that of the Full Court (endorsing the decision of French J) in Western Australia v Strickland , that the Registrar or his delegate is not confined in s 190C (4) to statements made in the affidavit or the information in the relevant application. 29 In my view the applicant's argument confuses the terms of ss 190C (2) and 190C (4)(b). While there is obvious intersection between ss 190C (2) and (4), the matters of which the Registrar is required to be satisfied by each section are, in my view, quite different. In relation to s 190C (2), the Registrar must be satisfied as to the contents of the application and that it contains information required by ss 61 and 62 (cf Mansfield J in Northern Territory of Australia v Doepel [2003] FCA 1384 ; (2003) 133 FCR 112 at [35] ), whereas in relation to section 190C (4) the Registrar must be satisfied as to the identity of the claimed native title holders including the applicant. That is to consider whether the application sets out the native title claim group in the terms required by s 61. That is one of the procedural requirements to be satisfied to secure registration: s 190A(6)(b). If the description of the native title claim group were to indicate that not all the persons in the native title claim group were included, or that it was in fact a sub-group of the native title claim group, then the relevant requirement of s 190C(2) would not be met and the Registrar should not accept the claim for registration... It is not suggested that the face of the application in this matter raises such difficulties. Indeed in the Wiri #2 Application, although the delegate was not satisfied as required by s 190C (4)(b), after considering each of the requirements of ss 61 and 62 the delegate was satisfied that the Application contained all the details and other information required by those sections, and accordingly complied with s 190C (2). Having said that, I do have regard to information elsewhere before me in relation to this issue in my consideration of the authorisation condition under s. 190C (4)(b). 33 In my view the applicant is incorrect in submitting that Doepel is authority that, once the Registrar is satisfied of those matters under s 190C (2), in the case of an uncertified application the requirements of s 190C (4)(b) are met by the Registrar being satisfied that the claim group described in the application authorised the making of the application. 34 Finally, I do not accept the applicant's argument that the delegate misconstrued the decision of O'Loughlin J in Risk v National Native Title Tribunal (2000) FCA 1589. 35 In that case an application was made by Mr Quall which stated that the native title claim group were eight "members of the Danggalaba Clan" who were all members of the one family. O'Loughlin J held that the delegate had erred in accepting the relevant application for registration. As his Honour pointed out, although the persons who claimed to be the native title claim group also claimed to be members of the Danggalaba Clan, they did not claim to be the only members of that Clan (at [40]). Further, as his Honour noted, it was apparent to the delegate that the family of eight was not the native title claim group - but, at most, only part of the relevant group (at [60]) - which comprised approximately 140-150 people. His Honour quashed the decision of the delegate on the basis that it should not have been accepted for registration. 36 So explained, the finding of the delegate in the matter before me - relying on Risk - that she was satisfied of the Application's compliance with s 190C (2), but not satisfied of its compliance with s 190C (4)(b), is correct. Further, I do not agree with the submission of the applicant that it was clear from O'Loughlin J's reasons that, notwithstanding the continued existence of the dispute between the relevant parties, if the purported native title claim group in the Quall application had been differently framed, the delegate could, lawfully, have accepted the application for registration. On the contrary - in my view it is clear from his Honour's reasons that not only did the evidence indicate that the applicant was not authorised by all the other persons in the native title claim group, but a reframing of the application by the applicant to so contend (when he was clearly not authorised) would not have allowed the delegate to accept the application for registration (see in particular his Honour's comments at [63]-[66]). 37 Accordingly, in my view grounds 1 and 2 of the applicant's claim cannot be substantiated. This is clear from the terms of ground 3 itself, and the submission of the applicant that, had the delegate not misdirected herself regarding the principles in Risk , she would have been satisfied that the requirements of s 190C (4)(b) were met. 39 I have already considered the decision of the delegate in relation to her state of satisfaction under s 190C (4)(b), and found that no error was made in the delegate's reasons for decision. 40 Like grounds 1 and 2, this ground also fails. The application be dismissed. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. | registration of native title claim application for review of native title registrar's decision refusing registration whether registrar erred in making decision proper construction of registrar's function under s 190c(4)(b) of the native title act 1993 (cth) native title |
The application proceeded to final hearing in relation to the liability of the second respondent and was dismissed as against the second respondent: Leonie's Travel Pty Ltd v International Air Transport Association (No 2) [2009] FCA 646. This brief judgment concerns an outstanding issue in relation to the costs of the first respondent, the International Air Transport Association (IATA). When the proceedings were commenced, the applicant brought them against IATA as well as a number of individual airlines. Ultimately the applicant accepted that it was unnecessary to maintain the proceedings against IATA and the proceedings against it were discontinued. IATA seeks its costs but the applicant submits that each party should bear their own costs. It is unnecessary to rehearse the details of the submissions made in support of these competing positions. Having commenced the proceedings against IATA unnecessarily, the applicant should, in the ordinary course, pay IATA its costs. The only point of possible substance telling against such an order, is that some of those costs were said to have been incurred unnecessarily. That is, IATA participated, it was submitted, in the proceedings at a time when it was apparent the proceedings would not continue against it. However I do not accept the IATA's participation was, at any relevant point, unnecessary. It is true that the solicitors for the applicant informed IATA in late February 2007 and before the discontinuance, that there would be a discontinuance if the other respondents raised no point about the non-joinder of IATA. Ultimately the applicant secured that commitment from the other respondents. However the intimation in late February 2007 was obviously conditional. While there may be cases where, in analogous circumstances, a party continuing to participate in the proceedings ought not get their costs, this is not such a case. IATA was, in my opinion, entitled to continue to participate in the proceedings having been joined as a party. IATA should have its costs. Accordingly I will order that the applicant pay IATA's costs of the proceedings. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore . | exercise of discretion to award costs necessary participation in proceedings costs follow the event costs |
The proceedings in which this motion arises were commenced on 16 November 2006 when the applicant, Olivaylle Pty Ltd, filed and served an Application and Statement of Claim against the respondent, Flottweg GMBH & Co KGAA, seeking damages for breach of contract and relief under ss 82 and 87 of the Trade Practices Act in respect of an alleged contravention of s 52 of the Trade Practices Act 1974 (Cth). In its Statement of Claim the applicant describes itself as one of the "world's largest family owned integrated producers and processors of premium extra virgin olive oil". Unsurprisingly, in its defence the respondent has not admitted this claim. 2 The essence of the matter is as follows. The respondent is a German registered company having a registered office in Australia. It is a manufacturer of what is described as a solid bowl centrifuge separation equipment. Such equipment is used apparently for processing olives to extract olive oil. In February 2005 Olivaylle entered into a contract with Flottweg for the provision of a processing machine. That contract provided for payment by four instalments between 11 August 2004 when a 20 per cent deposit was paid and 1 August 2006. The machine was delivered in April 2005 on payment of the second instalment. The claim is that the machine was defective in a number of respects, in relation to which representations were allegedly made, hence the Trade Practices Act claim. Those same matters were also the subjects, allegedly, of terms of the contract. 3 It would appear from para 23 of the Statement of Claim that representatives acting on behalf of Flottweg dealt with the machine for some purposes (alleged by Olivaylle) to be by way of repair and modification. From answers given by counsel for Flottweg at the hearing before me, this occurred at Olivaylle's place of business. 4 On 14 December 2006 a correspondence began between the solicitors for the respondent and the applicant's solicitors in which Flottweg indicated its concern was to establish whether or not Olivaylle would be able to meet any costs order that may be made against it in the proceedings. Having referred to s 1335 of the Corporations Act it requested that Olivaylle provide copies of documents which evidenced its financial position and its capacity to meet any adverse order. It was indicated that it was anticipated those documents would include "statement of cashflows, profit and loss statement, current balance sheet and bank statements". An alleged reason given for this request was that Olivaylle had not recently filed returns with the Australian Securities and Investment Commission ("ASIC") that would provide any indication as to its financial position. I interpolate at this stage in no respect has Olivaylle not complied with its obligations under the Corporations Act . Olivaylle's response to this was that it had lodged all necessary documents with ASIC and left the matter at that. On the day of that response Flottweg's solicitors again indicated they had no indication that Olivaylle could meet a costs order and foreshadowed that if they had to make an application for security and were unsuccessful because Olivaylle had the capacity to meet a costs order they would seek indemnity costs of that application. 5 On 10 January solicitors for Olivaylle indicated that they would resist such an application should it be made. On 24 January 2007 solicitors for Flottweg indicated that unless Olivaylle provided security for costs in a sum satisfactory to Flottweg or else evidence that Olivaylle had the means to satisfy a costs order, it would apply for a court order that Olivaylle provide security in the sum of $300,000 and it annexed a draft notice of motion seeking that sum. Two affidavits were filed by the respondent in support of its application. The first of these annexed the correspondence to which I have already referred and land title searches which revealed that the applicant is not a registered proprietor of property in South Australia but is the registered proprietor of a Crown allotment in Wallowa in the State of Victoria. It also has filed a search of ASIC's records which disclose amongst other things that Olivaylle's registered office and principal place of business are on the Crown allotment to which I have referred and that the company has a thousand issued shares, these being held by one of its four directors. The search also reveals that a fixed and floating charge exists over a property of Olivaylle in favour of the National Australia Bank Ltd ("the NAB"). That debenture was lodged on 6 December 1999. 7 It is essentially from this material and from its inability to extract information from Olivaylle concerning its financial circumstances that Flottweg contends it has met the threshold requirement of s 1335 of the Act. The only material put on by Olivaylle resisting the motion was an affidavit annexing a property search which included a map and land description of the Crown allotment at Wallowa to which I earlier referred. That search reveals that the allotment contains 1976 acres. The affidavit mistakenly asserts that the property was unencumbered. I say mistakenly because of the debenture to which I have referred above. 8 The essence of the case advanced by the respondent is that the likely costs to be incurred by it in defending these proceedings are $240,000; that the applicant is a limited liability property company with only one thousand share issues; and that I should not assume that a proprietary company of this nature has assets in excess of half a million dollars, this being an estimate of the costs to both parties of the proceedings. The respondent relies further on the repeated refusals to provide evidence of financial position; on the fact that the Victorian property is subject to a debenture; and on a lack of evidence of Olivaylle's liability if any to the NAB. It then goes on to indicate that its application was brought promptly. 9 The respondent relies particularly on the reasons of Pidgeon and Owen JJ in FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69 ; (2000) 33 ACSR 739 to the effect that the legislative intent of s 1335 was that, in permitting the incorporation of a limited liability entity, it was necessary to ensure that persons who might have dealings, whether voluntary or involuntary, with such an entity should have a measure of protection from prejudice resulting from the limited liability character of a corporation. 10 In that case the anticipated costs of the moving party were $44,000; the plaintiff company's paid up capital was $4,001; it had no land registered in its name; from 1990 to 1995 (the last date on which it was required to file financial returns) it suffered operating losses after tax, save in 1995; and it did not file any answering affidavit. I would note, as well, that the pleadings were not before the court. Nor, it would seem, was there evidence of the relationship of the parties other than that the litigation concerned a contractual dealing. 11 Pidgeon and Owen JJ considered that the absence of land combined with the low share capital gave rise to an appearance that there was reason to believe that there were no assets to meet the costs. 12 Before considering the respondent's submissions I should make the following observations about s 1335 and the proper approach to be taken under it. First, there is no onus on the applicant to adduce evidence of its ability to pay its debts (i.e. a future costs order). Nor is the issue of whether security should be ordered to be determined on the basis of whether or not that onus has been satisfied. Rather, as Goldberg J indicated in Second Lenbourne Pty Ltd v Beagle Management Pty Ltd [1999] FCA 486 at [9] , what is required is that there be credible testimony before the Court that there is reason to believe that the applicant will be unable to pay the respondent's costs if the respondent is successful. Secondly, it now seems reasonably well accepted that the paid up capital of an applicant company is not as of course relevant in proceedings of this variety because the capital structure itself will ordinarily be irrelevant to the ability to pay. This will be so even if in other events which can also be fairly described as reasonably possible the plaintiff corporation would be able to pay the costs. The degree of likelihood of the plaintiff corporation being unable to pay the costs along with all the circumstances, actual and possible, about its financial position, would be then to be taken into account in the exercise of discretion, and in framing the orders of the court if the decision is to order security. The evidence before me suggests that Olivaylle would appear to have a substantial olive growing and processing business conducted on a near 2,000 acre property which has been visited by representatives of the respondent in the circumstances I noted earlier. The respondent entered into business dealings with the applicant and there is nothing to suggest from those dealings (which involved the payment of instalments to Flottweg totalling more than one million dollars over two years) that the applicant was in any way unable to meet its obligations to the respondent; that any delays were incurred in making payment; or that there were other reasons which would give Flottweg cause for concern about the financial circumstances of Olivaylle. 14 For the reasons given by Heerey J to which I earlier referred I do not consider that the capital structure of Olivaylle provides reason suggesting it may not have either assets in excess of half a million dollars or else the capability to accommodate liabilities in such a sum. There is no credible testimony before me to suggest that it does not. It has been able to acquire a very expensive machine and it is the owner of what appears to be a significant business. I infer this both from the property holding it has and has from the size and pleaded capacity of the machine purchased from Flottweg. The character and duration of the prior business relationship of the parties and the fact that Olivaylle conducts a business on substantial land that it owns places the circumstances of this matter in a quite different field of discourse from those in FFE Minerals Australia Pty Ltd . 15 I would add, though, that while the respondent relies as a discretionary factory in support of its application upon its bringing the application promptly there is, in my view, something to be said for the proposition that it may have been excessively prompt and pre-emptory in the circumstances. I would say that its ready resort to this procedure might be said to invite some suspicion that it is at least a litigation tactic. The spectre held out of seeking indemnity costs, even if unsuccessful in the application for security, betrays either a misunderstanding of Olivaylle's obligations in this respect or else it was simply a high handed gesture. 16 There is no credible evidence establishing that there is reason to believe there is a real chance that could suggest there is reason to believe that Olivaylle will be unable to pay Flottweg's costs if successful in its defence. I simply am in a position of being asked to speculate about this matter, speculate in the absence of testimony providing any basis for suspicion that it will not, in the event of being unsuccessful, be able to pay those costs. I do not consider that the threshold requirement of s 1335(1) has been satisfied. I will dismiss the motion for security for costs with costs. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn J . | security for costs s1335 corporations act 2001 (cth) no onus to adduce evidence of applicant's ability to pay no credible evidence establishing that there is reason to believe there is a real chance that the applicant will be unable to pay the respondent's costs corporations law |
She has applied unsuccessfully for a position of Trainee Registrar in Dermatology in each of the years commencing 2001, 2002, 2003, 2004 and 2005. She claims that the respondent's selection and appellate processes entitle her to relief because of misleading or deceptive conduct (or conduct likely to be such) and misleading representations by the respondent. Her claims are brought in reliance upon provisions of the Trade Practices Act 1974 (Cth) (the TPA) and the Fair Trading Act 1987 (WA) (the FTA), particularly ss 52 , 53 (g) and 55A of the TPA and ss 10 , 12 (1)(e), 12 (1)(l) and 18 of the FTA. Her claims are set out in a re-amended statement of claim which is referred to as the claim. 2 The respondent is a company limited by guarantee. Fellows of the respondent are medical specialists practicing in the field of dermatology. The respondent operates in conjunction with chapters, of which there is one in Western Australian. The references to the respondent in these reasons are to be read as including or referring primarily to that Chapter unless otherwise indicated. For the years 2001 and 2002 the advertisements for the position were placed by RPH. For the years from 2003 the advertisements were placed by the respondent. These latter advertisements noted that there is a variation between States regarding the application process for hospital-based positions and that the requirements of each State should be followed. In the case of the respondent in Western Australia, it has been the respondent's function to conduct an annual selection process through a selection committee. The position is open to all eligible candidates in Australia and overseas. The person selected is recommended by the respondent to RPH which employs the trainee. The appointee is provided with training and instruction by Fellows of the respondent who are independently engaged as consultants by the teaching hospitals. Upon successful completion of the training, the trainee is entitled to become a Fellow of the respondent and may hold him or herself out as a specialist dermatologist. 4 The evidence of Dr Beresford, who was employed full time as Director, Clinical Services at RPH from 1989-2005 other than in 2000-2002, that service registrar positions for any speciality depend on both funding and workload demand. An increase in registrar positions is made to meet increasing workload demand. Training registrar positions have to be accredited (that is, authorised) by the relevant speciality college. The hospital does the administration of the rotating registrar positions for many specialities. In the case of dermatology the trainee is employed by RPH but discharges their training function on a rotational basis at other public hospitals in Perth, Fremantle, Sir Charles Gairdner and Princess Margaret. There is no financial arrangement between RPH and the respondent for the service of training the trainee registrar. 5 Dr Beresford further stated that RPH makes the offer of employment to the candidate recommended by the respondent. Only if the hospital was aware of some factor seemingly overlooked in the selection, would the hospital defer making any appointment while referring the issue to the respondent with notice to the candidate. If the recommended person put patients at risk, the hospital would not employ that person. Similarly, if a problem arose with a trainee the issue would be first referred to the respondent. 6 In cross-examination Dr Beresford testified that the Head of the Dermatology Department at RPH, who was employed by the hospital, had two roles. One was to supervise the Department, the other was as a Fellow of the respondent to be responsible for the tutoring of the individual trainees and to supervise training, for which they were responsible to the respondent. Additionally the respondent, after setting training requirements, then supervised its delivery. 7 In each of the years relevant to the applicant's claims (2000 to 2004), the Selection Committee of the respondent recommended to RPH a candidate other than the applicant. In each of those years, the recommended candidate was employed by RPH in the position of Trainee Registrar in Dermatology. The applicant has argued that the respondent bears total responsibility for the appointment, given that RPH has always accepted the selected candidate. The respondent contends that the fact of acceptance by RPH of the respondent's selection does not lead to the necessary inference which the applicant asserts, it being due arguably to the quality of the selection. 8 I proceed on the basis that in the years relevant to the application the appointment of the trainee registrar was made by the hospital. However, in the absence of unusual factors, the hospital would accept and act upon the recommendation from the respondent. That is, if unusual circumstances required it, RPH was entitled to accept or reject the recommendation of the respondent. 9 The respondent set the minimum training requirements for dermatologists and accredited training programs in its Training Handbooks. The respondent also supervised the delivery of training through the Head of the Department (as a Fellow) working with volunteer Fellows as trainers without payment from RPH (or any of the other hospitals) to the respondent. The respondent was not therefore engaged in the day to day management of the training program. The applicant understood that to be the case. For the position commencing in 2001, the applicant was ranked 9 out of 10. For 2002, towards the bottom of the list. For 2003, 14 out of 23. For 2004, 24 out of 34. For 2005, 7 out of 14, although two candidates withdrew so that she was effectively 7 out of 12. 11 The applicant has invoked the appellate process in relation to the Selection Committee decisions for the positions commencing in 2003, 2004 and 2005. 12 The applicant's case is not that she should have been selected in any one of the relevant years or that she was in any of those years the best qualified candidate. Nor is it a case about the applicant seeking employment at RPH. Her claims are rather about her endeavours to get into the respondent's training program and whether the processes of the respondent did not give her what was described in opening as 'a fair go'. The respondent submits that nevertheless as the applicant's case was developed in evidence, it became apparent that she contends her application should have been successful in 2002 for the 2003 position in that she was the best qualified candidate on offer with RPH that year. However, that does not reflect in the pleadings and nor has it been addressed in the submissions made for the applicant. It is to the claims in the pleadings which these reasons are directed. 13 The selection processes from 2000-2004 show that applicants usually applied one to two years in a row. The applicants who tried in more than one year were ones who usually got into the top five candidates. Some candidates applied unsuccessfully in more than one year. Each of the successful candidates for the positions commencing in the years 2002-2005 had previously applied unsuccessfully. She obtained her MBBS from the Dow Medical College of the University of Karachi, Pakistan in 1984. In August 1990 the applicant was admitted by a selection committee of the Commonwealth for a bridging course for overseas trained doctors. She completed the 12 month course in August 1991 and obtained her AMC in December 1991. 15 The applicant gained her specialist qualification as a Fellow of the Royal Australian College of General Practitioners (FRACGP) in July 2001. 16 Around February 1992 the applicant commenced practice as a general medical practitioner at the Wesley Medical Centre owned by the Wesley Central Mission in Perth. In or about July 1997 the Wesley Central Mission closed down the Wesley Medical Centre. 17 Sometime in August 1997 the applicant joined another city practice, namely, Forrest Chase Medical Centre where she worked full time until early December 1997. 18 In or about February 1998 the applicant commenced part-time work (three sessions per week) as a general medical practitioner at the Griffin Medical Centre located in Perth's CBD. 19 From about 1998 to early 1999 the applicant considered various options for further advancing her career, including gaining specialist training in an area of interest, establishing and owning a general practice in Perth's CBD or joining another practice either as a consultant contractor or a partner. In early 1999 she decided to seriously explore options for further advancing her career and expertise in medicine by gaining specialist training in dermatology. She telephoned the Australian Medical Association in Perth to obtain relevant information about a traineeship in dermatology and was told to contact Dr Judith Cole, the Regional Secretary of the WA Faculty of the Australasian College of Dermatologists. The applicant attended an interview with Dr Cole and subsequently applied to the respondent for admittance to its trainee registrar program in dermatology. I have read the transcript and it is apparent that in respect of some of the items objected to, there are foundations for his knowledge. Whether they are convincing foundations is an issue which would arise if it was necessary to accord any weight to his evidence, as a non-expert. In the light of those considerations I allow the objections to par 31 and par 36. I also allow the objection to par 23 so far as it refers to Dr Vinciullo. I do not allow the objections to par 43 and par 44 on the basis they may inform the evidence of the witness on his perceptions of the profession. I do not allow the remaining objections. 22 Particularly in relation to the evidence of each annual selection process in the years relevant to the applicant's claims, the applicant's case draws inferences from the application of the principles in Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298 at 305, 308, 312, and 320-321. In doing so the applicant also relies upon Girlock Sales Pty Ltd v Hurrell [1982] HCA 15 ; (1982) 149 CLR 155 at 161-162, 168 and 169; Trade Practices Commission v Arnotts Ltd (1990) 93 ALR 657 at 671-672; White Industries (Q) Pty Ltd v Flower & Hart (a Firm) (1998) 156 ALR 169 at 226-228; and Australian Competition and Consumer Commission v Global Prepaid Communications Pty Ltd (in liq) (2006) ATPR 42-103 at [57] and [60]. Section 4(1) of the TPA defines a corporation to mean (relevantly) a trading corporation formed within the limits of Australia. 'Trading corporation' is defined to have the same meaning as that expression has in s 51(xx) of the Constitution . The respondent denies that it is a trading corporation. (b) One of the respondent's 'chief functions' includes providing 'satisfactory education to our trainees' and providing 'a very high standard of training in dermatology': (See respondent's Annual Report 2000/2001 at 1, 15-17 and 46). (e) Throughout 2004/2005 the respondent increased promotion of itself and its Fellows to government, government bodies, the media and the general public to emphasise that Fellows of the respondent are the only true specialists in all aspects of skin health and disease. The respondent also planned to continue its promotional activities to ensure that dermatologists are recognised as the only true experts in all aspects of skin health and disease: (respondent's Annual Report 2004/2005 at 2-3). (f) The respondent earns significant income on an annual basis from a variety of sources that are of a trading or commercial character: For example, in 2000/2001 its 'Meetings and Trade Exhibitions', 'Unit Trust Distributions', 'Entrance Examination Fees', 'Training Conferences/Courses', 'Network Training Income', and 'Building Levies Received'; In 2001/2002 'Revenue from meetings, trade exhibitions and courses'; 'Training/Projects revenue'; 'Investment revenue'; 'Interest revenue'; 'Revenue from sale of books and brochures'. (See respondent's Annual Reports: 2000/2001 at 58-69 particularly at 61; 2001/2002 at 60-75 particularly 64; 2002/2003 at 62 --- 74 particularly at 65; 2003/2004 at 61 --- 75 particularly at 65). The respondent is also registered for GST and has an Australian Business number. (g) The respondent's Annual Scientific Meeting (incorporating a Trade Exhibition) is the respondent's 'largest single income/expenditure item': (respondent's Annual Report 2000/2001 at 56; 2001/2002 at 57; Statement of Shahid Shakur at pars 25-27). (h) The respondent's Finance Committee established following a respondent's Council meeting in November 2000 recognised that 'it should be pro-active in seeking new sources of income generation': (respondent's Annual Report 2000/2001 at 36). (i) The respondent is dependant on income from meetings, trade exhibitions and sponsorship to fund its core activities: (respondent's Annual Report 2001/2002 at 62). They also confirm the respondent's powers to undertake trading or commercial activities in furtherance of the objects of the respondent (including purchasing real or personal property or investing and dealing with the respondent's money). 26 The respondent relies on the evidence of the applicant's witness Dr Beresford. He testified that the respondent does not receive any remuneration from the hospital for undertaking the process of reviewing the applicants and making a recommendation. Further that training is provided by members of the respondent through the hospital at no charge. The candidates pay their examination fees and annual fees to the respondent. 27 The respondent submits that trading was not a substantial activity of the respondent. It contends that the trading activities of a corporation must form a significant proportion of the respondent's overall activities: R v The Judges of Federal Court of Australia: Ex parte The Western Australian National Football League (Incorporated) [1979] HCA 6 ; (1979) 143 CLR 190 ( Adamson 143 CLR). 28 However, the applicant's submissions on the point rely on authorities which point to wider considerations. The test for determining whether or not a corporation is a trading corporation for the purposes of the TPA requires consideration of the 'current activities' of the corporation rather than enquiring into the 'essential character' of or 'purpose of its incorporation': Adamson 143 CLR and State Superannuation Board v Trade Practices Commission [1982] HCA 72 ; (1982) 150 CLR 282 at 303---304 per Mason, Murphy and Deane JJ. The test requires an assessment to be made whether 'trading is a substantial corporate activity' ( Adamson 143 CLR at 208 per Barwick CJ) or whether 'trading activities form a sufficiently significant proportion of its overall activities' ( Adamson 143 CLR at 233 per Mason J with whom Jacobs J agreed) or determining that 'trading is not insubstantial, [the fact that trading is incidental to other activities does not prevent it being a trading corporation]': Adamson 143 CLR at 239 per Murphy J. It should also be noted that 'Trade for constitutional purposes cannot be confined to dealing in goods or commodities. Its full parameters may be difficult of definition. But the commercial nature of an activity is an element in deciding whether the action is in trade or trading': Adamson 143 CLR at 209 per Barwick CJ. The fact that a corporation was incorporated by statute, publicly owned and established to undertake important public functions at public expense does not prevent it being characterised as a trading corporation --- as was the case with the Tasmanian Hydro-Electric Commission in the Commonwealth of Australia v The State of Tasmania (Tasmanian Dam Case) [1983] HCA 21 ; (1983) 158 CLR 1. 31 Applying the activities test led Wilcox J to conclude that the Australian Red Cross Society, the NSW Division of that Society and The Prince Alfred Hospital were each trading corporations for the purposes of the TPA: see E v Australian Red Cross Society (1991) 27 FCR 310 at 340-345. This was notwithstanding that the Society did not make any profit out of its blood transfusion service (accounting for some 80 per cent of its activities) and that it did not charge for its blood products. Its only income was from governments, and the funding formula prevented that income ever matching its costs. In relation to the supply of blood the Red Cross Society and the NSW Division did not engage in trading activities; they engaged in a major public welfare activity pursuant to agreements with governments. Similarly, regarding The Prince Alfred Hospital, Wilcox J found that its 'predominant activity was the provision of medical and surgical care to patients, they were not objectives antithetical to the notion of trade. Many trading corporations supply services rather than goods': E v Red Cross 27 FCR at 345. It is not necessary that trading activities be profitable, or are even intended to be profitable, to constitute the trader as a 'trading corporation': E v Red Cross 27 FCR at 345. 32 In The Australian Beauty Trade Suppliers Limited v Conference and Exhibition Organisers Pty Limited (1991) 29 FCR 68 the sole issue before the Full Court was whether the primary judge had erred in finding that the appellant (ABTS Ltd) was a trading corporation formed within the limits of Australia for the purposes of the TPA. ABTS Ltd was a company limited by guarantee and had about 37 members each of whom paid an annual membership fee of $100. The members were suppliers to the trade known as the beauty industry. ABTS Ltd did not itself engage in any such supply business. It acted as a monitor in respect of adherence by its members to its rules. The main activity of ABTS Ltd was the organisation, annually, of a trade exhibition at which members were required to exhibit and at which non-members could exhibit, on less favourable terms than those available to members. The exhibition itself is a significant commercial enterprise. The appellant instigates the exhibition, appoints an organizer and oversees her arrangements. From time to time it directs her as to the course she must take. By the terms of its rules, the appellant compels its members to participate in the exhibition and it takes a share of its financial return. The appellant engages in the exhibition for the ultimate purpose of promoting the sale of its members' products. The exhibition generates the greater part of the appellant's income. The exhibition is a substantial and not merely a peripheral activity of the appellant. But that is not to the point. It is necessary therefore to identify what activities of the respondent constitute providing, for reward, goods or services. 34 In the case of the respondent its activities are directed to the provision of services. To some degree that provision is not for reward. The two matters referred to in the evidence of Dr Beresford (the absence of remuneration from RPH to the respondent for undertaking the process of selection and the provision of training by Fellows of the respondent without charge) are in that category. 35 The principal trading activity of the respondent is that of organising its Annual Scientific meeting which incorporates a trade exhibition. That is its largest single income/expenditure item by a very long measure. It also earns income from its training functions, which relate to continuing education of Fellows and, to a smaller extent, of persons seeking to complete the Part 1 examination or any later equivalent. Such income is significant to it. As long as the trading is not insubstantial, the fact that trading is incidental to other activities does not prevent it being a trading corporation: Adamson 143 CLR at 239 per Murphy J. 36 I do not consider the trading activities of the respondent to be insubstantial. As in Australian Beauty Trade 29 FCR 68, the exhibition itself is a significant commercial enterprise constituting a sufficiently significant proportion of the overall activities of the respondent. It generates a most significant part of the respondent's income. These circumstances are such as to merit the description of the respondent as a trading corporation. WAS THE RESPONDENT ENGAGED IN TRADE AND COMMERCE? In addition it is alleged the respondent is a supplier of high quality care and advice to individual patients, other branches of the medical profession, interest groups and the general public. 38 The respondent denies that it is engaged in the supply of services or engaged in trade or commerce or that it supplies care to patients. There is no evidence that it does supply such care. 39 For an applicant to establish liability by a respondent under ss 52 , 53 or 55A of the TPA or ss 10 , 12 or 18 of the FTA it must establish that the impugned conduct was engaged 'in' 'trade or commerce': Concrete Constructions (NSW) Pty Limited v Nelson [1990] HCA 17 ; (1990) 169 CLR 594 at 602, 604, 614 and 613. The reasoning in that decision has been analysed by Dowsett J in his dissenting reasons in Hearn v O'Rourke (2003) 129 FCR 63 at 70-76, considered by the Full Court (French, Sackville and Conti JJ) in Village Building Company Ltd v Canberra International Airport Pty Ltd [2004] FCAFC 240 ; (2004) 139 FCR 330 at 338-341. In other words, one does not simply identify the conduct in question, note that the relevant corporation is engaged in commercial activity of some kind, then look for a connection between the two. Because corporations are usually formed to engage in commercial activities, it will rarely be difficult to find such a connection. The correct approach is to determine whether or not the relevant conduct can, according to ordinary usage, be described as having occurred in the course of dealings "which, of their nature, bear a trading or commercial character". The commercial undertakings of the corporation in question may be relevant to the exercise. However, the more important question will be whether the conduct is of a kind which is usually of a commercial nature. Even if the services may be provided without profit to the respondent that would not necessarily signify that they are not provided in trade or commerce. The proper characterisation of the provision of the training program is not dependant on the respondent's internal accounting practices. Nor it is submitted can it be dependant on the level of fees the respondent choses to charge. The WA Faculty believed that all costs associated with the issue of the cost of providing training to trainees needed to be properly costed and charged. 43 In support the applicant relies on Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants (Aust) [2001] ATPR (Digest) 46-212. There Lindgren J was required to decide whether the educational and training functions supplied by the ICAA in connection with its CA Program pursuant to its Charter constituted the provision of 'services' in trade or commerce. His Honour answered affirmatively after a careful analysis of the facts: Monroe Topple [2001] ATPR (Digest) at 52,339-52,343. The enrolment in CA Program modules (the successor to PY modules), the compilation and selling of the module syllabuses, the writing, production and sale of module support materials, the conduct of 'focus sessions', the provision of 'feedback' to the candidates and examination (meaning all forms of assessment of a candidate's attainment) were all regarded as part of the ICAA's education and training function. Its objective was to recover the costs it incurs with respect to these matters by way of enrolment fees. What is important in this context is not the profit making or non-profit making status of the entity or whether, for whatever reason, it does or does not obtain a profit or desire to make a profit from the activities in question. Rather, attention must be focussed on the nature of the activities themselves. Everyday examples are the provision of education and training in relation to foreign languages, or English, or skills such as cooking or photography, or sports such as golf or tennis. There Kenny J found that promotional activities in relation to the supply of goods and services constituted conduct bearing a trading or commercial character. This was in circumstances where advertisements were part of a promotional campaign designed to promote products. It is submitted that the evidence establishes that the conduct of the respondent's training program as identified above is conduct in trade or commerce. 49 The respondent seeks to distinguish Monroe Topple [2001] ATPR (Digest) 46-212 on the ground that here it is not established that the respondent is in the business of selling education and training to many candidates 'for a very substantial monetary return on a highly organised and systematic and ongoing basis': at [77]. Also that the applicant's claim relates to the selection process for recommendation for employment by RPH subsequent to which the successful employee would receive the training. That is, the claim does not relate to any training provided by the Fellows after such employment in their capacity as employed consultants of the teaching hospitals. Nor, it is contended, does it involve the conduct of the respondent in proffering advice in the provision of dermatology services. 50 The respondent accepts that what must be found is 'conduct which is itself of an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character': Concrete Constructions 169 CLR at 603. Therefore the respondent submits that a finding needs to be made that the respondent's conduct in relation to selecting a candidate to be recommended for the Registrar's post at RPH and in determining any appeal by such a candidate is conduct in trade or commerce. This is a reference to evidence that Dr Cole, a Fellow of the respondent, provided informal advice in 1999 to candidates. The respondent contends that in any event Dr Coles' conduct should be characterised as private conduct. For reasons set out below, that aspect of the submission has not been accepted. 2. inviting applicants to apply for entry into the dermatology training program in each year. 3. publishing a training handbook setting out the selection criteria. 4. participating in the interviewing process and recommending the candidate considered most suitable to RPH. 5. maintaining and undertaking an appellate process. 6. engaging through a Fellow of the respondent who was a member of the Selection Committee in Western Australia in a debriefing of candidates. 52 It is common to the reasoning in Concrete Constructions [1990] HCA 17 ; 169 CLR 594, to Hearn [2003] FCAFC 78 ; 129 FCR 64, to Village Building [2004] FCAFC 240 ; 139 FCR 330 and to Monroe Topple [2002] FCAFC 197 ; 122 FCR 110 on appeal that to decide whether the conduct in question is in trade or commerce it is necessary to focus primarily upon that conduct. That involves identifying it. In my view the six items identified in the respondent's submissions correctly identify the conduct in question with one exception. The exception is the promotion of entry to the trainee registrarship at a conference in the circumstances considered in relation to the value of general practice reinforced representations (discussed later). The seven circumstances identify the circumstances in which representations are alleged to have been made, the effect of which is at issue on this proceeding. 53 Examining each of the seven items of conduct in question in turn, I am unable to conclude that such conduct or any item of it is able to be characterised as of a kind usually of a commercial nature. This is not to say that among the range of activities engaged in by the respondent (to which the applicant's submissions appear most to advert) these are not activities of a commercial nature. However, so far as concerns the conduct in question as the source of the infringement of the proscriptions of the TPA the position is to the contrary. None of the conduct in question is of a trading or commercial character. It is not enough that it is directed to the wider activity of the respondent to promote and develop dermatology when in itself it is devoid of the requisite character. 54 The conduct in question here is 'divorced from any relevant actual or potential trading or commercial relationship or dealing' so that it will not constitute conduct 'in trade or commerce': Hearn 129 FCR at 73 applying Concrete Constructions [1990] HCA 17 ; 169 CLR 594. I do not consider that a trading or commercial character is imparted to the conduct in question by the charging of a fee by the respondent to candidates, the advertisement for applications for trainee registrar positions or the publication of the Training Handbooks. The charging of fees bears no resemblance to the dimension of the fee charging at issue in Monroe Topple [2002] FCAFC 197 ; 122 FCR 110. They are not the source of very substantial monetary reward. None of these matters is in themselves conduct of a commercial character. 55 Furthermore the conduct in question does not arise in relation to the educational or training activities of the respondent. Rather, such conduct relates to the selection of a candidate to participate in training accredited as meeting the standards set by the respondent but provided by RPH through Fellows of the respondent engaged as volunteers and, if successful, to then join the respondent as a Fellow. 56 I distinguish Monroe Topple [2002] FCAFC 197 ; 122 FCR 110 on the basis that the conduct in question there was the whole of the range of activities of the Institute delivered as services. In other words, the conduct in question there included the range of activities of the corporation and specifically its educational and training activities. That is not the case in this proceeding. 57 The result is that I conclude the conduct in question is not properly able to be characterised as conduct in trade or commerce. 58 Section 5(1) of the FTA defines 'trade or commerce' to include 'any business or professional activity'. 'Business' is defined to include a profession. In Prestia v Aknar (1996) 40 NSWLR 165 at 194 Santow J held the FTA is to govern dealings including professional activities, but only those which, of their nature, bear a trading or commercial character. Additionally that whether a particular occupation or activity is that of a 'profession' or 'professional activity' is a question of fact and degree. He drew a distinction between the actual exercise of intellectual skill, typically represented by pure advice on the one hand, and on the other, a representation about either the conduct of that intellectual skill or the practice which generates it. He found the former (subject to the terms in which it was given) would fall outside the equivalent of s 10 of the FTA on the ground that pure advice did not involve any representation. The latter would be capable of inclusion in trade or commerce if it inherently bore the necessary trading or commercial character. In Fasold v Roberts (1997) 70 FCR 489 at 528 Sackville J followed Prestia 40 NSWLR 165. 59 In my view it cannot be found that any of the conduct in question here was a professional activity. Furthermore, even if it was and for the reasons previously given, it was not 'in trade or commerce'. The result is that the extended definition of trade or commerce in the FTA does not assist the applicant. 60 While this alone would disentitle the applicant to judgment on the claims under the TPA, I proceed to give my reasons on the totality of the applicant's claims. The same applies for s 10 of the FTA. The general words of s 52(1) of the TPA and s 10(1) of the FTA should be widely interpreted, not read down: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 202 and 204; Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45 at [97] ; Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 491 and 503-504. (b) The section is not confined to conduct that is intended to mislead or deceive: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd [1978] HCA 11 ; (1978) 140 CLR 216 at 228; Parkdale 149 CLR at 197; Yorke v Lucas [1985] HCA 65 ; (1985) 158 CLR 661 at 666 and 675-676; and Campomar 202 CLR at [103]. (c) The section is not confined to conduct which was engaged in as a result of a failure to take reasonable care: Parkdale 149 CLR at 197. (d) A person who has acted honestly and reasonably may be liable to be restrained by injunction, and to pay damages, if his, her, or its conduct has in fact misled or deceived or is likely to mislead or deceive: Parkdale 149 CLR at 197; Yorke 158 CLR at 666; Campomar 202 CLR at [103]. (e) One meaning the words 'mislead' or 'deceive' share in common is 'to lead into error': Parkdale 149 CLR at 197. (f) The words 'likely to mislead or deceive' make it clear that it is unnecessary to prove that the conduct in question actually deceived or misled anyone: Parkdale 149 CLR at 198. (g) The Court must decide objectively for itself whether the conduct is misleading or deceptive or likely to mislead or deceive: Taco Company of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87; Medical Benefits Fund of Australia Ltd v Cassidy [2003] FCAFC 289 ; (2003) 135 FCR 1 at [29] ; Domain Names Australia Pty Ltd v .au Domain Administration Ltd [2004] FCAFC 247 ; (2004) 139 FCR 215 at [17] ---[18]. (h) Evidence that members of the public have actually been misled is admissible but not necessary or conclusive: Taco Bell 42 ALR at 202; Global 2 FCR at 87; Medical Benefits Fund 135 FCR at [43]; Domain Names 139 FCR at [17]. (i) The section provides remedies additional to the common law: Parkdale 149 CLR at 205; Campomar 202 CLR at [97]. (j) Consideration must be given to the class of consumers likely to be affected by the conduct: Taco Bell 42 ALR at 202; Global 2 FCR at 91; Campomar 202 CLR at [102]-[103]; Medical Benefits Fund 135 FCR at [31]; Domain Names 139 FCR at [24]---[28]. (k) Whether or not conduct amounts to a representation is a question of fact to be decided by considering what was said and done against the background of all the surrounding circumstances. In some cases, such as an express untrue representation made only to identified individuals, the process of deciding that question of fact may be direct and uncomplicated. In other cases, the process will be more complicated and call for the assistance of certain guidelines upon the path to decision: Taco Bell 42 ALR at 202; Campomar 202 CLR at [100]. (l) In cases of representations to the public (rather than cases involving representations to identified individuals), the 'ordinary' or 'reasonable' members of the class of prospective purchasers must be considered: Campomar 202 CLR at [101]---[103]. (m) In an assessment of the reactions or likely reactions of the 'ordinary' or 'reasonable' members of the class of prospective purchasers of a mass-marketed product for general use, the Court may well disregard assumptions by persons whose reactions are extreme or fanciful in deciding the application of the section: Campomar 202 CLR at [105]. (n) It must be determined 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 class of prospective purchasers: Campomar 202 CLR at [105]. (o) In cases of alleged representations for conduct to mislead or deceive the representee must labour under some erroneous assumption. Such an assumption can include the obvious such as a simple assumption that an express representation is worthy of credence. The nature of the erroneous assumption which must be made before conduct can mislead or deceive will be a relevant, and sometimes decisive, factor in determining the factual question whether conduct should properly be categorized as misleading or deceptive or as likely to mislead or deceive: Taco Bell 42 ALR at 200; Campomar 202 CLR at [104]. (p) The question whether particular conduct causes confusion or wonderment cannot be substituted for the question whether the conduct answers the statutory description in the section: Taco Bell 42 ALR at 201. (q) A document or advertisement which, when read or viewed carefully as a whole, is factually true and accurate may still be capable of being misleading if it contains a potentially misleading primary statement which is corrected elsewhere in the document or advertisement (eg by use of 'fine print' or a symbol pointing to some qualification) but without the readers or viewer's attention being adequately drawn to the correction. The principle which applies to those cases is that the qualifying material must be sufficiently prominent or conspicuous to prevent the primary statement from being misleading. Put another way the degree of prominence required (of the qualifying material) may well vary with the potential of the primary statement to be misleading or deceptive: Medical Benefits Fund 135 FCR at [37]---[41]. (r) Nothing in the terms of the section suggests that a statement made which is literally true may not at the same time be misleading or deceptive. It clearly may be: Hornsby 140 CLR at 227; Taco Bell 42 ALR at 200; Global 2 FCR at 88. (s) It is not necessary that there must be a representation for the section to be infringed. To add such a requirement is to impose a gloss on the statutory words. 'Representation' is not co-extensive with 'conduct'. False impressions conveyed by pictures rather than words, can be misleading conduct: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 40-41; Accounting Systems 42 FCR at 491 and 504. (t) There is no room under the legislation for publication of misleading or deceptive advertising so long as it is corrected by later material. Whether conduct is misleading or deceptive (or likely to be so) depends on the circumstances in which it occurs and not on what might happen in the future: Taco Bell 42 ALR at 198-199; Medical Benefits Fund 135 FCR at [42]-[43]. Representations to identified persons (see claim at pars 11, 12, 14, 15, 18, 23, 28, 29, 31, 32, 38D) and representations to a general audience (see claim at pars 13, 20, 24, 34, 38A). For the latter, the applicant contends that the class of persons to be considered would be the reasonable or ordinary person in the community. As the respondent's Training Handbooks were published on the respondent's website, it argues the class of persons is broad. It would include not only medical practitioners contemplating entry onto the respondent's training program and existing trainees and dermatologists but also officials from government agencies and hospitals as well as the public at large on the basis that it is relevant to public confidence in specialists to have knowledge of what the respondent requires for such a position. It is submitted that the erroneous assumption that the reasonable or ordinary member of the public would be under in this case is the obvious one identified above that the express representations are 'worthy of credence'. 63 The respondent submits that there is not evidence that the Training Handbook was a document intended for, nor consumed by, the general public. The notice concerning the Training Handbook was itself addressed to trainees of the respondent and other examination holders. On the evidence the respondent contends that the relevant class, at its broadest, is medical practitioners and, at its narrowest, is the class of medical practitioners interested in becoming specialist dermatologists. It argues that it is by reference to ordinary and reasonable members of that class that it must be determined if the conduct alleged occurred: Campomar 202 CLR at 87. 64 The test to be applied is that stated in Parkdale 149 CLR at 199, namely 'consideration must be given to the class of consumers likely to be affected by the conduct'. Applying that test, I consider that the relevant class is that of medical practitioners. The Handbooks were directed to such practitioners and it was only they who were eligible to avail themselves of the training opportunities described in the Handbooks. 65 I do not consider that the absence of evidence of use and consumption of the Training Handbooks by members of the public can be conclusive they were not directed to a wider audience. That is because the placement of the Handbooks on the website of the respondent enables it to be inferred that the Handbooks were available to any member of the public. However, it was not the wider public who were within a class of consumers likely to be affected by the Handbooks. They could be informed by the Handbooks but not affected by them in the way a medical practitioner consumer could be. Section 51A(2) is the source of the provision that unless the corporation adduces evidence to the contrary, it shall be deemed not to have had reasonable grounds for making the representation. The applicant submits that to establish 'reasonable grounds' the representor must show (a) some facts or circumstances (b) existing at the time of the representation (c) on which the representor in fact relied (d) which are objectively reasonable and (e) which support the representation made. 67 The respondent does not concede that s 51A is applicable. I am unable to agree that there are not occasions where the section is applicable. 68 However I agree with the respondent that s 51A should not be understood to have bound the respondent not to change the policy expressed in one particular Training Handbook. The policy in a Handbook for a particular year was valid for that year. The Handbooks were adopted by the Council of the respondent from year to year. Whether the changes or absence of changes in a particular year are relevant in any other year is a matter to be determined by application of the rules of evidence, not by adoption of any blanket approach that changes applicable in a subsequent year are irrelevant. 69 The respondent submits that it discharged the onus on it under s 51A by the passing of a formal resolution to adopt the Handbook each year in circumstances where it reposed confidence in the ability of its Fellows to discharge their obligations as members of a Selection Committee fairly, honestly and in good conscience. 70 I will consider the application of s 51A and these submissions in relation to each allegedly future representation as it arises. The applicant submits that statements of aspiration can also constitute representations. For this submission the applicant relies upon the terms of the statements in question, the context in which they appear and the absence of evidence to persuade the Court that what are described in the defence as 'itemised statements of aspiration' were not representations. 72 The respondent contends on this issue that whether words are aspirational is to be found from the words used and not from evidence. Reference is made to the portion of relevant Training Handbooks addressing 'attributes' of a dermatology trainee occupying a registrar training position. 73 The question is therefore whether the statements were representations. I will consider the issue further in the particular contexts in which it is said to arise. It is said it was not a representation because implementation of it never could have guaranteed an improvement in her position for selection. I have not accepted the submission that Dr Cole's statements were not given on behalf of the respondent. 75 When each of the circumstances of these sessions (both before the applicant applied and the feedback sessions after she applied) is examined it is apparent the applicant sought a meeting with a spokesperson on behalf of the respondent. Also it is not the case that any representation from these sessions could not have improved the applicant's chances, although it is the case they could not have guaranteed her selection. Again, when the circumstances of each feedback session are examined, it is seen that while some of the matters stated to her were by way of appraisal, others were directed to how she could best improve her skills. In April 1998 the Report was endorsed by the Medical Training Review Panel and forwarded to the Commonwealth Minister for Health and Family Services. The respondent participated in that review --- which notes in the executive summary at 15 that 'postgraduate training in medicine is almost exclusively in the hands of the learned Colleges'. It noted that the selection of medical graduates for vocational training is a serious responsibility and that the current system is based on the belief that members of the profession and the particular discipline are best able to identify those most suitable for specialist training (at 25-26). It expressly dealt with the situation of documentation as enabling external scrutiny and that the documentation should be such as to enable accurate reconstruction of the original detail and process. It said destruction of documents is unjustifiable on a number of grounds and is to be avoided until there is some certainty they will not be required (at 107). 78 A report by the Australian Medical Workforce Advisory Committee in February 1998 on the Specialist Dermatology Workforce in Australia noted that changes in dermatology practice are likely to continue and the trend was away from public hospital practice (at 182-293, 250). From 2002, following a review of the selection process, an independent lay person has also been included. 80 Each year a Selection Committee is constituted. Nevertheless there was a considerable continuity in membership in the years made relevant by the applicant's claims. 81 The sole criterion of selection to be applied by the Selection Committees is merit. Training Handbooks are issued with reference to the selection process in each year. 82 The first step in the selection process was for members of the Selection Committee to be assigned to 'score' the candidate or candidates referred to him or her against a series of criteria on a score sheet. The Selection Committee then short-lists some candidates for interview and referee interview. 83 It is apparent that a persons ranking by any Selection Committee is dependent not only on their own record but also how their record stands up in relation to the other candidates in the particular year. Additionally emphasis by a Selection Committee on particular attributes varied from year to year in the light of the candidates and their particular qualities. Two successful candidates in former years were persons who, like the applicant, had qualifications and experience as a general practitioner as part of their record. 84 An important feature of the selection was that the Selection Committee did not have jurisdiction to appoint the selected person to the position of Trainee Registrar. The final decision whether or not to employ a selected candidate rested with RPH, at least formally. On or about 19 May 1999 Dr Shahid met with Dr Cole to discuss Dr Shahid's interests in pursuing a career as a specialist Dermatologist. 87 The applicant's evidence was that she was interested in exploring options for advancing her expertise in medicine by gaining specialist training in dermatology. She telephoned the Australian Medical Association (AMA) in Perth to obtain relevant information concerning a traineeship in dermatology. She was told to contact Dr Cole, the Regional Secretary of the WA Faculty of the respondent. 88 The respondent's defence accepts that Dr Cole has been a Fellow of the respondent since 1989; was on the respondent's Council between 2001 and 2002; was the Chair of the respondent's WA Faculty in 2004 and 2005; and was on the West Australian Selection Committee for the recommendation of candidates for a position of trainee registrar in Western Australia in 2000 and 2002 to 2005. 89 The respondent denies the pleading in par 11 of the claim save as to the fact of the meeting between the applicant and Dr Cole on or around 19 May 1999. 90 The applicant attended the meeting together with her husband. Her evidence in cross-examination was that Dr Cole told her that her background in practice was very relevant, would bring diversity to the profession and gave her 'an edge'. This was corroborated by her husband's evidence. 91 In her evidence Dr Cole denied telling the applicant that her general practitioner background was 'very relevant' to specialist training in dermatology; rather she had said it would be 'acceptable' for application for the training position and that it would bring diversity. She stated she had told her that other doctors with a general practitioner background had been selected; she named two. She also claimed to have referred to another selected general practitioner who had an exceptional record and to the fact that entry into the training program had become very competitive. Dr Cole denied saying that being a general practitioner gave the applicant an advantage. Her evidence was also that she did not specifically encourage or discourage the applicant to apply for the training program. However she had said that the Part 1 examination was being held in a few weeks' time and the applicant could apply to sit for it. 92 The applicant contends there are sound reasons for accepting her account in preference to that of Dr Cole. The first is that it would be highly unlikely that she would have embarked on the extensive preparation for the FACD Part 1 examination and moved to a part-time role in general practice if she had not been given specific encouragement or reassurance by Dr Cole regarding her experience and its suitability for the practice of dermatology and the training program. The second is that it is unlikely that Dr Cole would have gone into specific detail of one previous candidate's qualification and interview performance if all she was trying to do was to give information as those particulars (of exceptional record) would have been likely to discourage the applicant. The third is that the alleged comments on increasing competitiveness of dermatological training were highly unlikely given that Dr Cole accepted in cross-examination that in 1998 no person from WA sat for the respondent's Part 1 examination and she was aware of that at the time and in 1999 there was only one or two WA candidates (although this would not affect the number of applicants for the position as it was advertised nationally). The fourth is that Dr Cole asserts she suggested the applicant should get back into the hospital system as a dermatology resident whereas it was not something either the applicant or her husband recalled yet it was a suggestion which would have impacted on their lives. The fifth is that Dr Cole said she did not take notes of the meeting because it was informal and did not recall its duration which is inconsistent with her definite approach to the matters in issue. 93 In relation to the fourth submission the respondent says there is no evidence that the applicant's entry into a hospital position would have impacted on her life. The evidence shows that the applicant worked part-time at the time of the interview and continued to do so. Also, at a later date the applicant did not accept such advice when given by Dr Clay. In relation to the third factor the respondent says that there is evidence dermatology was becoming very competitive over recent years and was consistent with the increased uptake of applicants and the national and international advertising of the positions. 94 On 13 September 2002 the applicant made a note in connection with later dealings with the respondent that Dr Cole had advised her in 1999 that her general practitioner background 'was not a minus but was a plus point in terms of bringing diversity', quoting the example of Dr Tait. 95 The respondent submits that the fact that general practitioners have been selected as the trainee show that, in a particular context, being a general practitioner can be an advantage. However, the advantage is to be found in the context of all relevant circumstances relating to an applicant and not in the fact of general practitioner experience alone. 96 This evidence must also be considered with the evidence relating to the 'value of general practice reinforced representations' below. Were the representations made? The respondent maintains she only gave 'personal advice'. I do not accept that submission. The applicant had sought the advice of the respondent. The AMA had referred her to Dr Cole, who held an appropriate office to represent the respondent. Dr Cole was speaking on behalf of the respondent. 98 I am satisfied that the representations pleaded in 11.b) and 11.c) were made. 99 It is more difficult to find whether the representation in 11.a) was made. It is denied by Dr Cole who testified she had said the experience was 'acceptable'. I am not satisfied that is a clear recollection of what was said. The evidence shows that attention was directed to other selected trainee candidates with a general practitioner background. 'Acceptability' does not seem to have been the focus of the consideration. In that context the weight of evidence (even allowing for Mr Shakur's position as the applicant's husband) favours the view that the representation was made. 100 I am not satisfied that the representation pleaded in 11.d) was made. When the ex post facto note of the applicant is considered, it becomes apparent that Dr Cole was not addressing an advantage of a general practitioner qualification to selection but rather to bringing diversity to the profession. Were the representations misleading or deceptive? The foundation of the plea is that the respondent does not in fact value general practice qualifications or experience. 102 In my view the applicant has not made out this foundation as at the time the representations 11.a), b) and c) were made. The evidence shows that, as Dr Cole stated to the applicant at her interview with her, some candidates with general practice qualifications had been selected as the trainee. The representation that the general practice experience was 'very relevant' could not be misleading or deceptive or likely to be such because that was what it was at the time it was made. That is not to represent that it would be a decisive or winning consideration, only that it was 'very relevant'. The fact that a consideration is 'very relevant' to a final determination does not necessarily mean that it is positive or negative it is just a relevant consideration that the adjudicator should take into account. It would be scored and taken into account with all of a candidate's qualifications and experience considered in the light of the qualifications of the other candidates. 103 The pleading in par 42 links the issue of undervaluing with the plea that the respondent does not value the general practice experience 'and/or' has an undisclosed preference for candidates with hospital experience and/or young hospital experienced doctors when selecting candidates for the training program. Dr Cole's evidence was that she told the applicant she should consider getting back into the hospital system as a dermatology resident or a registrar in a related field such as radiation, oncology, plastic surgery, histopathology, immunology or general medicine. Both the applicant and Mr Shakur deny this was said. However, Dr Cole said she remembered it because the applicant had asked what she could do and Dr Cole said she had explained her own experience before doing the trainee registrar position. I accept Dr Cole's evidence on this issue. It follows that, so far as the interview with Dr Cole was concerned, there was no lack of disclosure to the applicant of the relevance of hospital experience. 104 Additionally, after the publication of the National Trainee Selection Guide in 2001 (considered more fully below) there was no on-going basis upon which the applicant could have considered that general practice experience would ensure her selection. The value of general practice representations could not objectively have been open to the applicant to rely upon after the statements of desired attributes of trainee dermatologists were published in the Guide as part of the Handbooks to which the applicant annually had regard. The Guide made it quite apparent that academic record, research, clinical experience and judgment were the pivotal considerations. In her evidence the applicant deposed that in the period 19-20 February 2000 she attended a seminar of the respondent in Sydney. She stated that while there two of the presenters from the respondent, one a practising dermatologist who was previously a general practitioner and the other a trainee registrar with a general practitioner background, highlighted that their general practitioner experience was very relevant to the respondent's training program and that general practitioner qualification was a plus for selection. The applicant said she was pleased and reassured by the consistency of these statements and Dr Cole's advice to her. In cross-examination she testified that the former had said being a general practitioner had given him an edge towards selection; the latter had said she was selected readily because she was a general practitioner. The applicant did not know where either came from. I accept the applicant's submission that the respondent has not adduced any evidence to refute this evidence nor any explanation for such. 106 I therefore accept these representations were made. However, for the reasons given on the value of general practice representations, I do not consider it has been established that the making of them was misleading or deceptive or likely to be such. The general practice qualification referred to was 'very relevant' but that was not (and could not be) an assertion that it was the only or principal consideration on selection or that it guaranteed selection. The ready acceptance of a candidate in one year cannot by itself constitute a future representation that another general practitioner will also be readily selected. 107 Further, the value of general practice representations could not objectively have continued to be relied upon by the applicant after the publication of the National Trainee Selection Guide in 2001, considered below. As a consequence she became a provisional trainee of the respondent. As required by the respondent, the applicant applied for the respondent's WA trainee registrar position in dermatology in July 2000. The position was known as a 'Rotating Inter-Hospital Registrar Appointment in dermatology'. At that time, the application process and the formalities of selection being co-ordinated for the respondent by RPH, principally through Ms O'Hara. 109 The applicant pleads she took these steps induced by and in reliance upon the matters pleaded in pars 11 and 13-15. Paragraph 11 refers to the value of general practice representations. Paragraph 13 refers to statements in the Training Handbook 2000. I agree with the respondent's submission that each Handbook spoke only for the year to which it related. The practice of the respondent was, through its Council, to issue such Handbooks annually in January, referable to the training for the calendar year in question. However, for an applicant applying in 2000 for a position in 2001, the only guide available would be that for the year preceding the one in which the position was to be held. Therefore, while the 2000 Handbook could not speak for 2001, it was nevertheless the document upon which the applicant had to rely to formulate her application for a position in 2001. In that sense, the Handbook of one calendar year continued to speak until supplanted by the next Handbook. 110 The applicant attended an interview for the position in September 2000. The applicant was asked by the respondent to read the Handbook thoroughly and did so. The applicant's claim alleges that i) and j) were representations with respect to future matters for the making of which the respondent did not have reasonable grounds. 113 The applicant submits that it is important to note the professionalism of the Handbook and that it was serious and detailed, being to provide guidance to members of the Australian or overseas community about the requirements to become a Fellow of the respondent. Both the contents of the Handbook and the training and examination requirements are expressly stated to have been determined and approved by the respondent. 114 In its defence the respondent pleads that the eligibility requirements for trainee registrar dermatologist are determined on an annual basis as set out in the Training Handbook and that in the 2000 Handbook the respondent was still developing its national selection process. 115 In pars 39, 40 and 41 it is pleaded the future representations in 13.i) and j) were misleading or deceptive or likely to be such. There it was stated that the training period had been increased to 5 years and the Part 1 examination abolished, due to concerns about the attitude of the Australian Competition and Consumer Commission (the ACCC) to entry requirements. In the respondent's Annual Report 2003/2004 it was stated that the training program was increased to five years and the basic science examination was abolished. Additionally that it would remain permanently valid and holders would not be required to sit the clinical sciences paper in their first two years. 117 The respondent submits in the light of that evidence that notwithstanding that a pass in the Part 1 examination ceased to be a pre-requisite for entry into the dermatology training course, any person who had passed the exam was entitled to continue to assert that they had passed it, so that the pass remained valid. Further that the entrants to the course who had previously passed the Part 1 examination were exempt from a portion of the training as a result of having that pass. Consequently it is submitted the representation was true. 118 It is also submitted by the applicant that at the time the representation was made, there was a basis for it. I consider the respondent's submissions establish reasonable grounds for the making of representation i). The claim in respect of it fails for the same reason as i). Her evidence was that he told her that the committee had selected a candidate with a research background in dermatology. Also that she had performed well in the interview with good references. At a meeting on or about 10 October 2000 Dr Swarbrick then Chairman of the WA Faculty of the College and Chairman of the College's selection committee for the 2001 trainee registrar position in Western Australia provided feedback to Dr Shahid. Paragraph 18.c) is pleaded as a future representation. In par 43 it is pleaded the positive feedback and research representations were conduct offending s 52 of the TPA. 123 It is also pleaded that induced by and in reliance upon (among other things) these representations, the applicant engaged in and undertook research work in dermatology. 124 The respondent submits that Dr Swarbrick encouraged the applicant by offering advice and that his feedback did improve her. It submits that whether or not that advice improved her to the point where ultimately she could be successful was a matter for her and was also dependent on who else applied. It could not be guaranteed. Since 1981 he has been in private practice and a consultant dermatologist at Sir Charles Gairdner Hospital. At various times he has been Head of the Department of Dermatology at Sir Charles Gairdner. He has held various roles with the respondent including Chairman of the WA Faculty in 2000 and 2001 and member of the WA Selection Committee in various years. In his evidence and cross-examination Dr Swarbrick said that, among other things, he had recommended to the applicant that she get involved in research relating to dermatology and gave her names of potential supervisors. 126 The applicant said she followed this advice and from late 2000 commenced preliminary work towards research under the supervision of Dr Coombe on characterisation of some of the clones for expression of melanoma markers. Her evidence was that she spent about 20 hours or more per week on the laboratory research activities from March 2001 to about the end of 2003. Following that she was engaged in writing up the research when convenient in the light of her other professional activities. As a consequence the applicant could not resume full time work in general practice. In fact, in February 2000 the applicant had already entered into a contract for part-time work. The applicant submits that it is not realistic to suggest that she would have done this without the positive feedback or encouragement given by Dr Swarbrick in October 2000. As against that, the respondent points to evidence of the applicant's interest in continuing professional education generally. 127 Dr Swarbrick's evidence on this was clouded by the fact that he expressed himself as unsure whether his memory related to the 2000 or 2001 feedback interview. As the meetings were intended to be informal, he had not made notes. He denies saying that the applicant's interview was very good and that she had performed well and had a good chance of being recommended for the position of trainee registrar. His memory was that she had not performed particularly well in answering interview questions. He said he endeavoured to be polite to her and to tell her things she could do to improve her chances of selection. These included re-entering the hospital system in a registrar position, commencing a research project in dermatology and/or enrolling in a postgraduate course in a field of dermatology. 128 The applicant recalled Dr Swarbrick suggesting she take the option of research but denies that he mentioned taking a hospital position. In cross-examination Dr Swarbrick gave a reason why he remembered saying that to her, namely, that Mr Shakur had suggested she might undertake research in the United States of America where she had relatives in the hospital system. This evidence was not put to Mr Shakur. 129 I find that Dr Swarbrick made the research representation pleaded in 18.c). It was a future representation it looked to the future and was not simply an 'appraisal' of the effect of her interview. It was acted upon by the applicant. 130 The respondent contends there were reasonable grounds for the representation, namely that undertaking research would improve the applicant's merits for being selected. Reliance is placed on the evidence of Dr Cole and Dr Swarbrick concerning the manner in which applicants were scored on, which included scoring research. Therefore the respondent submits in effect that there were facts existing at the time of the representation, namely the mode by which candidates were scored, on which Dr Swarbrick relied and which were objectively reasonable and supported the making of the representation. The respondent says on this evidence the representation was true and that undertaking the research did improve the applicant's merits because she received recognition in the selection process (as did other candidates) where research had been undertaken as compared to the position if she had not undertaken the research. 131 To be added to this is that Dr Swarbrick gave to the applicant the names of two candidates whose careers had benefited by undertaking research. 132 In my view the respondent has discharged the burden under s 51A and established that there were reasonable grounds for the making of this representation at the time it was made. 133 Furthermore, the representation continued to be reasonable because a history of involvement in research projects was in the first limb of the desirable attributes of a dermatological trainee introduced by the National Trainee Selection Guide in 2001, considered more fully below. However, he could not be categorical in speaking to this feedback session. The evidence remaining is that of the applicant and her husband. Both of them testified that Dr Swarbrick had said she had performed well in the interview. I find that was what he said. It is consistent with Dr Swarbrick's intention to be polite to the applicant and not put her down in the feedback session. However, it was not a statement which did more than affirm she had performed well in the interview. It could not have mislead or deceived or been likely to do so except with reference to how she in fact performed in the 2000 interview. It said nothing as to her chances, either at the interview or in the future. I do not consider it has any further relevance to the applicant's case. She was advised by the respondent to consult Appendix 2 in the 2001 Training Handbook, which could be downloaded from the respondent's website. The applicant read that Handbook and applied for the 2002 position. She was not successful. In October 2001, in accordance with the Handbook, she applied for a formal feedback interview. 136 A feature of the 2001 selection process was that much of the documentation relating to it was misplaced or destroyed. Dr Swarbrick accepted in cross-examination that he did not know where the records were and that there was no system for preserving them, contrary to the Handbook representation. 137 Late in the trial the respondent produced Dr Clay's handwritten score sheet for the 2001 selection and Dr Singh's sheets for the same selection to each of the witnesses respectively. The applicant submits the lateness and unexplained character of the production means that the documents should be treated with caution. I agree with the respondent that the documents were properly identified and they cannot be disbelieved. However, the manner of their production, while showing that these records were kept, does not add credibility to the soundness of the record keeping system. The applicant submits that the respondent has not provided any cogent evidence of measures taken by it to ensure these representations could be honoured and were made on reasonable grounds. 139 The respondent pleads in its defence that the 2001 Training Handbook states aspirations to act fairly towards applicants for the selection processes and decision making by the respondent but denies they constitute representations. The Handbook is subtitled on its cover as referrable to 'information and curriculum'. The Foreword contains the statement 'this handbook presents a detailed curriculum and general regulations relating to training and examinations'. Appendix 1 contains what is described as the 'appeals process'. Appendix 3 addresses approved trainee posts. Appendix 4 deals with application for accreditation to a training program. Appendix 5 sets out the trainee appraisal form. Appendix 6, the assessment of competence form. Appendices 7 and 8 contain matters relating to certification. Appendices 10 and 11 deal with sample logbooks. Appendix 12 addresses research and travelling scholarships. Appendix 14 contains an order form. I consider these are all in the character of factual statements, representing the position of the respondent on their subject matter. 140 There are other appendices dealing with aspirational matters. The curriculum statement includes a list of objectives relating to knowledge and understanding; skills; and attitudes as they affect professional behaviour and also ethical issues. Appendix 2 is the 'National Trainee Selection Guide', some of which is aspirational in that it refers to desirable attributes of a dermatology trainee. Appendix 9 sets out the code of conduct. Appendix 13 contains a reading list. 141 It is not the case, therefore, that it can be found that the Handbook as a whole is an aspirational document. Whether or not a statement from it is a representation will depend on the content of the particular statement and its context. To have a sound academic record, a pass in the Part 1 examination of the College and involvement, a history of involvement or a willingness to be involved in research projects. Those three paragraphs show that such a committee must have regard to academic record (which would included post-graduate record), involvement in research, and clinical ability and experience. Of these, clinical ability is clearly an important consideration. Discussion of cases in the clinics, ward rounds, seminars, clinicopathological sessions and journal club meetings are all important aspects of training. Trainees should allow time for reading current dermatological literature as well as pertinent literature in clinical medicine. An understanding of general clinical medicine, particularly pertaining to dermatology, is essential. Trainees are also encouraged to attend grand rounds and other hospital conferences involving other aspects of medicine and surgery. It is essential that trainees acquire a knowledge of histopathology of the skin as well as both theoretical and practical knowledge in mycology, parasitology, virology and microbiology. This includes an understanding of techniques of staining and culturing pathogens. 145 The applicant testified she had been in practice over 8 years full-time and 5 years part-time. Of the patients she saw 10 to 15 per cent had a dermatology condition. Of those, 95 per cent she managed and about 5 per cent were referred to dermatologists. Her main referral was to West Perth Dermatology. The three dermatologists there were Dr Donnelly, Dr Rohr and Dr Halbert. Dr Rohr was a member of the Selection Committee when the applicant applied in 2000. Dr Halbert was a member of each of the Selection Committees for the applications made in 2001 to 2004. Dr Donnelly was a member of the Selection Committee for applications made in 2003 and 2004. However, she had not used them as referees. It had not occurred to her that the persons best able to address her clinical skills would be the dermatologists to whom she was referring patients each week. In particular, she had not discussed her application or her interest in dermatology with Dr Donnelly. Therefore the respondent argues it can safely be inferred that their assistance was not sought either because the amount of clinical work the applicant said she referred to them was untrue or their references concerning her clinical skills would not have assisted her case. 146 Dr Cole testified that the difference between clinical experience as a general practitioner and clinical experience in a hospital is that the latter involved treating patients who, by virtue of their problems, have been sent to hospital usually by a general practitioner, because that problem could not be managed in general practice. For a training registrar it is a supervised environment in which they must perform a lot of tasks which would not arise in general practice. She did not deny that general practice could be an adequate background for selection but it was different to hospital experience. 147 From the introduction of the National Trainee Selection Guide the applicant was therefore on notice that her experience as a general practitioner as such was not among the desired attributes for which a Selection Committee was charged to search among candidates. She was from that time on notice that the relevance of her experience as a general practitioner was whether it had given her experience, including clinical experience, which could establish that she had one or more of the desired attributes. It must have been apparent to her as a medical practitioner that if she wanted to get high marks for clinical experience she may perhaps best do that in a hospital setting or, if not, by increasing the focus of her general practice on clinical aspects of dermatology. As a practitioner, she would also have known of the comparative difficulty in having someone able to speak to her clinical experience as a general practitioner rather than from a supervised environment. Interviews will be granted after assessment of curriculum vitae and referee reports. Referee reports will be scored in an objective manner with a global score incorporated. The candidate's responses will be recorded. Representation t) is particularised as implied from q) to s) and the contents of 6-12 (General Information) and 38-41 (Appendix 1 --- Appeals Process) of the same Handbook. 149 As these pleadings (other than 't)') are sourced in statements in the Training Handbook, there is not a dispute as to whether they were made. The areas of contention are whether they constituted representations and whether they were conduct proscribed by s 52 and other sections of the TPA. This occurred after assessment of CV's and referee reports. Such reports were scored. • 20.f): such were kept, subject to defects in retention referred to elsewhere. • 20.g): such minutes and reasons were kept. • 20.h): candidates had the opportunity to ask questions and express opinions and their responses were recorded. • 20.i): the Selection Committees met promptly. • 20.k): records were kept, subject to defects to be mentioned below. • 20.n): this occurred annually in the production of each year's Training Handbook. • 20.p): the purpose of the Guide is a fact. • 20.q) and t): considered below. Written applications were made. A Selection Committee reviewed and assessed applications against a common set of criteria. A standardised ranking system was used. No trainee was selected without an interview. Interviews were granted after assessment of CV's and referee reports. No other candidate than the applicant has appealed. Other candidates have applied more than once. Written records were kept. There was opportunity for candidates to speak, ask questions and obtain feedback. There were reasonable grounds to suggest that the applicant would have improved her chances of selection by leaving general practice and working in a hospital in preferred fields of immunology and rheumatology. There was no evidence that if the applicant's appeal succeeded in any instance, arrangements could not be made for the applicant to enter the program. It is submitted that in all these circumstances each Selection Committee attempted to discharge the obligation on it and the respondent had reasonable grounds to expect that the obligation would be discharged. 153 I accept that the evidence supports the matters the respondent relies upon and I find reasonable grounds for the making of the statements at the time they were made has been established in relation to the non-aspirational pleaded future statements. The first is in relation to 20.k). It is said there was an alleged failure of the respondent to keep or provide minutes or records of meetings during the selection processes for the trainee registrar program. The second is in relation to 20.q) where it is contended that no genuine opportunity is provided for a candidate aggrieved by a decision of the respondent in the selection process to appeal the decision and to have the appeal adjudicated upon before allowing the impugned decision to take effect. 155 In respect of each of these aspects it is first pleaded that the conduct is misleading or deceptive or likely to be such contrary to s 52 of the TPA and s 10 of the FTA. 156 It is also pleaded that the statements are liable to mislead the public as to the nature, the characteristics or the suitability for their purpose of the respondent's services in contravention of s 55A of the TPA and s 18 of the FTA. The applicant submits that the conduct complained of must have a public element to it given the reference in the section to 'mislead the public'. She relies on the Handbooks, the source of the representations, being available in hard copy and to the community as a whole when promoted or provided on the respondent's website. The respondent submits that, based on its view that the relevant class is an ordinary member of the class of medical practitioners or medical practitioners interested in becoming specialist dermatologists, there is no scope to find a breach of s 55A. This is because the respondent maintains that there is no basis to find that the relevant conduct would 'mislead the public' because there is no involvement of a sufficiently large and random or general group to satisfy this requirement. cf Westpac Banking Corporation v Northern Metals Pty Ltd (1989) 14 IPR 499; Trade Practices Commission v J & R Enterprises Pty Ltd (1999) 99 ALR 325. 157 Thirdly, it is pleaded the statements falsely represent that services are of a particular standard, quality, value or grade contrary to s 53(aa) of the TPA and s 12(1)(e) of the FTA. The applicant submits that the Court should approach the word 'quality' and the word 'standard' in their ordinary meaning. 158 Fourthly it is pleaded that the statements falsely or misleadingly represent the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy contrary to s 53(g) of the TPA and s 12(1)(I) of the FTA. The applicant submits that the concept invoked is that of a transaction (in this case, the selection process and the appeal process) being promoted. This will include 'the collection of rights and duties which will be acquired or assumed by the parties to the transaction being promoted as between the proposed [supplier] and the proposed [acquirer], if they enter into the transaction which the promoter actually has in mind, and is promoting: Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801 at [26] per Carr J citing and applying Henderson v Pioneer Homes Pty Ltd (1980) ATPR 40-159 at 42 244. 159 The applicant relies upon the evidence referred to above in relation to the respondent's 2000 Handbook and the value of general practice reinforced representations and to evidence digested in a tabular form as an attachment to the applicant's closing submissions. It was expressly said, among other things, that "the entire selection process for candidates for dermatology training registrar positions will be open, transparent and accountable"; that "proceedings of each meeting of the Selection and Interview Committees will be minuted with a record of decisions made, with appropriate reasons for those decision"; that "the selection process would be "capable of withstanding external scrutiny"; "a record of proceedings of the College's Selection and Interview Committees will be kept for a minimum period of 6 years in a secure manner at the College's premises; the National Trainee Selection Guide had been developed by the College "to ensure uniformity and fairness in the selection process" and that it "will be continually monitored and evaluated". The statement appeared as part of the National Trainee Selection Guide. It is most specific in its content. It is a matter on which most if not all applicants would rely in knowing that it would preserve the confidentiality of their application. 161 The respondent accepts that there is evidence that the November 2001 selection minutes were not kept at the respondent's premises. Also that there was evidence that records were maintained by the secretary of the Western Australian selection committee, although not at the respondent's premises. Nevertheless the respondent submits records were kept and became available. 162 The respondent says that in any event the complaint goes nowhere because the question of record keeping and maintenance was ex post facto to the decisions of selection committees. The applicant did not appeal the selection decision in 2001, so that the subsequent question of failure to keep records is irrelevant. This submission is not to the point of the applicant's submission here, which is whether the making of the representation constituted conduct offending any of the sections. Issues of causation will arise later. 163 As the respondent accepts, there is evidence that some records were kept and some were not. The record keeping involved the passing of records from secretary to secretary. Perhaps inevitably with such a system, not all records were readily able to be located and some were found not to exist. In my view the evidence establishes that the record keeping of the respondent fell short of the representation made concerning it as pleaded in 20.k) of the claim. On the assumption, the respondent's relevant conduct was in trade or commerce, I therefore find that the conduct of the respondent in failing to maintain its selection and interview records in accordance with the norm of conduct referred to in representation 20.t) engaged in misleading or deceptive conduct or conduct likely to be such contrary to s 52 of the TPA. This would be the case whether or not the public to which the representation was directed is defined narrowly to applicants for the position of trainee registrar or to medical practitioners or even to the readers of the Handbook from the public generally if they were, contrary to my view, found to be part of the relevant parts. 164 Section 55A applies in more limited circumstances (conduct 'liable to mislead the public') and requires proof beyond reasonable doubt. On the assumption that the conduct of the respondent was 'in trade or commerce' so far as the conduct in question is concerned, the failure to maintain records in accordance with the representation is said to be conduct as to which there was a probability it could mislead (for example, applicants seeking assurance of confidentiality or litigants such as the applicant seeking discovery for the appellate process) the relevant public of medical practitioners as to the nature, characteristics or suitability for their purpose of the services offered by the respondent in relation to selection. However, liability under the section is strict and it is necessary to prove an actual probability, not just a possibility, that the relevant public would be misled and misled in the relevant way required by the section: J & R Enterprises Pty Ltd 99 ALR at 337-339. This has not been made out. 165 I consider the circumstances do satisfy a finding that, contrary to s 53(aa) , representation 20.t) falsely represented that the respondent's services in relation to selection were of a particular standard in relation to record keeping, when that was not universally the case. 166 Likewise the same circumstances satisfy the requirements of s 53(g) that the respondent promoted its services in relation to selection by making a false or misleading representation concerning the existence of a condition or right attaching to engagement with the services. 167 I consider the further relevance of these findings is in relation to the applicant's claims respecting the appellate process since it was for the purposes of that process that she sought the records. The appellant did not appeal in that year so that she cannot have been misled by any lack of genuine opportunity in that year. 169 The respondent submits that the Training Handbook for 2001 relates only to its selection and appellate processes in that year. It is submitted that it is not the case that a Handbook was conduct with an ongoing effect. This is because the respondent through its Council published a Training Handbook in each year, applicable to that year. I agree with this submission. There is no evidence that any of the Handbooks made representations intended to have effect beyond the year in question. 170 It follows that these claims with respect to 2001 cannot be resolved in favour of the applicant as there is no evidence she was misled by them. The issues dealt with in the submissions concerning the alleged lack of a genuine right to appeal are considered in Part C below. At a meeting on or about 23 October 2001 Dr Swarbrick then Chairman of the WA Faculty of the College and Chairman of the College's selection committee for the 2002 trainee registrar position in Western Australia provided feedback to Dr Shahid. However they were Dr Clay's views and were not shared by Dr Swarbrick. 173 As to 23.a), the applicant relies on her evidence which she claims is corroborated by the evidence of Mr Shakur, who accompanied her to the feedback interview. In her evidence the applicant said Dr Swarbrick told her she had performed very well and her interview was very good. 174 Dr Swarbrick denied making such a statement. He said that experience in immunology was relevant, and the applicant accepts that was the case. She also accepted that he referred to one applicant who, although highly regarded, did not get selected because the Selection Committee considered he needed to obtain more well-rounded clinical experience. He testified to having given the applicant ways in which to improve her chances of success in the selection process. One way he recommended was for her to get back into the hospital system. This was denied by the applicant. Dr Swarbrick, as previously set out in relation to the feedback session in 2000, could not recall in which year he had given this suggestion. He also testified that after the conclusion of the interview the applicant had thanked him for his comments as being most helpful and encouraging to her to keep pursuing her goal. He was surprised at this response because he believed he had said words to the applicant and her husband to convey that her qualifications were not sufficient to be competitive. 175 The feedback meeting was overheard in part by Dr Cole, who occupied a room adjacent to Dr Swarbrick. Her evidence was that he had told the applicant she could undertake a hospital position or start a research project and/or postgraduate studies. In cross-examination Dr Cole said she was sure of this. 176 Dr Cole said that Dr Swarbrick had given a reasonable feedback interview, neither encouraging or discouraging the applicant. He had explained that there were other candidates of an extremely high calibre. After the meeting had concluded Dr Swarbrick had expressed his surprise to her at being thanked by the applicant for his encouragement. Dr Swarbrick said he was surprised because he did not consider the applicant's qualifications were sufficient to be competitive for selection. 177 In the light of the evidence of Dr Cole (which I also consider removes the doubt held by Dr Swarbrick on whether he had made a representation concerning hospital experience at this feedback interview) I accept that Dr Swarbrick did not represent to the applicant at the feedback interview that her selection interview had been very good. He gave to her even handed advice, representing what he knew to be the position for candidates to qualify for selection. Even if he used the words 'very good' they would fall to be understood in the context of the whole of the evidence of the character of the feedback interview and so as not representing to the applicant that her chances of selection were unusually high. I therefore find that the positive feedback representation was not made as pleaded and pressed. 178 As to 23.b), it was made as pleaded. 179 As to 23.c), the applicant's evidence was that Dr Swarbrick had said her referee reports were excellent. Mr Shakur corroborated the applicant's evidence. Dr Swarbrick denied making this representation and testified two referees gave adverse reports. 180 In 2001 the applicant's referees were a Professor known to the applicant to whom she had spoken about research; a Senior Research Fellow at the Western Australian Institute of Medical Research, to whom the applicant had also spoken about research; a paediatrician and a mentor while the applicant was preparing for her AMC examination; and Dr Rahimtoola, the Professor of Medicine where the applicant had worked in Pakistan whom she had not seen for 10-12 years save for an occasional meeting at conferences. Dr Swarbrick testified in cross-examination he had endeavoured to contact Dr Rahimtoola without success. He could not recall the Senior Research Fellow being a referee. I cannot accept Dr Rahimtoola would have been in a position to give an 'extremely good' report on relevant recent experience of the applicant. I am not satisfied in all these circumstances that the applicant's evidence, even considered with Mr Shakur's, establishes the alleged statement. 181 As to 23.d), it was made as pleaded. 182 As to 23.e), Dr Swarbrick said he told the applicant that the 2001 Selection committee was not convinced by her answers in relation to the new research project and that the Selection Committee got the impression the applicant was not enthusiastic in pursuing dermatological research. Both the applicant and Mr Shakur testified that Dr Swarbrick's evidence was that this was the view of Dr Clay. I find the representation was made as pleaded. 183 As to 23.f) (a future representation), Dr Swarbrick's evidence was that he gave the applicant ideas to improve her chances of success. He told the applicant that the best way to be recommended for a registrar position in dermatology would be if the applicant got back into the hospital system with any medical registrar position. Dr Cole, who gave evidence of what she had overheard of the interview, testified that Dr Swarbrick had told the applicant that she could undertake a hospital position or start a research project and/or postgraduate studies such as honours or masters in a dermatology related field. Therefore I find the representation as pleaded is made out (although it does not represent the whole of the representations which were made). 184 I find that the respondent has adduced evidence to negate the statutory presumption that such representation was unreasonable. The evidence is that which establishes that in selection procedures, including this year in question, credit could be given in respect of another hospital position or research or academic work but not that either factor would be decisive in favour of selection. 185 It follows that representation 23.f) was not misleading or deceptive or likely to be such and did not constitute the engagement in conduct of relevance to ss 55A or 53 (g) of the TPA on which the applicant also relies in this respect (par 41 of the claim). 186 As to 23.g), it was initially denied in the pleaded terms by Dr Swarbrick. He testified he said that a better trained doctor with higher degrees would probably be selected for the position over the applicant and that was always a problem. However, in cross-examination he testified that although he did not remember making the statement as claimed, it was possible that he could have said it. The applicant and Mr Shakur testify he did make it. I find the statement was made. 187 Paragraph 43 of the claim is to the effect that the strong performance and competitive position representations (leaving aside the future representation addressed above) were misleading or deceptive or likely to be such because the respondent did not in fact value post graduate qualifications or research experience highly or at all and/or had a preference for candidates with hospital experience and young hospital experienced doctors when selecting candidates for the trainee registrarship. In my view the evidence has not shown that at the time any of these representations were made that the respondent did not in fact value post graduate qualifications or research experience either highly or at all. The evidence shows they would have been taken into account and scored where an applicant held such qualifications. However, neither of them would have or was said to have guaranteed selection. 188 As to the alleged preference for hospital experience, this option was one of the options put to the applicant by Dr Swarbrick, whose evidence on this was corroborated by Dr Cole. 189 I do not consider that the putting of the research option and the post-graduate study option by Dr Swarbrick to the applicant in addition to the hospital option was misleading or deceptive or likely to be so. That is because all were relevant to and would play a part in any selection process for the position of trainee registrar. As 20.b) pleads and as it has been found, the selected candidate in 2001 was someone with a better postgraduate degree than the applicant. Likewise, as 20.d) states, another candidate was sent away to enhance his clinical experience. In early June 2002 the applicant received notice from the respondent regarding proposed changes to the training program, including the future validity of the FACD Part 1 examination. The notice informed her that holders of a pass in that examination would only be given an exemption for 3 years from the need to complete the basic sciences training component and assessment rather than, as previously, on a permanent basis. No explanation was provided of the reasons for this change. 191 In late June 2002 the applicant applied electronically and directly to the respondent for the training program for 2003. The respondent acknowledged receipt of her application and incorrectly advised her also to apply to RPH. 192 The applicant claims to have made this application induced by and in reliance upon the matters pleaded in pars 11, 13 to 15 and 19 to 20 of the claim. Pleadings 13 and 20 refer to Training Handbooks and are not the source of continuing representations except so far as they endured until the approval and issue by the respondent of the next Handbook or were adopted or repeated by the substitute Handbook. 193 The Training Handbook stated that short listing for interviews would be done by assessment of an applicant's curriculum vitae and referee reports. However, the applicant's referees were not contacted and no records of her referee reports have been produced by the respondent. Dr Clay testified in cross-examination that the respondent did not regard the Trainee Selection Guide in the Handbook as binding in relation to processes the respondent should follow. Although it stated that it was essential for there to be satisfactory reports from professional referees, the Selection Committee resolved on 6 August 2002 to interview referees only for the short listed candidates. 194 The assessment of the applicants was done using two different 'CV assessment guidelines' forms, one with 11 scoring factors and the other with 10. The additional scoring factor was item 8, addressed to whether or not an applicant was a 'BSE holder'. The reason for the difference was that the former was an old scoring sheet. There were also anomalies in the assessment within the 11 factor form. Additionally, Dr Swarbrick was unable to explain his allocation of marks to the applicant and others. 195 In his cross-examination Dr Swarbrick accepted that the use of hospital and clinical record as two separate items with equal points, a person such as a general practitioner would be at a disadvantage. Likewise Dr Clay accepted that in that respect the process favoured hospital doctors. 196 The applicant was not short listed or interviewed. 197 The interviews were held on 21 August 2002. The meeting closed at 9.00 pm. Within three hours of that time the Chair of the respondent had informed the selected candidate of his success by telephone. Just after midnight the Chair sent an e-mail notice to RPH and others stating that the selected candidate 'has been appointed' and requesting RPH to inform the unsuccessful candidates. 199 The respondent again denies that these 'representations' are anything more than aspirations. However, I have rejected that submission in respect of the open, transparent and accountable representations as pleaded in par 20, identifying only 20.e), j) and m) as aspirational. 200 These representations fall for resolution as previously set out in relation to par 20 of the pleading. Three were short-listed. All members of the selection committee were dermatologists. He has no postgraduate qualifications and no significant research background. Dr Gordon gave a case presentation at the College's conference this year. She has no publications and no other research background. Dr Gordon has no postgraduate degree or diploma. And that overall there appears to be a "subtle bias" towards younger hospital doctors. 202 Those attending this feedback session in addition to the applicant were Mr Shakur, Dr Clay, Dr Stewart-Wynne (Assistant Director, Clinical Services, RPH and consultant neurologist) and Ms Joyce O'Hara (Administrative Assistant to Clinical Services, RPH). The applicant was the only person taking notes at the meeting. 203 The respondent's defence denies all but the fact and date of the meeting with Dr Clay and relies on a different account of the evidence given by Dr Clay. It specifically denies the pleas in 28(1).k) that the applicant was not short listed because she comes from a general practice background; in 23(1).l) that hospital experience was viewed more favourably; in 28(1).n) that the experience of doctors from general practice is not relevant; and in 28(1).p) that her post-graduate experience was also not relevant. 204 To make out this pleading the applicant relies on her evidence and contemporaneous notes which she says are corroborated by Mr Shakur's evidence and Dr Stewart-Wynne's evidence. She testified that Dr Clay did not rely on any documents in providing the feedback. Specifically he did not produce her score sheets or any other material for the selection process. In a responsive statement Dr Clay said that his practice was usually to review such matters before providing feedback. In any event he considered his involvement with the respondent made him very familiar with the CVs of applicants. 205 The applicant said in her statement that she had asked what deficiencies the selection committee had seen in her application. However, Dr Clay had not responded but rather stated the strengths and distinctions of the winning candidate as well as of the other candidates short-listed. She had been told that 23 applicants applied and three were short-listed and interviewed, of which she was not one. Her evidence was that Dr Clay had told her the Selection Committee looked more favourably on hospital based experience and at such experience in immunology and rheumatology than at general practice experience. In cross-examination she testified he told her she should look to get experience in these fields. In her statement the evidence also said that Dr Clay had told her the committee would not know how to assess the value of general practice. Additionally he had said that her experience and post graduate degree were all valuable for a general practitioner but not for a dermatologist. Also that the committee preferred younger hospital based doctors because immunology and rheumatology were relevant and younger doctors can serve the community for a longer time. Dr Stewart-Wynne had said that overall there appeared to be a subtle bias towards younger hospital doctors. Dr Clay had confirmed that was the case. When she put to those present a complaint that the respondent should have made these matters known and that they were contrary to what she had been told by Dr Cole, she had not received any response. 206 Mr Shakur generally corroborated the applicant's evidence. 207 Dr Stewart-Wynne said in his statement that he did not retain a clear recollection of who had said what at the meeting. He recalled Dr Clay praising the winner, possibly excessively. He had met with the applicant on 23 September 2002 and been provided by her with a letter setting out her recollection of the feedback meeting on 13 September 2002. Although he had not checked the exact words of the letter he considered the overall thrust of the letter was appropriate as an account. The letter is now reflected in the applicant's claim in respect of the 2002 feedback session. 208 Dr Clay had been the Chair of the selection committee in 2002. He had met with the applicant for the feedback session on 13 September 2002. He did not specifically recall what was said in the meeting. He believed that he told the applicant that other candidates had qualifications and/or experience that she did not. He testified that he tried to give the applicant ideas on how to improve her position for the following year, including by joining a hospital or doing further postgraduate work. He denied that he had told the applicant that these were criteria for selection or that the applicant had to have any particular type of experience for a trainee position. He accepted that he had told her that if she worked in the hospital system it would 'get her known' in the hospital community and give her a better chance of convincing the selection committee that she was the most qualified person. In cross-examination, the applicant accepted Dr Clay had told her this. He denied telling the applicant that two of the short-listed candidates were not involved in any dermatological research. Also that she was not short-listed because she came from a general practice background or that the experience of doctors from general practice is not relevant for the trainee position. He said it was the applicant who had insinuated that it was advantageous to be a younger doctor with a hospital background. In fact, only on one occasion had a young doctor been selected for the position, but he had been unsuccessful prior to being selected. A doctor with a hospital background in immunology was also recommended for the position. In his experience each committee member had his or her own view of what was relevant experience to begin training as a dermatologist. It was not his position that general practice experience gave someone an advantage over other candidates. 209 This extract of the principal points made in the evidence of Dr Clay does not convey the qualified terms in which his oral evidence was given. Much of it was qualified by statements of belief and reference to his own practice rather than precise recollection of the feedback interview and what was said at it. 210 The respondent submits that to the extent Mr Shakur supports the applicant's evidence on feed back sessions, no weight should be given to his testimony. I agree that his evidence must be approached with caution, given that he is the applicant's husband. However I cannot see why his evidence on the feedback sessions should be treated in any way different to his evidence of other events. At this feedback session he was in the company of others whose testimony must also be weighed. 211 The respondent submits that the purpose of the feedback session was to advise the applicant why she had not been selected rather than to advise her on what she should do in the future to be selected. While it is the case the applicant initially sought a feedback in 2001 in terms identifying the former purpose, the advice given to her, including that given by Dr Clay, was not confined to past analysis and was to some extent expressed in terms as to what she should do in the future. 212 Turning to the pleaded future representation in 28(1).r), Dr Clay accepted that he had made this statement. The applicant pleads that the pleaded representations in 28(1).k) to r) and 28(2) are the context in which the issue of reasonableness is to be judged. I consider 28(1).n) and p) to be not reasonable and not to reflect the evidence. The other paragraphs reflect the views of the 2002 Selection Committee on the application of the requirement in the 2002 Training Handbook for clinical training. 213 There is no dispute that in making the statement in 28(1).r) Dr Clay was acting on behalf of the respondent, a corporation. The evidence establishes that experience in the areas of immunology and rheumatology could have assisted the applicant. His evidence in relation to this aspect, based as it is on the requirement for clinical training in the Handbook and his years of experience in dermatological practice and with the respondent and its selection processes, is evidence to the contrary of the statement being misleading. The statement is one made with reasonable grounds supporting it, so that it was not misleading or deceptive advice or advice with that likelihood. 214 It needs to be borne well in mind that from the introduction of the National Trainee Selection Guide in 2001, the criteria for a trainee registrar included meeting the attributes of 'a sound academic record', 'willingness to be involved in research projects' and demonstration of a 'sound clinical ability and judgement in a wide range of clinical settings'. It should therefore have been apparent to the applicant from the 2001 Handbook onwards that all these matters were part of the matters to be weighed by a Selection Committee. Above all, that 'merit is the sole criterion'. That is, merit is to be assessed by a Selection Committee with reference to the desired attributes. Additionally the Guide provided that referee reports were to be from referees with whom the candidate had the closest professional contact in recent times and who were able to comment on the stated criteria. 215 As to the other statements alleged to have been made at the feedback meeting, the weight of the evidence favours a finding that they were made as the applicant claims. Her evidence is corroborated by Mr Shakur; it is not disputed by Dr Stewart-Wynne and it must be considered in the circumstance of the uncertainties and lack of exact recollection affecting Dr Clay's evidence. No evidence was submitted from Ms O'Hara. 216 Within 10-11 days of the feedback meeting the applicant's notes had been documented and used for a letter to RPH and the respondent seeking confirmation of her recollection of the meeting and informal reconsideration. She did not receive any substantive response from RPH or the respondent concerning the accuracy of her record. Dr Stewart-Wynne's evidence was that he left it to Dr Clay to respond. Dr Clay said in cross-examination that he disagreed with the applicant's version of the minutes but did not convey that to her. That is confirmatory of the correctness of the acceptance of her evidence on these alleged statements. 217 The statements other than 28(1).r) are only pleaded as particularisation of the circumstances going to the reasonableness of the making of that representation. The applicant was advised on 6 November 2002 that the respondent had affirmed its original decision. She was not provided with any substantive reasons or explanation for the outcome of the reconsideration. 219 No evidence was tendered by the respondent as to whether the use of the different score sheets to short list candidates had been considered on the review or similarly whether any consideration was given to the fact that the applicant had not been scored on certain criteria as she should have been. Dr Singh testified that he could not recall whether or not the letter from the applicant was taken into account and that no new materials were submitted by her. Dr Swarbrick, although present, had not added to his original CV assessment of the applicant. She also checked the respondent's website. 221 In May 2003, after checking with the hospital on the correct procedure for lodging an application, the applicant lodged her application for the 2004 Trainee Registrar post electronically directly with the respondent in Sydney and also in hard copy with the Secretary of the WA Chapter. 222 The respondent was unable to produce the original records of this application and no explanation of that failure was provided. 223 The initial allocation of candidates had the applicant assigned to Dr Singh. This was changed by Dr Clay to Dr Cole. Dr Clay's explanation was that this was at Dr Singh's request, because he had corresponded with the applicant. However Dr Singh said he did not recall requesting such a change. 224 The applicant was neither short listed nor interviewed. Interviews of short-listed candidates were conducted on 15 September 2003. The applicant was informed by letter dated 28 August 2003 that her application had been unsuccessful. 225 RPH was notified by the respondent of the selection by letter two days after the decision. Unlike 2002, the letter was in the form of a recommendation. The selected candidate was offered a contract of employment by RPH around 22 September 2003. The respondent says there is no evidence that the person selected was not the best candidate. 226 The applicant submits that the evidence establishes that her CV assessment scores were moderated down. This was so, but it occurred in relation to all candidates. Comparing her 2002 CV assessment with 2003 shows that, despite progressing further in her dermatological research and adding another year of clinical experience and running a general practice, the Selection Committee, virtually not changed from 2002, had given her less marks for her academic record (score sheet item 1), her hospital record (item 2), her clinical experience (item 3), her involvement in broader community (item 6), her postgraduate study/higher degree (item 8) and for WA commitment/rural involvement (item 10). Dr Clay agreed in cross-examination that his written evidence that the applicant's referees were personal and could not comment on her clinical ability was not correct. He then minimised the usefulness of her referees on the grounds they were business associates. He said a reference from a general practitioner may receive a lower rating than one from a Professor of Medicine in a competitive situation. Another of her referees told Dr Clay he was unaware of the applicant having any clinical experience. Two others of the applicant's referees were not persons who could attest to her clinical experience. Dr Clay, as Chair of the WA Faculty, instead of arranging such a meeting, forwarded the request to the National Secretary of the College. The evidence from the respondent is that it did not accede to the applicant's request because of the appeals process and potential legal proceedings against the respondent. Dr Clay's evidence was that he was directed by the respondent not to have any communications with the applicant. The respondent submits that there is reason for scepticism at the bona fides of the request of the applicant in the circumstances. Thereafter, candidates who had passed the FACD Part 1 examination and who were selected into the College's registrar trainee program would be required to pass a Clinical Sciences Examination. I have previously rejected this as a general submission. I do not consider it is applicable to the three above additional statements. They were all statements of fact. 230 The representation concerning the permanency of the Part 1 examination was contrary to the representations of permanency in the 2001 and 2002 Handbooks. However, credit is still given to holders of the Basic Sciences Examination as they are exempted from the Clinical Sciences examination but are required to pass the Clinical Pharmacology examination. The applicant was aware that criteria may change from year to year. The statement in the 2003 Handbook was not misleading or deceptive. (Her evidence was she downloaded it; there is evidence of a hard copy being mailed by the respondent to her). She applied in mid-May 2004 to the WA Faculty of the respondent and electronically to the National office of the respondent for the Trainee Registrar position in Perth commencing 2005 and paid an application fee. 232 In June 2004 the WA Faculty of the respondent was uncertain whether or not the application should be considered, given the applicant's appeals process was still continuing and due to other 'ongoing legal issues'. The national office of the respondent advised the WA Faculty to consider the application and to disregard previous appeals as a consideration. 233 In July 2004 the applicant sought clarification from the respondent whether or not she was also required to apply to RPH. The respondent advised her she had to apply to RPH as the appointment was made by it on the recommendation of the respondent. The applicant inquired of Dr Beresford at RPH who advised her that was not the case and that applications need to be made only to the respondent. 234 The Selection Committee met around 24 August 2004 to short-list candidates for the 2005 position. The applicant was not short-listed and therefore not interviewed. 235 The documents of the short-listing process evidence that the items on hospital record and clinical experience had been merged. Again, the respondent gave no explanation for being unable to produce original documents associated with these processes. 236 In February 2003 the applicant had commenced a major clinical dermatological trial. Notwithstanding a year of this experience, the electronic record of the applicant's score sheet shows she was given no marks for academic record (item 1), hospital record/clinical experience (item 2), WA commitment/rural involvement (item 7), and other (item 8) and only a score of 1 for her global score and 1.5 for referees. 237 In late August 2004 the respondent advised the applicant that her application for the 2005 position had been unsuccessful. 238 The Selection Committee met on 13 September 2004 and interviewed the four short-listed candidates, selecting one. The respondent was unable to discover the communication for the selection to RPH. The applicant submits the inference is that the communication had taken place by 15 September 2004. However, Basic Science Examination holders who commenced training from 2004 onwards exempted from the Clinical Sciences Examination were required to pass the Clinical Pharmacology Examination in the first 18 months of training. Information will also appear on the College website. 241 The evidence establishes the making of the representations pleaded in this respect. as compared to a hospital registrar in immunology, rheumatology and radiotherapy. Dr Cole also refused to provide any explanation as to how a general practitioner not having the hospital record keeping experience would be assessed and scored; further how that was important and relevant to the trainee registrar position in dermatology. Dr Donnelly was also present. The applicant took notes at the meeting. Dr Cole dictated notes about 30 minutes after the meeting. Dr Cole disagrees that the applicant's notes represent what in fact occurred at the session. Dr Cole's notes were not made available until produced as an exhibit to her statement. They had previously been undiscovered. No proper explanation of this was given by the respondent. In her responsive statement Dr Cole denied not answering the applicant. 244 Re 38D(1).a), Dr Cole stated she did not inform the applicant that she had scored highly on the matters pleaded in this paragraph. She said that she told the applicant she had received marks for her post-graduate degree even though her Master's degree had not yet been officially awarded. 245 Re 38D(1).b): Dr Cole told the applicant the Selection Committee gave higher marks to applicants with good grades during their undergraduate degree and recognised with marks if applicants received prizes or were awarded honours. As the applicant did not have these she had not scored highly for academics. In her responsive statement Dr Cole said the Selection Committee had taken into account that the applicant had only pass grades at undergraduate level. 246 Re 38D(1).c): Dr Cole told the applicant she did not score on this criterion because she did not have recent or referable hospital experience. 247 Re 38D(1).d): Dr Cole denied telling the applicant she had scored lower on clinical experience as a general practitioner. In her responsive statement Dr Cole said the comment she had made was that the experience was different. Further, that it was a different objective criterion to hospital experience. 248 Re 38D(1).e): Dr Cole told the applicant that Dr Heenan had not been a good choice as a referee as he could not comment on her clinical ability and provide useful comments in the referee questionnaire. 249 Re 38D(1).f): Dr Cole said if the applicant or any other applicant was serious about becoming a dermatologist he or she should apply to all States because sometimes other larger States had many more positions available than Western Australia. Whether such applications were made was only one of the criteria used to determine whether a candidate scored in relation to a commitment to dermatology. 250 I find that the representation made by Dr Cole was that if the applicant or any candidate applied to all States that would be one of the indicia to which regard was had to determine the candidate's commitment to dermatology. 251 This is pleaded as a future representation. Dr Cole was speaking of the approach taken by the Selection Committee and future Selection Committees. Her views were based on her significant experience in the Selection Committees of the respondent. She therefore had reasonable grounds for making the statement on behalf of the respondent. 252 Re 38D(1).g), h) and i): Dr Cole said to the applicant that as RPH had not finalised the offer to the successful applicant and the score cards had been sent to the respondent in Sydney she could not provide the applicant with her ranking. 253 Having considered the evidence in 38D, I find that 38D.b), c), e), h) and i) are made out as pleaded. In relation to 38D.f) and g), the pleadings are made out but only in the terms of Dr Coles' evidence on them allows. Paragraphs 38D.a) and d) are not made out. 254 Re 38D(2): Dr Cole reassured the applicant her clinical experience had been taken into account. However, the applicant was given a zero score for such experience. The applicant submits this failed to properly assess her work as a general practitioner (as the respondent's website said was relevant) or her clinical trial work. Dr Cole testified in cross-examination that a zero score was a fair one because the item applied only for particularly relevant clinical experience. In the absence of a proper explanation from the respondent (such as a formal and published change in meaning or interpretation of the clinical experience criterion) I agree with the submissions of the applicant that Dr Cole's evidence on this issue does not provide a credible explanation. I find this statement made out. 255 Re 38D(3): This is pleaded as a future representation. Dr Cole's evidence in her responsive statement was that she said to the applicant that given the high calibre of the applicants she did not stand a chance for the next three to four years. Rather she had said to the applicant that given the high calibre of candidates that year, which was likely to continue in future years, the chances of any one candidate being selected for the position was very low. In the light of the evidence of Dr Cole I am not satisfied this statement as pleaded was made. 256 Re 38D(4): In the light of Dr Cole's evidence that the score sheets had been forwarded to the respondent in Sydney, I am not satisfied this statement was made. 257 Again associated with this selection process were informal admissions concerning the non-existence of relevant documents for which no explanation was given. 258 The future representations in 38D(1).f) and (3), having been found to be reasonable and not made out respectively, cannot be productive of any liability arising under pars 39, 40 and 41 of the claim. 259 There are no pleas in relation to the conduct reflected in the making of the non-future statements in the 2004 feedback session. Within about a further 10 days the applicant filed her request for appeal. An applicant has the right however to request a hearing of the Appeals Committee if he or she does not wish to participate in an informal reconsideration and review process. My application was dismissed for reasons that do not fall within the parameters of the guidelines that govern the Committee's decision-making powers. In particular, my application was dismissed for erroneous reasons which are wrong and which are biased in their scope and application. The Committee indicated a preference for younger applicants, a preference which is both discriminatory and outside the scope of the guidelines it is required to follow. In addition, relevant information was ignored or unfairly dismissed because the Committee wrongly concluded that certain qualifications and expertise were irrelevant --- which, in fact, they were not. Finally, the decision made could not be justified on the facts and information before the Committee. Revoke the decision of the Selection Committee of Western Australia and make a new decision in substitution for the original decision by offering me the position for a rotating inter-hospital Registrar in Dermatology. (2) The respondent declined to provide to her the documentation concerning the selection process which she considered necessary to enable her to effectively advance the proper hearing of the appeal. Further it did not inform her that many of the documents she was seeking never existed, were destroyed or misplaced after the relevant selection process. That was not made apparent until October 2005 when the respondent was required to file a list of documents and provide an explanation of discovery inadequacies. No explanation has been given in evidence for the shortcomings in this regard. (3) The respondent did nothing to ensure that the appeal was heard before the time that the position the subject of the appeal was to commence. It did not seek to have the starting date for the position delayed. The respondent had in fact advised RPH of the selection decision and on the same day advised that the position commenced on 20 January 2003. That is, there was no intention to provide a person appealing the decision to do so in a properly constructed and formal manner. Therefore the applicant submits that appellate process was a sham or charade. It is said this dissipated the subject matter of the appeal so that no realistic outcome of it was possible. It is submitted that it is paradoxical for the respondent to maintain that the appeal was on foot when by the time of the directions hearing the selected person had held the position for two years. (4) The continuation of the appeal process in these circumstances is contended therefore to have been a charade. It was one that required the applicant to travel interstate for a mediation and for a directions hearing. It was not until 19 December 2002 that Dr Singh sent to the national office of the respondent only some of the documents relevant to the appeal with more documents being sent a year later on 18 December 2003. 263 Concerning the suggestion that the appeals system is a charade, the respondent cites the evidence referring to the role of the applicant and her solicitors in preventing the procedure proceeding for the 2002 appeal. He stated that 'whatever the outcome of the appeal, [the successful candidate's] position will not change'. He continued by stating that should the applicant be successful in her appeal 'the issue of her participation in the training program and employment for the year will be a matter for discussion by' the respondent. Dr Clay's evidence was that had the applicant so succeeded a novel position would have been presented as there was not then another position available. 265 On 15 January 2003 Dr Beresford replied to the Honorary Secretary stating that RPH only had one salary for a trainee in dermatology. In the event that the respondent was prepared to guarantee that should the applicant be successful she would be placed elsewhere and that RPH would not be expected to offer a place, he would be willing to offer a full contract to the successful candidate. Pending that assurance, he was not able to offer a long-term contract to that person until after the appeal had been heard. 266 However, Dr Beresford testified he had afterwards been informed the successful candidate had been given a one year appointment. He considered therefore he could not give only a short term contract because to do so would constitute a breach of a year long contract. 267 I do not agree with the submission of the applicant that the letter of 15 January 2003 is evidence of pre-judgment of the appeal. However, it shows an appeal process that was without effect in that a successful appellant would not supplant the person previously selected. It is clear that the respondent did not have any proper appeal process in place and was devoid of experience as to what the appeal process should offer. 268 One possible argument from all the circumstances is that the respondent did not consider it was likely the applicant would succeed in her appeal. The selected candidate was an outstanding, probably one of the most outstanding ever selected over the years. If that was the case, it would show pre-judgment. However, I do not regard it as a necessary inference. 269 The delay in the appeal process also takes on added significance in the context of Dr Beresford's response to the respondent. Was the delay a way of accommodating the issue of a full contract to the selected candidate? There is no inference that follows from the evidence to answer that question. 270 The evidence set out above is also relevant to the assertion by the respondent that RPH controlled and determined the making of appointments of the trainee dermatologist. There is no evidence of the respondent having taken any steps to have the applicant's appeal considered or dealt with before the subject matter of the appeal, namely, the post of Trainee Registrar, was filled by RPH acting on the advice of the respondent of the selection as conveyed in mid-September 2003 and commenced in January 2004. 272 In lodging the appeal the applicant paid the fees represented in the respondent's Training Handbook for 2003 of $1650. However, in December 2003 the respondent sought further fees representing an increase to $5000 which were paid by the applicant, although previously unknown to her. 273 In the course of discovery for this appeal the respondent disclosed in an affidavit sworn on 24 October 2005 that a number of documents relating to this selection process (original informal notes of conversations with referees taken by Selection Committee members) had been destroyed. The applicant contends this supports her claim that the representation by the respondent regarding the security of storage of documents being part of the selection process in 2003 was misleading or deceptive. 275 On 22 November 2004 the applicant lodged advice of her appeal against the decision of the selection committee with regard to the 2005 Trainee Registrar position. 276 On 15 December 2004 the applicant wrote to Dr Beresford at RPH seeking assurance that her rights were being protected without disadvantaging the successful candidate or herself until the determination of the appeal. On 25 February 2005 Dr Beresford responded that 'several of the colleges and speciality societies undertake their own recruitment and simply notify the hospital of the successful candidate'. He also stated that RPH 'had no control over their process of selection'. 277 Around 24 December 2004 the respondent acknowledged the applicant's appeal and advised that it had been forwarded to the appeals committee and that there may be significant delays in seeking to convene an appeals committee for the second and third appeals. In January 2005 the applicant wrote to the respondent inquiring about the foreshadowed delays but did not receive a reply. 278 The discovery process for this appeal also was productive of evidence that a document from the selection process (an email) had been destroyed. The respondent says this will involve potential privacy issues and the applicant should not be allowed to 'trawl over' records relating to the assessment of other candidates. These included 20.q) and t) concerning the genuineness of the respondent's appellate process. 281 Against that background the applicant submits that the respondent's training program selection process is not an open, transparent and accountable process or one capable of withstanding external scrutiny, which as the Brennan report said on the issue of documentation, meant a process that enables 'non-participants in the original selection to accurately re-construct processes and decisions' or 'accurate reconstruction of the original detail and process' and which urged colleges to avoid destruction of documents because it was an unjustifiable action. It is argued that the respondent has, since 2001 consistently and expressly stated in its Training Program Handbooks that, following the publication of the Brennan Report the respondent recognises that 'a formal National Trainee Selection Guide is essential ...' and that the respondent further recognises in that context that '... the selection process needs to be open, transparent and accountable'. It has also made other express representations regarding documenting the selection process and secure custody of those documents as alleged by the applicant in these proceedings. However, whether considered on a year by year basis or overall the applicant submits the evidence establishes that the respondent's representations are untrue. The term can have a variety of meanings in a legal context. For example, there are: (a) appeals in the strict sense; (b) appeals by way of rehearing on the evidence before the initial decision maker; (c) appeals by way of rehearing on the evidence before the initial decision maker supplemented by such further evidence as the appellate tribunal may allow; (d) appeals by way of hearing de novo; (e) appeals in the nature of judicial review; and (f) appeals on questions of law or involving questions of law. It is submitted that to determine which of the meanings borne by the term 'appeal' as referred to, and conferred by, the respondent's training program handbooks is a matter of construction of the respondent's relevant handbook and other materials: See Turnbull v New South Wales Medical Board [1976] 2 NSWLR 281 at 297; Bradshaw v Medical Board of Western Australia (1990) 3 WAR 322; Allesch v Maunz [2000] HCA 40 ; (2000) 203 CLR 172 at 179-181; Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47 ; (2000) 203 CLR 194 at 202-205, 222-226, 238-242; Fox v Percy [2003] HCA 22 ; (2003) 214 CLR 118 at [20] (and [21]-[31]) per Gleeson CJ, Gummow and Kirby JJ. 283 It is submitted that construing the relevant handbook suggests that the nature of an appeal provided by the respondent is a hybrid between an appeal in the strict sense and an appeal by way of rehearing (with the possibility of a hearing de novo in 'exceptional circumstances': see respondent's Training Program Handbook 2003 at 42 at par 6.1). In any event, for there to be a genuine appeal from the decision of the respondent's Selection Committee the applicant contends it needs to be possessed of the following features. Firstly, it was essential that the subject matter of the appeal, namely the Trainee Registrar position for the relevant year, be available. By providing RPH with the respondent's decision on the selection of the appropriate candidate for the Trainee Registrar position for the relevant year without allowing for the appeal period to expire or, if an appeal is lodged, for the appeal to be heard and determined, the respondent dissipated the subject matter of the Appeal. It is claimed by the applicant that by encouraging RPH to fill the Trainee Registrar position in each relevant year in accordance with the selection committee's decision and allowing the 'appeal process' to continue (for over 2 years in respect of the applicant's first appeal) notwithstanding that the respondent was aware of the appeals lodged by the applicant, the respondent exacerbated and aggravated the situation. Secondly, to enable the applicant to conduct the appeal she needed to have access to the materials on which the respondent's Selection Committee made its initial decision. 284 The respondent submits that the appeal is at best a right of review. It is contended that as the appointment is a hospital appointment it could not be expected that there would be an appeal or review process inconsistent with the Public Sector Management Standards. In addition, the respondent could not determine the matter insofar as the position for which the applicant applied was for a public hospital appointment with RPH, as the applicant understood. The respondent argues that the right to appeal is available and that the conflict over the relief afforded is not a denial of that right. 285 The respondent maintains that, as a consequence of the applicant's appeals being undetermined, the applicant's rights have neither been exhausted nor abandoned. Further that in such circumstances her claims relate to incomplete causes of action so that her claims are brought prematurely and should be dismissed. Additionally that at no point has either the respondent or RPH said that if the applicant was successful with her appeal, that she would be refused an appointment as trainee dermatologist; rather they have indicated that the person appointed would not be removed from the position which had been awarded to them. 286 Whether the 'appeal' provided in the respondent's training handbook is of the legal character contended for by the applicant or the respondent, I consider it needs to be possessed of the features contended for by the applicant to qualify as an appeal, however understood. An appeal is defined as 'a transference of a case from an inferior to a high court or tribunal, in the hope of reversing or modifying the decision of the former' Oxford English Dictionary (2 nd ed, 1989) at p 565. Thus the verb to appeal relevantly includes the meaning of calling 'to a higher judge or tribunal for deliverance from the adverse decision of a lower...': ibid. To represent that an appeal is provided for is not a statement that some alternative avenue is provided. It is a statement that there is a route to deliverance from a lower adverse decision. The features contended for are intrinsic aspects of an appeal being available. An appeals process, in the absence of pre-known provisions to the contrary, necessarily involves an appeal against the decision awarding the selection to another and not a process for seeking an alternative appointment. The appeal is posited on the assumption arising from the fact that there is only one trainee position available in Western Australia in any one year. The possibility of the availability of another position may be relevant to other considerations, such as damages, but it cannot mean, in the absence of pre-announced provisions to that effect, that it qualifies as part of the appeals system to which the representations of the respondent refer. This is because RPH will only act to make an appointment upon advice from the respondent that the process of selection is complete. The responsibility for completing the process, including the appellate process, rests entirely with the respondent. The respondent contends that the applicant's conduct has been a significant factor in why that is so. She has occasioned dates for directions hearing to be vacated, mediation dates to be delayed and insisted on attempting to obtain documentation relating to previous years selection committees for use in her appeals, notwithstanding that the material is self-evidently irrelevant given that each years' selection is unique. 290 I do not consider that the actions of the applicant have been the only cause of the reason why the respondent has not engaged in conduct to fulfil representation 20.t). In reaching this view I have had regard to the applicant's aide-memoire 'Schedule of dates set by the Respondent for the hearing of Dr Shahid's appeal lodged on 22 December 2002 and mediation' and the evidence to which it refers. The actions of the applicant relied upon by the respondent are to some extent normal features of any properly operating appellate system. The failure to resolve any of the appellant's appeals as at this date is ultimately not occasioned by her exercising rights incidental to each of the appeals. What has occasioned that position in the main is the failure by the respondent to establish and operate an appellate process in a timely and effective way in accordance with pre-planned rules or mechanisms designed to bring about the hearing and determination of any appeals before an appointment is made in any particular year. Such a process must itself be able to control timely advancement of the appellate process. That is the usual rule where a court has a discretionary jurisdiction and it is applicable where judicial review is sought in the face of other remedies not having been used. Even that 'cardinal principle', however, is subject to exceptional circumstances: cf R v Chief Constable of the Merseyside Police, Ex parte Calveley [1986] 1 All ER 257. 292 I do not accept that the applicant's claims are premature (in that her appeals have not been resolved) so that the claim should be dismissed on that ground alone. The applicant's claim is in respect of conduct the effect of which is complete and is not dependent of the resolution of any appeal. Her claim is not related to the determination of her selection. Rather her claim is directed to the conduct of the respondent in representing the characteristics of its selection and appellate process. That is not the contention: the contention is that a viable appeal should be heard and determined within the time necessary for training to continue on schedule or at least without any unnecessary interruption. That is, it is not an essential component that there should be a viable appellate system that it give rise to a stay in training. 297 The applicant contends that the circumstances in which she made her appeals were such as to give rise to a contract. Those circumstances were (1) the appeal arose in the course of business relations rather than social or domestic relations; (2) the respondent offered the appeal in its Training Handbooks; (3) the applicant accepted the offer of an appeal by lodging the documents requesting an appeal; (4) the relationship of the parties is known; (5) the identity of the parties is known; (6) the payment of the fee on lodgement ensured that consideration was present; and (7) the exchange of correspondence between the parties and the conduct of a directions hearing is inconsistent with there being no contractual or legal obligation to carry forward the appeal process. There was a meeting of minds --- an intention to agree. There was, admittedly, consideration for the defendant company's promise. I accept the propositions of counsel for the plaintiff that in a case of [sic] of this nature the onus is on the party who asserts that no legal effect was intended, and the onus is a heavy one. Counsel for the plaintiff also submitted, with the support of the well-known textbooks on the law of contract, (ANSON, and CHESHIRE AND FIFOOT), that the test of intention to create or not to create legal relations is "objective". I accept that the onus may be readily discharged in the case of commercial negotiations where agreement on important matters might readily persuade the court that a contract was made. It may be said then that an evidentiary onus will shift to the defendant to rebut that conclusion, but that is only a matter of evidence and in my opinion if the inference of an intention to create legal relations is to be drawn, it will be because the party asserting that it is so has discharged the onus of persuading the court: Toyota Motor Corp Aust Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106, particularly per Tadgell J at 177. I remain of the view I expressed in Commonwealth Bank of Australia v T.L.I. Management Pty. Ltd. [1990] V.R. 510 that, when the question is whether the legal effect of a transaction is promissory there is no presumption that it is: see the discussion contrasting this decision and that in Banque Brussels Lambert SA v. Australian National Industries Ltd. (1989) 21 N.S.W.L.R. 502 in Greig and Davis, The Law of Contract , (1987), 5th cumulative supplement (1993), at pp. 57-8. The issue raised in that appeal was whether a Magistrate had wrongly inferred an absence of intention to create legal relations in respect of the employment of a clergyman to the position of Archbishop of his church. The joint judgment (Gaudron, McHugh, Hayne and Callinan JJ) consideration of this issue (at 105) started with an identification of the requirements of a legally enforceable duty as being evidenced by identifiable parties, certain arrangements between the parties and (absent a deed) real consideration. In relation to the question whether the parties could objectively be seen to intend the assumption of duty, their Honours said that it may take account of the subject matter of the agreement, the status of the parties, their relationship to one another, and other surrounding circumstances: at 105. They said that the circumstances which might properly be taken into account are so varied that they preclude the formation of any prescriptive rules: at 105. At best, the use of that language does no more than invite attention to identifying the party who bears the onus of proof. In this case, where issue was joined about the existence of a legally binding contract between the parties, there could be no doubt that it was for the appellant to demonstrate that there was such a contract. Reference to presumptions may serve only to distract attention from that more basic and important proposition. 303 Examination of the case law since the decision in Ermogenous [2002] HCA 8 ; 209 CLR 95 shows the following. In Re Dickson Catering Pty Ltd (in liq) [2002] ACTSC 107 it was accepted that the effect of Ermogenous [2002] HCA 8 ; 209 CLR 95 was that reliance on a presumption was no longer the appropriate test and that in every case the party asserting the existence of a legally binding relationship bears the onus of proof. In Dowdell v Knispel Fruit Juices Pty Ltd [2003] FCA 851 it was accepted that the issue is not to be resolved simply by applying presumptions. To similar effect was the reasoning of the Court in Ashton v Australian Cruising Yacht Co Pty Ltd [2005] WASC 192. It is true that when considering whether a binding agreement was reached, and if so, its terms, courts do not engage in a search for the subjective intention of the parties: Merritt v Merritt [1970] 1 WLR 1211 at 1213 per Lord Denning MR; Taylor v Johnson [1983] HCA 5 ; (1983) 151 CLR 422 at 428 per Mason ACJ, Murphy and Deane JJ; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 336 per McHugh JA; Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8 ; (2002) 209 CLR 95 at 105---106 per Gaudron, McHugh, Hayne and Callinan JJ; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2003] NSWCA 75 ; (2003) 56 NSWLR 662 at 675 per Bryson J. Nonetheless, the understanding of the parties as to what they had agreed upon is not irrelevant when considering what a reasonable bystander might have concluded having regard to the discussions that took place. This aspect is discussed more fully in the separate judgment of Allsop J at [118] with which we agree. It is also supported by the authority of Paal Wilson and Air Great Lakes , both of which insist that consensus between contracting parties remains a relevant factor when deciding whether a contract has been made. To so hold also appears within the exceptions to the objective theory of contract allowed by Williston and Taylor . If the agreement regulates business relations, there will usually be no difficulty in inferring such an intention: ibid at 282. Reference was made to the decision in Cameron v Hogan [1934] HCA 24 ; (1934) 51 CLR 358 where the Court held that the rules of the political party in that case did not create enforceable contractual rights and duties between members, or between executive officers and members. Such associations are established upon a consensual basis, but, unless there were some clear positive indication that the members contemplated the creation of legal relations inter se, the rules adopted for their governance would not be treated as amounting to an enforceable contract. (Compare per Jessel M.R., Rigby v Connol (1880) 14 Ch D at p 487, and per Scrutton LJ, Rose and Frank Co v JR Crompton and Bros Ltd (1923) 2 KB at p 288.). McKinnon v Grogan [1974] 1 NSWLR 295. However, the decision must govern the present case and, in any event, the criticisms do not relate to the necessity adverted to in the judgments for a clear indication that the members contemplated a legal relationship before the rules of the association can be treated as an enforceable contract. The search for such an intention requires an objective assessment of the state of affairs between the parties. A lack of certainty as to the terms or subject matter of a proposed agreement in the context of ongoing negotiations concerning such matters may lead to a finding that the parties did not arrive at a moment when, objectively assessed, there was an intention to create legal relations. If a contract was not made it will nonetheless be possible for a disaffected party to seek relief in equity. ' (2006) 34 ABLR 175). Rather it is said this was an application for employment by a third party (RPH), the successful applicant for which would be entitled to enter into a training process conducted by the respondent. Separately there was a grievance procedure contemplated by Appendix 1 to the Handbooks. The onus lies on the applicant to establish the intention, which is a question of fact. The respondent argues that not every relationship is a contractual one. It is said that this is not an example of parties involved in business relations. It is a medical college on the one hand and a medical practitioner aspiring to entry into a training program with a view to admission to the medical college on the other. It is submitted by the respondent that the appellate process does not require the finding of a contractual relationship. Likewise the respondent submits that as the appeals are incomplete no claim for loss can now be made out. 310 Having considered the above decisions I consider it is clear the applicant cannot rely on the presumption referred to in Edwards [1964] 1 All ER 494. Rather it is necessary to consider all the circumstances to find whether in fact there was an intention to create legal relations. 311 It is also clear, in my view, that the alleged agreement between the applicant and the respondent was not one relating to business affairs. This is not, therefore, one where there is no difficulty in inferring the intention to create legal relations. 312 On the contrary, the alleged contract is one which involves the invocation by the applicant as a candidate for selection for the position of trainee registrar of a right of appeal against the decision of a selection committee. The alleged right of appeal is provided by the statements and hence the processes of the respondent, which is a voluntary association. Without relying on the attachment to notions of proprietary interest referred to in Cameron [1934] HCA 24 ; 51 CLR 358, it is nevertheless evident that in the case of a voluntary association there must appear from the evidence a clear indication of a contemplation of a legal relationship. That of course was there referrable to the relationship between members of the association. A fortiori in the case of relationships between a person outside the association and the members of it. 313 In my opinion there is no clear indication from the evidence that either the applicant or the respondent contemplated a legal relationship giving rise to an enforceable contract. It is patent that, viewed objectively, the respondent had no such intention. This is because the respondent regarded itself as so unfettered by any contractual concerns as to be able to substitute some other form of outcome of the appeal other than the one which would normally be anticipated, namely, the substitution of a successful appellant for the person originally selected. There was clearly no meeting of minds between the applicant and the respondent on what the exercise of the right of appeal might lead to. 314 Not only is there no clear indication appropriate to a voluntary association of contractual intention but in my view there is no evidence which would support a finding of an intention to contract in any event. 315 I therefore find that the applicant's plea that there was an intention to create legal relationships between herself and the respondent in respect of the selection process appeals in 2002, 2003 and 2004 respectively has not been made out. Rather the declarations sought are said to be directed to the determination of a legal controversy and not to answering abstract or hypothetical questions. The applicant is said to have a 'real interest' in seeking the relief to which the respondent has been a proper contradictor. There was no delay by the applicant in bringing the proceeding. 317 The respondent submits that unless the conduct is by a trading corporation and done in the course of a trade or commerce, there is no scope for declaratory relief under s 163A of the TPA: Henderson v Pioneer Homes Pty Ltd [1979] HCA 55 ; (1979) 142 CLR 294; Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd [1981] HCA 7 ; (1981) 148 CLR 457; and Fencott v Muller [1983] HCA 12 ; (1983) 152 CLR 570. Alternatively, if the conduct was in trade or commerce, the declarations sought are of no utility. The impugned conduct did not prevent the selection of a more meritorious candidate than the applicant. The findings made above would not entitle the applicant to the other declarations sought. Proposed declaration B(6) should not be made because the respondent had reasonable grounds for making its statement that its decision would not be affected; namely that an alternative position would be created. While that step was one not appropriate to the existence of a proper appellate system, it was one which made the letter of 8 January 2003 to RPH not misleading. Proposed declarations B(10) and (11A) involve a consideration of issues of relevance and argument on those issues. Such issues are best dealt with by the appellate body itself and such discretionary considerations would weigh against the making of these declarations. Proposed declarations B(11B)-(11D) could not be granted on the ground that the filling of the position breached any selection process appeal contract because it that was not the case in respect of the 2003, 2004 or 2005 appeals, for reasons set out above. As to whether the filling of the position of trainee registrar prior to the hearing and determination of the appeals was a pre-determination of the appeals themselves, I am not satisfied on the applicant's case that would necessarily have been so. The prior filling of the position was never perceived by the respondent as precluding the appellant from attaining a position if successful, although not in replacement of the selected candidate. I have earlier held that the offering of an alternative position did not satisfy the requirements of the represented appellate system. However, I would have required some argument on the issue of pre-determination before accepting that it had such effect. 319 As is apparent from earlier findings, the applicant's entitlement to a declaration along the lines of that sought in B(11) of the application, perhaps with some modifications to more readily suit the facts as found, must be considered. However, as the representations, being the conduct in question (as distinguished from the activities conducted by the respondent), did not occur in trade or commerce, the applicant is not entitled to the making of any declarations in respect of conduct under the TPA (or the FTA). Rather, in the public interest it is a broad statutory injunctive power which 'is flexible and may be applied in service of a variety of functions to support the policy of the Act'. It is said to be imperative to the public interest that where the respondent offers candidates a right of appeal it does so on a genuine basis. 322 The respondent says, firstly, that the absence of a proper appeals process is of no materiality because it would not affect the outcome. That is, the applicant was not in any of the instances under appeal the best qualified candidate. Therefore the Court should be slow to grant a mandatory injunction if to do so would be of no advantage to an applicant in the proceedings before it: MIPS Computer Systems Inc v MIPS Computer Resources (1990) 18 IPR 577. Secondly, that none of the appeals has yet been determined. Thirdly, that as the suit is brought for the applicant's personal interest, there is no foundation for this being considered to be a suit in the public interest. Fourthly that the absence of any likely repetition of the conduct is a relevant factor: Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations (1992) 38 FCR 1. 323 There are four injunctions sought in the application. C(12) relates to the constitution of selection and training committees and I do not consider that the findings made in these reasons disclose any case for such relief. C(13) seeks an injunction for delivery of documents to the applicant for her appeals, but I have already stated that involves a judgment of relevance being made by each appellate committee. C(14) seeks injunctive relief requiring the respondent to ensure the appeals process is effective. While I have found that the respondent has not provided an effective appellate system, I do not consider it should be injuncted to do so. There are manifold discretionary considerations against it. It is for the respondent to develop improvements to its appellate process, not for a court to generally mandate improvements. Any improvements would be for the future and could not apply to any of the appeals instituted in the present appellate system. None of the present appeals have been determined and must be allowed to run their course. C(15) seeks restraint upon the respondent from implementing or acting upon selection decisions until the appellate processes have been completed or allowed to be completed. That cannot assist any of the appellate processes in which the applicant remains involved, so that it seeks relief falling outside the claims of the applicant. It concerns conduct of the respondent in relation to which it lies in its power to restructure. I do not consider these circumstances can support the making of a mandatory injunction. These have been particularised as general damages, aggravated and/or exemplary damages, and damages for past and future economic loss. Section 4K of the Act provides that loss or damage includes a reference to injury. It follows that the loss or damage spoken of in ss 82 and 87 is not confined to economic loss ( Marks [1998] HCA 69 ; (1998) 196 CLR 494 at 513 [46] , per McHugh, Hayne and Callinan JJ; at 526-527 [93]-[96], per Gummow J. What kinds of detriment constitute loss or damage, when a detriment is to be identified as occurring or likely to occur, and what remedies are to be awarded, may all raise further difficult questions. Especially is that so when it is recalled that remedies may be awarded to compensate, prevent or reduce loss or damage that has been or is likely to be suffered by conduct in contravention of the Act. Nor should it be assumed that loss or damage is incurred either as a loss on capital account, or as a loss on revenue account which, if to be compensated by an award of damages, must be translated into a single capital sum. These assumptions find no support in the language of the relevant provisions. 328 The submissions also make the point that there is a clear distinction to be drawn between proof of historical facts and, on the other hand, proof of future possibilities and past hypothetical situations. In the former case the civil standard of proof applies but in the latter the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect that degree of probability: Malec v JC Hutton Pty Ltd [1990] HCA 20 ; (1990) 169 CLR 638 at 643. The process of discounting for contingencies is considered in Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25. 329 The applicant claims she has lost the opportunity to establish herself as the best candidate for training under a fair selection process and is entitled to damages for the loss of that opportunity. Mr Spooner has calculated the present value of the future income loss of the applicant if she had been selected as a trainee registrar in 2002 commencing January 2003 and was admitted as a Fellow of the respondent in January 2007 after completion of the four year training program. The calculation is based on the projected income of a specialist dermatologist to age 65, less the projected income of the applicant as a continuing general practitioner based on her current actual income. As Appendix 4 of the Spooner report states, the calculations are done on three different income percentiles. The data and assumptions used in the calculations are set out in that appendix. 330 The respondent submits that there is no damage in relation to the applicant pursuing dermatological research or postgraduate studies if she is unable to enter dermatology because it is part of her personal development in any event. The undertaking of postgraduate research cannot have been wasted expenditure. 331 The respondent submits that the applicant was not prepared to accept suggestions from selection committee members that objectively were likely to improve her prospects for selection. Eg she did not act on the advice of Dr Clay to work in a first class hospital in preferred fields like immunology and rheumatology. Although she took on research on the advice of Dr Swarbrick, she was unable to convey a clear understanding of her research project: see the evidence of Dr Clay and Dr Swarbrick. 332 The respondent says further that the applicant's real complaint on appeal could only be that a merit-based selection did not occur, as a result of which she was unsuccessful. That is, if it were the case that the respondent's conduct either in the Selection Committees or the appeals was misleading or deceptive or likely to be such, it has not caused the applicant loss to the extent that she has lost the opportunity to be nominated for the position unless she was the most meritorious candidate. That is, the applicant must establish loss and damage by the conduct of the respondent done in contravention of the TPA or the FTA: Brown v Jam Factory Pty Ltd (1981) 53 FLR 340; Finucane v NSW Egg Corporation (1988) 80 ALR 486; Wardley Australia Ltd v Western Australia [1992] HCA 55 ; (1992) 175 CLR 514; Marks v GIO Australia Holdings Ltd [1998] HCA 69 ; (1998) 196 CLR 494. Further, that when the applicant applied she knew there was no guarantee that she would be selected. It is not her case that she would not have applied unless she was certain of selection. 333 The respondent continues by submitting that the applicant does not say she would have done anything other than remain as a general practitioner if she had not tried to obtain entry to the training course. There is no pleading by her of reliance on any conduct of the respondent to apply for the 2004 and 2005 positions, which the respondent says is fatal to any claim for damages relief for those years. It is said effectively only 2003 remains alive. In that year the successful candidate was one of the most highly qualified as against the applicant, who was rated 14 out of 23. 334 The respondent says that alternatively the applicant must show a loss of a demonstrable chance to have been nominated: Sellars v Adelaide Petroleum NL [1994] HCA 4 ; (1994) 179 CLR 332. 335 The respondent submits that the applicant cannot demonstrate such a demonstrable chance. The probabilities of her being the most meritorious candidate were low. The assumptions on which Mr Spooner provided his expert opinion have not been made out. 337 Likewise in relation to damages for distress, the respondent says these are not exemplary and no evidence has been adduced to support such a claim in any event: Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445. 338 Turning firstly to the alleged loss of opportunity to participate in a proper and genuine selection process, it is apparent that as a consequence of my findings in relation to representations concerning the selection process, the applicant is unable to establish any such loss of opportunity caused by those representations. This would be the case even if the respondent's conduct had been in trade or commerce. 339 As to the alleged loss of opportunity to participate in a proper or genuine appeals process (if the respondent's conduct had been in trade or commerce), I do not consider the applicant has established that the absence of a proper or genuine appeals process was causative of a loss of opportunity as alleged. Objectively viewed, the persons selected in each of the years in which she lodged appeals had relevant qualifications unable to be matched by her record. This is even more so the case in relation to 2003. That is, I consider the applicant only established a low probability that she had any real or demonstrable chance to be selected if there had been a proper and genuine appellant process. 340 I also am not satisfied the applicant has made out any case for damages with respect to anxiety and distress under this head. It was there said that there was no reason why aggravated damages should not be recoverable under s 87. Such damages were considered to be compensatory, and the section provides for compensatory damages. Compensation was regarded as appropriate where proscribed conduct caused anxiety, distress and vexation. 342 The applicant submits that circumstances of aggravation exist in relation to the respondent's process in relation to her three appeals in contumelious disregard of her rights. This conduct is said to include (1) communication of the respondent's decision in each year to RPH before the appeal period had expired; (2) allowing and encouraging RPH to fill the position being appealed against before the appeal had been heard or determined; (3) inordinately delaying the hearing of the appeals; (4) not providing the applicant with the relevant materials or documents, as she repeatedly requested, pretending to her that the relevant documents were available when in fact they had been destroyed or misplaced; (5) stress in dealings with the respondent; and (6) stress from being required to undertake this proceeding and so engage in litigation. 343 The applicant also seeks to include in this list the respondent's conduct concerning the Medical Directory of Australia. This involved the publication of the Directory wrongly describing the applicant as a Fellow of the respondent rather than a person who had passed Part 1 and the respondent had stated it would issue litigation against her concerning the misdescription. Although the applicant was not at fault over the misdescription, the threat of litigation had been made at the time when the applicant was an appellant in the respondent's process. 344 As part of aggravation damages the applicant seeks damages for 'reliance damages' by reference to expenditure reasonably incurred by one of the parties to the contract for the supply of services in the expectation, ultimately disappointed, of performance by the other. Applied in relation to the respondent's appellate process, it seeks an amount of damages commensurate with the applicant's expectation, objectively determined, rather than subjectively ascertained. This requires the applicant to prove that, on the balance of probabilities, her expectation of a successful outcome of the appellate process, as a result of the performance of the contract, had a likelihood of attainment rather than being mere expectation: Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54 ; (1991) 174 CLR 64 at 80. 345 The respondent accepts the aggravated damages are compensatory only and awarded for injury to a plaintiff's feeling: Lamb v Cotogno [1987] HCA 47 ; (1987) 164 CLR 1 at 8. 346 Assuming the respondent's conduct had been in trade or commerce, the applicant has not established that anxiety and stress were caused to her by such of that conduct on which she relies. 347 Further, there is no foundation for any award for reliance damages in respect of the applicant's expectations of the appellate process in any of the three years involved. That is because the evidence establishes that the probabilities of her being the most meritorious candidate in any of those three years were low. Loss of opportunity of becoming a specialist dermatologist has been considered above. In evidence are the supporting documents. In addition interest is claimed at the Federal Court judgment rate of 10.5 per cent per annum. 350 The respondent argues that on the evidence there is no reasonably reliable evidence upon which to allow the out of pocket expenses. It is said there is no medical evidence to support the allegations that the applicant suffered depression or distress occasioned by the respondent. Likewise it is said there is no evidence that Mr Boccabella's fees are proper or that Mr Shakur properly incurred any administrative fees. 351 In light of the conclusions reached in the earlier reasons, there is no foundation for this claim. The starting point for the calculation is the income of the applicant for the financial year commencing 1 July 2004, that being her first year of full time earnings extrapolated back to the financial year commencing 1 July 1999. That was the first financial year after her meeting with Dr Cole, from which the applicant claims to have committed to becoming a trainee registrar. 353 The loss claimed is in the sum of $662 259 and $271 647 for interest. These figures derive from Appendix 3 of the Spooner report. 354 Again, in the light of the earlier reasons and findings, there is no basis upon which an order could be made for this claim. I certify that the preceding three hundred and fifty-five (355) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson. | misleading or deceptive representations selection of a candidate on an annual basis for appointment as trainee registrar in dermatology representations concerning the selection process representations in information sessions, training handbooks, selection committee meetings and feedback sessions representations concerning appellate process filling of position before determination of appeals whether representations misleading or deceptive or likely to be such whether respondent a trading corporation whether conduct in question was conduct in trade or commerce breach whether intention to create legal relations whether lodgement of appeals created contractual relationships trade practices contract |
There has been no appearance on behalf of the defendant this morning on the return date for the application. The matter was called on at approximately 10.15 am and no appearance was recorded. The matter was then stood down until 11.00 am and called again. There has been no appearance upon the matter being called for the second time. 2 The plaintiff has provided a list of materials which are read on the application, and has provided a chronology and written submissions in relation to the merits in support of the making of a winding up order. Prior to the matter being called on this morning the defendant had provided submissions through lawyers Groom & Lavers and in those submissions the proposition was being advanced that there are special circumstances which would warrant the application being adjourned. 3 Without descending into all the detail of the matter, there has been a history of negotiations between representatives of the defendant and financiers, including Macquarie Bank, and others, to raise money to enable the plaintiff's claim to be discharged. In the course of those matters, a cheque was drawn and made payable to the Commissioner, which upon presentation was dishonoured. That payment apparently was made in the context of anticipated fruitful refinancing arrangements. 4 Upon the failure of those arrangements and the dishonouring of the cheque, the defendant apparently has engaged in other discussions with a view to securing a sale of an asset described as its "rent roll". The submissions set out five matters which are said to constitute special circumstances which would warrant the matter being adjourned. Two things need to be said about that. The first is that the defendant has not appeared to articulate the merits of those matters. Secondly, I am not satisfied, in any event, that they constitute special circumstances, particularly having regard to the payment to the Commissioner of a cheque in discharge of a liability which has been dishonoured upon presentation. Accordingly I propose to make an order that the defendant be wound up. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application for an order that the defendant be wound up in insolvency under the provisions of the corporations act 2001 (cth). insolvency |
It held a licence pursuant to the regime established by the Therapeutic Goods Act 1989 (Cth) (the TGA Act) and was obliged to comply with the requirements of the licence in manufacturing its products. On 28 April 2003 the Therapeutic Goods Administration (TGA) suspended the licence. Pan could not manufacture or sell any more goods covered by the TGA Act and was obliged to recall goods it had sold. The licence was never restored. Pan became insolvent and was ultimately wound up. 2 The applicant, Australian Naturalcare Products Pty Ltd (Naturalcare), was one casualty of these events. It sold complementary medicines by mail order. It purchased most of its stock from Pan, and had done so for many years. The recall of goods in stock, the inability of Pan to supply orders that had been accepted and the loss of Pan as a future supplier caused major disruption to its business. Naturalcare lodged a proof of debt claiming a substantial sum to compensate for this disruption. The liquidator has allowed amounts in relation to goods recalled and the failure to supply accepted orders but has denied liability otherwise. Naturalcare sues for damages for the disruption to its business. 3 The essence of the case for Naturalcare is that, in one way or another, Pan guaranteed the continued supply of products that complied with TGA requirements. Liability is put on various bases, including contract, tort, estoppel and breach of s 52 of the Trade Practices Act 1974 (Cth). Each basis depends upon the course of business dealing between Naturalcare and Pan which commenced in 1989. The objects of the TGA Act are set out in s 4 and include the provision of a national framework for the regulation and control of therapeutic goods and medical devices to ensure their safety, quality, efficacy and timely availability to consumers. 5 A 'therapeutic good' under the TGA Act is broadly defined as a good which is represented in any way to be, or is likely to be taken to be, for therapeutic use (unless specifically excluded or included under s 7 of the TGA Act, which provides for a declaration that goods are or are not therapeutic goods by the Secretary of the Department of Health and Aging). 'Therapeutic use' is defined in s 3 of the TGA Act. 6 The TGA Act applies to therapeutic goods used in Australia (whether produced in Australia or elsewhere) and to therapeutic goods that are exported from Australia. It sets out the legal requirements for manufacturing, supplying and importing of medicines into Australia as well as the requirements for listing or registering all medicines on the Australian Register of Therapeutic Goods (the Register). It also regulates advertising, labelling and product appearance. The TGA Act is supplemented by regulations and various orders and determinations. The Australian Code of Good Manufacturing Practice for Therapeutic Goods --- Medicinal Products (the Code) is of particular importance in this case. 7 The Register was established under Pt 3 of the TGA Act. The Register is a database of information about therapeutic goods for human use which are approved for supply in, or export from, Australia. Any product claiming to have therapeutic qualities must either be listed or registered in the Register before it can be supplied in Australia, unless it is specifically excluded or exempt. As a general rule, higher risk medicines are registered and lower risk medicines are listed. The assessment of a product's 'risk' will largely depend on its ingredients, its form of dosage and the promotional or therapeutic claims made for the product. Many complementary medicines are listed in the Register and some are registered. 8 The application to have a product listed or registered is made by a 'sponsor'. Under s 3 of the TGA Act, a sponsor is someone who imports, exports, manufactures or has therapeutic goods imported or manufactured on its behalf, but does not include someone who arranges or personally imports, exports or manufactures therapeutic goods on behalf of another if that person is a resident of, or carrying on business in, Australia. To apply for registration, a sponsor needs to supply product specifications and analytical reports. Necessary product specifications include the formula (generally by way of a formulation certificate), the ingredients including quantities, the size and shape of the pill and a copy of the proposed label. The analytical report identifies the ingredients and their strength and how this supports the therapeutic claims made on the product's behalf. 9 A sponsor's product must be manufactured by an authorised manufacturer in order for the product to be registered. All applications by sponsors of a proposed therapeutic good must specify which approved manufacturer is to produce the product if registration is to be successful. Australian manufacturers of therapeutic goods have to be licensed under Pt 4 of the TGA Act. Manufacturers must also comply with the principles of the Code. Those Manufacturing Agreements are outlined in greater detail below. In 1999, the manufacturing business conducted by Pan Laboratories Pty Limited was transferred to Pan Laboratories (Australia) Pty Limited (which was renamed Jimang Pty Limited on 2 February 2000) and was carried on by it until March 2000 when the business was transferred to Pan Pharmaceuticals Limited. From 1999 to 2000, Selim was the Chief Executive Officer, a director and a majority shareholder of Pan Laboratories (Australia) Pty Limited. When Pan Pharmaceuticals Limited was listed on the Australian Stock Exchange on 23 August 2000, Selim became the Chief Executive Officer, a director and the majority shareholder of the company. Hereafter, 'Pan' refers to whichever entity was conducting the manufacturing business from 1974 to April 2003 except where it becomes necessary to distinguish between the corporate entities. 12 Selim's job involved day to day contact with sponsors to encourage them to buy Pan's new and existing products. Between 1974 and 1988 he was the only person at Pan working in a marketing position. Between 1990 and 2003, he was the head of Pan's Marketing & Sales and Exports departments with a number of Marketing & Sales Managers reporting to him. He claimed to have a number of formal qualifications relevant to his position including a Bachelor of Pharmacy, a Diploma of Food and Drug Analysis, a Master of Science (Organic Chemistry), a Diploma of Herbology and a Ph.D. in Nutrition. 13 Pan was audited by the TGA in February 1995, November 1995, April 1997 and November 1998. A number of compliance issues were raised in these audits, particularly in the November 1998 audit report. However, Pan remained licensed. In 1985 or thereabouts he was appointed as the General Manager of Balance Sports Supplements which had an established relationship with Pan. Schadel met Selim and dealt with him directly in negotiating product development and manufacturing processes between the two companies. In 1987, Schadel became the Sales and Marketing Manager of a business trading under the name of Weider Health and Fitness. 15 In 1989, with encouragement from Selim, Schadel started his own business known as Styjive Pty Limited from 1989 to 1991 and Australian Naturalcare Products Pty Ltd thereafter, herein referred to as 'Naturalcare'. Schadel and his wife were initially the sole shareholders of Naturalcare. The company started with only one product called Royal Jelly which was supplied by Pan but initially sourced from overseas as Pan did not have the technology to manufacture it at that time. Both Selim and Schadel agreed that the companies were parties to this agreement although a copy was not available to tender in the proceedings. The form and content of the successive Manufacturing Agreements will therefore be discussed in greater detail in the context of those agreements which are in evidence. 17 The business relationship between the two companies was fostered by a close professional and personal relationship between Selim and Schadel who worked together on the development of Naturalcare's business, particularly in the early years of their dealings. They met at least once every three months, and probably more often, for three to four hours at a time. Selim and Schadel continued to have regular, though less frequent, meetings until April 2003. At the meetings, Selim proposed new products and discussed their formulas and benefits, as well as discussing business more generally. 18 In the early 1990s, Selim actively encouraged Schadel to expand Naturalcare's product range. I have first-hand knowledge of the best product range for a mail order business like [Naturalcare] . I can give you a list of suggested products that are selling well that your customers would like. If Schadel was interested in the product he would ask Selim to send him a quote and if Schadel found it satisfactory, he would send Pan a purchase order. Selim agreed that they worked 'closely and collaboratively' to develop Naturalcare's business. As a result of that practice, Naturalcare's range expanded beyond Royal Jelly to include products such as Korean Ginseng, Evening Primrose Oil, Arizona Odourless Garlic, Vitamin E, Vitamin C and Multivitamin and Mineral. By the end of 1992 or thereabouts, Naturalcare offered its customers approximately 26 separate complementary products. To the best of Schadel's recollection, Selim had suggested all of them and Selim did not deny that this could have been the case. Selim encouraged Naturalcare to purchase all of its product from Pan. 20 Selim provided financial as well as technical assistance to help Naturalcare expand its range in the early years. Schadel claimed that from 1989 to 1994, Naturalcare received monthly invoices from Pan but would only partially pay selected invoices at the end of the month, irrespective of the total amount owing. Selim agreed that he offered Naturalcare favourable credit terms but added that from about the early 1990s, Naturalcare was required to pay within 45 days for repeat products and only allowed to delay payment on new products. Schadel claimed the credit terms encouraged him to buy products he may not otherwise have bought and also to continue to purchase almost 100 per cent of Naturalcare's product from Pan until around March 1994. Schadel gave evidence that Naturalcare consistently owed hundreds of thousands of dollars to Pan during this period. It suffices to hold that considerable credit was advanced by Pan to Naturalcare. 21 Selim also offered Naturalcare assistance in registering products with the TGA including the preparation of product specifications, formulation certificates and initially on the labelling or packaging details for new Naturalcare products. Pan also sent relevant paperwork to the TGA directly on Naturalcare's behalf until the mid 1990s, although Selim denies that it was Pan's practice to lodge an application for listing or registration with the TGA on behalf of Naturalcare. Schadel claimed that if the TGA had any queries in relation to ingredients of products or registration requirements, the TGA called Pan, or Naturalcare and then Pan, although Selim denies that the TGA addressed such queries to Pan rather than Naturalcare in its capacity as a sponsor. Again, it suffices to hold that Pan gave considerable assistance to Naturalcare in relation to sponsorship of products. Once a product was registered, Pan manufactured the product for Naturalcare (if Naturalcare submitted an appropriate order) and the product was then added to Naturalcare's product range. 22 The usual modus operandi of supply was that Naturalcare sent Pan a purchase order and Pan sent back confirmation if it could source the relevant raw materials and fill the order. A purchase order usually set out the manufacturer's name and address, the sponsor's name and address, the sequence number of the order, the product name and Pan's formula code for the product, a quantity of product, the price of the product (taken by the mid 1990s from an annual price list supplied to Naturalcare to be discussed below), the total amount payable for the order, the required delivery date, and the place of delivery. Pan informed its sponsors of its policy that purchase orders were to be submitted by the tenth day of each month and Pan would then attempt to deliver the goods by the end of the following month. Pan usually ordered its raw materials by the fifteenth day of each month. If it could not source the raw materials required to produce the product, Pan's practice was to withhold confirmation of the purchase order by not issuing an order confirmation. Schadel programmed in a lead time of three months in case of such eventualities, when for example, the product had to be sourced internationally. If the price of a product had changed since the issue of the annual price list, Pan would send the confirmation order back to Naturalcare stating the new price. If Pan did not receive a response within a couple of days of sending the confirmation order it would begin to process it. 23 Pan normally required Naturalcare to purchase prescribed batch sizes. The size of the minimum batches increased over the years, as did Pan's commitment to enforcing the policy. Selim helped Naturalcare on several occasions by agreeing for Pan to do an early or special production run for Naturalcare. However, Schadel wanted to find a way to test new products on the market without having to pay the costs involved in filling Pan's minimum production runs. In about 1992, Selim suggested that he should contact a Mr Sid Sarantis, the owner of a company called Markethaven Pty Limited. The company did contract packaging and also bought Pan products to sell to supermarkets. On any view, it is clear that Schadel contacted Sarantis as a consequence of Selim's recommendation in about 1992 or 1993. Naturalcare then developed a relationship with Markethaven. Markethaven became Naturalcare's packaging agent and the two companies signed a Packaging Agreement in 1997. Markethaven packaged product from both Pan and other manufacturers for Naturalcare. Schadel and Sarantis also made oral arrangements to split orders from Pan so that Naturalcare periodically bought a percentage of Pan product from Markethaven. From time to time, Selim described Naturalcare as 'Pan's mail order arm'. Selim encouraged Naturalcare to look into selling its products into international markets and promised to help Naturalcare with the supporting documentation required to register products overseas. I am satisfied that at all times Schadel reposed considerable trust and confidence in Selim personally and from a business point of view. 25 Naturalcare ordered its complementary medicines from Pan in the form of either 'soft gels' or tablets. Soft gel products attract a premium in the market place. Benefits include being easier to swallow and thus more attractive to consumers, especially mail order customers who are predominantly elderly. It is also a superior means of delivering a therapeutic product as it is ordinarily easier to swallow and digest a soft gel tablet than it is a hard tablet. The only company with the technology to make them in Australia up until this time was R P Scherer. From 1994 onwards, Pan's principal competitor for the soft gel market was R P Scherer. 27 Products were described by the parties as being either 'generic' or 'non-generic'. Virtually --- or fish oil would be a good example, virtually single ingredient product, 1000 milligram fish oil. A non-generic product developed by Pan for [Naturalcare] was typically sold to [Naturalcare] exclusively for a period before release to any of Pan's sponsors. Naturalcare could not go on without an injection of equity. During the year, Schadel therefore negotiated the sale of 65 per cent of Naturalcare's issued shares to Cellarmasters Wines Pty Limited with an option to acquire a further 10 per cent, which was exercised in 1995. Schadel retained his position as Managing Director. 29 Mr Terry Davis, the then Executive Director of Cellarmasters, told Schadel that he would like to investigate alternative suppliers for Naturalcare's generic products as he was concerned about the company's reliance on Pan. As a consequence, Schadel contacted Lipa Pharmaceuticals Pty Ltd to obtain tentative quotes for supply of certain generic products. 30 Schadel, Davis and Selim had two meetings in 1995/1996 where Davis voiced his concerns to Selim. Given your current and past issues with the Therapeutic Goods people where do you stand with a clean bill of health and who could we turn to if you were not able to supply? [Naturalcare] can continue to buy all of its products from Pan without a worry. Pan is the largest manufacturer of health care products in Australia. Pan complies with all of the TGA's requirements so there is no risk in Pan not being able to supply [Naturalcare] . There is no problem in Pan continuing to supply [Naturalcare] . I have asked Barry to continue to try to source products from other manufacturers. [Naturalcare] can continue to buy all of its products from Pan without a worry. Pan is the largest manufacturer of health care products in Australia. Pan complies with all of the TGA's requirements so there is no risk in Pan not being able to supply [Naturalcare] . There is no problem in Pan continuing to supply [Naturalcare] . Pan is Australia's number one manufacturer and is TGA compliant. What about our history? We have together formulated [Naturalcare's] top sellers. Pan has helped to build your business. Does Pan have the production capacity? [Naturalcare] should get 100% of its products from Pan and we should continue to work together to develop new products. Other sponsors which are much larger than [Naturalcare] , such as Bullivants, get all of their products from Pan with no problem. I accept the evidence of Davis. He was not cross examined. He is now independent of the parties and had no reason to give false evidence. His evidence is broadly consistent with and corroborates that of Schadel. I find that Schadel and Davis relied upon and continued to rely upon the assurances given by Selim. 32 At one of the meetings with Davis and Selim, Davis suggested the possibility of Pan paying Naturalcare a 2.5 per cent advertising rebate on all Naturalcare's purchases from Pan so that Naturalcare did not bear all the risk on new products. Selim agreed to grant Naturalcare an advertising rebate of 2.5 per cent of annual sales and $1000 for every new product introduced. I'm only doing it for [Naturalcare] to help us grow the business together. On 10 December 1997, Naturalcare and Lipa signed a Manufacturing Agreement. Schadel also made enquiries during the course of 1995 about the possibility of purchasing soft gel products from R P Scherer but was informed that Naturalcare would be required to appoint R P Scherer as Naturalcare's main supplier of other products if the two companies were to do business. Naturalcare continued to purchase the bulk of its products from Pan. 34 As noted above, Pan sent Naturalcare a price list to act as a guide for the following year (although prices did fluctuate to some degree because of changes in the price of raw materials). The list would set out the names, product codes and prices for all the products Pan was supplying to Naturalcare at that time. Schadel claimed that to the best of his recollection the price lists were provided in response to his request for greater price certainty because Naturalcare promised its customers a fixed yearly price. Selim recalled the request but claimed that price lists were provided to all sponsors. There is no reason to doubt Selim on that point. 35 Selim denied that he ever had a conversation with Schadel in which Naturalcare promised to pay the price stipulated in the annual price list, or if not stipulated, a reasonable price, as Schadel was told the prices on the list were subject to change. Schadel agreed in cross-examination that the negotiation of prices was an ongoing affair. The arrangement was flexible. Schadel admitted in cross examination that Naturalcare had bought products from manufacturers apart from Pan. Naturalcare therefore did not confine its purchasing to products on Pan's price lists. 37 Selim also denied that Schadel ever promised to attempt to ensure that Naturalcare purchased goods from Pan of an average annual value not less than the preceding annual value of goods purchased from Pan. Schadel admitted under cross examination that he could not recall a conversation in which such a promise was made. However, if Naturalcare placed an order for product that Pan had quoted Naturalcare for in the past, Pan would supply the product if it had the relevant raw materials and the order was for the required minimum batch run. 38 On 10 February 1995, Pan and Naturalcare signed another Manufacturing Agreement. Objective: This document specifies the Code of Good Manufacturing Practice responsibilities relating to the manufacture of the products listed in Annexure 1 of this Contract for Australian Natural Care Products (herein referred to as "Natural Care") by Pan Laboratories (Australia) Pty. Ltd. (herein referred to as "Pan"). These responsibilities refer to the numbered clauses in the Code of Good Manufacturing Practice for Therapeutic Goods, August 1990. Operation: Products manufactured and packed in final containers by Pan. Confidentiality: Formulation supplied for purposes of this Agreement are considered confidential and are not to be supplied by any third party other than with Pan's written consent. Term: This Agreement shall continue in operation for three (3) years, and will be deemed automatically renewed for a further three (3) years at the end of each three (3) year period. Either party shall determine otherwise by giving six (6) months notice in writing to the other party of their intent to terminate the Agreement. Scope: This Agreement does not cover any other commercial arrangements. It included a table which set out relevant clauses of the Code, the responsibilities those clauses are concerned with, and which of the two companies was to undertake each responsibility. This table was followed by Annexure 1 described in a sub heading as '(List of Products)'. This document appeared in identical form in subsequent Manufacturing Agreements but was referred to as 'Appendix 1 and will be referred to as such hereafter. There are 15 products in Appendix 1 of the 1995 Manufacturing Agreement. There was no provision in the Manufacturing Agreement in relation to commercial arrangements for the supply of goods. There was no obligation to order or supply any particular goods on any particular terms. That Manufacturing Agreement was in similar form to the 1995 Manufacturing Agreement with a few minor amendments. There were 67 products in Appendix 1 of the 1998 Manufacturing Agreement. 40 Schadel described the Appendix 1 product lists as 'fluid' in that they showed products Naturalcare had received quotes for but never introduced into its range, products that were introduced but which failed, and products that Naturalcare continued to order. The list also excluded products that had been introduced shortly before the Manufacturing Agreements were signed. Schadel said that he did not feel under an obligation to purchase the products on the various Appendix 1 documents from Pan if Pan's prices were not competitive. However he did believe that Pan was under an obligation to supply Naturalcare with a product, even if Naturalcare had only ordered it once. 41 Naturalcare and Pan also signed a Confidentiality Agreement in February 1995 and in August 1998 in similar form. 42 In mid 1998, Cellarmasters sold its shares in Naturalcare to Amrion Inc, a manufacturer of therapeutic goods based in the Unites States of America. Amrion came to own 90 per cent of Naturalcare's issued shares although Schadel retained his position as Managing Director. Mr David Robinson, a director of Amrion, became a director of Naturalcare in about July 1998 and retained this position until about November 2000. He gave evidence that he travelled to Australia on two occasions to have meetings with Schadel to evaluate Amrion's ownership of Naturalcare and analyse the company's business opportunities and weaknesses. I am concerned about what happens to [Naturalcare] if that supply is cut off or interrupted? Almost every company in our industry is buying from Pan. They have a great reputation for quality. I don't think there is any chance they would not be able to supply [Naturalcare] . If you were not able to supply [Naturalcare] , even temporarily, it would have a seriously negative affect on our business. Pan is the largest supplier of nutritional supplements in Australia. There is no possibility that Pan won't be able to supply [Naturalcare] with the products they order. Further, as Pan is the largest supplier in Australia, we work closely with the TGA and we meet, or exceed, all necessary standards the TGA sets for the manufacture of nutritional supplements. I think that we will be seeking to diversify its suppliers. Pan has helped build [Naturalcare] . Our relationship extends beyond simply supplying goods --- it extends into other areas including constant product development. We have built the business together and we should stay together. Pan has the capacity to meet all of [Naturalcare's] production needs. Pan has not let you down. For products you have ordered, Pan has supplied. He was not cross-examined and there is no reason to doubt his reliability. His evidence is broadly consistent with and corroborates that of Schadel. I find that Robinson and Schadel relied and continued to rely upon Selim's assurances. 45 Amrion had a plan to distribute its products, manufactured in a factory in Colorado, USA, to the Australian market by using Naturalcare's client list. However, the TGA did not grant Amrion the appropriate accreditation and in May 2001, Amrion sold its shares in Naturalcare back to Schadel and his wife, who became the sole shareholders of the company again. 46 In around 1999 or 2000, Pan had developed a new formulation for glucosamine sulphate to relieve arthritic pain. The formulation was approved by the TGA and Naturalcare sold it under the name 'Healthy Joints'. In about September 2001, Selim and Schadel had a meeting in which Schadel told Selim that he was planning to have Healthy Joints manufactured by Lipa because Lipa could supply it for a lower price. Schadel and Selim remembered this conversation differently. You have no right to give it to another manufacturer. If you do, I will sue you! If you decide to fight me it will cost you a lot of money and I will win. Lipa is reformulating to their own specifications from our label claim. You know it's a major price issue for us. The product is so much more expensive from you. And you've always told me that you would meet their prices. Selim denied that he threatened to sue Naturalcare and claimed that he responded to Schadel's announcement by saying it was 'disappointing'. In March 2002, Pan and Naturalcare entered into another Manufacturing Agreement and another Confidentiality Agreement. The Confidentiality Agreement was in the same terms as before. The March 2002 Manufacturing Agreement was in the same form as the 1998 Manufacturing Agreement. There were 103 products in Appendix 1 of the 2002 Manufacturing Agreement. 48 Schadel gave evidence that in relation to the period of January 2000 to April 2003, he understood that Pan was to supply 'close to all' of Naturalcare's soft gel product requirements and the 'majority of all other goods sold'. When Counsel for Pan put it to Schadel that in reality Pan only supplied 52.5 per cent by volume and 42.8 per cent by value of Naturalcare's soft gel product in this period and only 44.5 per cent by value of Naturalcare's other products, Schadel said 'I don't know whether those figures are correct.'. The figures appear in a statement by one of Pan's liquidators, Mr Christopher John Honey, who caused a purchasing analysis to be conducted by Gary Busby, Bian Guan Lim and persons under their direction and under his supervision. Mr Bradley James Stuart, the financial controller of Naturalcare gave evidence based on a review of Naturalcare's MYOB database that for the financial years ending 30 June 2002 and 30 June 2003, Pan supplied Naturalcare with approximately 66 per cent of Naturalcare's total stock purchases; and with 98 per cent of its total soft gel purchases. A difference in the figures could be the result of Stuart including product that was indirectly sourced from Pan, for example if Markethaven bought product from Pan and packaged it for Naturalcare under their Packaging Agreement. Schadel certainly reserved the freedom to acquire products from other manufacturers if the price was more favourable than Pan's price. 49 The business relationship between Schadel and Selim continued to function. In late 2002, Selim offered to introduce Schadel to a Mr Derek Coates as a possible buyer of Naturalcare when Schadel expressed a desire to sell the company. In February 2003, Selim told Schadel that he thought there was an opening in the market for a pharmacy only brand which Naturalcare could fill by selling its existing range under another label. In the same month, Selim told Schadel that he should relaunch his business in the French market and that Pan would give him extended credit terms and free product to help him with the venture. Selim expected that the relationship whereby Pan supplied Naturalcare with a large portion of its therapeutic goods would continue indefinitely into the future. As a result, the TGA conducted a special GMP audit of Pan between 30---31 January 2003. As indicated during the inspection, these deficiencies were to be referred to the Chief GMP Auditor and a Section Review Panel for further consideration, including the possibility of amendment, suspension or revocation of the company's licence. When, within reason, an extended time frame is warranted, then a description of the proposed corrective action(s) (including a timetable with target completion dates(s)), progress reports, and upon conclusion, objective evidence of its completion. The Group advised that poor quality products have an increased risk of failure in both safety and efficacy. The Group recommended that the company's manufacturing licence should be suspended immediately for the protection of the community's public health and safety. We were notified by the TGA after it was in the media. In that first week we had 26,000 phone calls and 162,000 hits on our website. We had customers constantly jamming up our telephone. I rang our industry representatives and couldn't get them because they were on national television. I spoke to my financial adviser and he told me to start firing people instantly. The party which acquired the assets of Pan did not commence to operate that business until well into 2004. 56 On 22 May 2003, Anthony Gregory McGrath and Christopher John Honey were appointed as administrators of Pan and as liquidators on 23 September 2003. • The contract was for a period of three years from 1 March 2002 with an automatic renewal for a further three year period. • Either party could terminate the contract by six months' notice in writing to the other. • Naturalcare promised it would use its best endeavours to ensure that it purchased goods from Pan of an average annual value not less than the preceding annual value of goods purchased. • Naturalcare promised to pay the price stipulated in the applicable Pan annual price list or, if not stipulated, a reasonable price. • Naturalcare promised to keep formulations for the goods acquired confidential and not to disclose them to any other person without Pan's written consent. • Pan promised to manufacture and supply the goods to a particular standard, namely, to the standard set out in the Code. Naturalcare relied upon Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 ; (2001) 53 NSWLR 153 at [81] , Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117---11,118 and Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 at 82---83. It was submitted that the quantities customarily acquired by Naturalcare from Pan were fluid but the overall quantity per annum from 2000 onwards totalled approximately $2 million. 61 I accept that commercial arrangements should not be pedantically analysed with a view to finding a self-contained offer and a self-contained acceptance before a contract can be found. However, in my opinion, the arrangements here were too fluid, if not amorphous, to amount to a long term supply agreement. Most of the points suggested to be in favour of the existence of the Supply Contract are indicative of a close working commercial relationship rather than contract. 62 There are significant discrepancies between the pleaded terms and the evidence given on behalf of Naturalcare. The evidence was that the applicant would purchase 'close to 100 per cent' of the soft gel products from Pan rather than all of those products and would purchase 'the majority of all goods' not 'all other goods'. The evidence of Schadel was consistent with a proviso that it was open to Naturalcare to acquire product from alternative suppliers who were offering a better price, but this is not reflected in the alleged contract. There is a question on Schadel's evidence as to whether the arrangement was that Naturalcare would purchase the lion's share of the overall business or (if there is a distinction) the bulk of the overall business. Schadel's evidence did not support the alleged term concerning the promise to use best endeavours to ensure that Naturalcare purchased goods from Pan of an average annual value not less than the preceding annual value of goods purchased. There is also merit in the submission for Pan that the purchase of 90 per cent of Naturalcare by Amrion, was inconsistent with the gist of the alleged arrangements. Whether or not Amrion products were meant to replace Pan products, it was intended that Naturalcare would be used as the Australian distributor for Amrion. 63 Another significant difficulty with the contract case is the existence of the successive written Manufacturing Agreements. There is no strict inconsistency between the Manufacturing Agreements and the alleged Supply Contract. It is to be noted, however, that one of the terms of the Manufacturing Agreements provided 'this agreement does not cover any other commercial arrangements'. The formality associated with the Manufacturing Agreements may be accounted for by the requirements of the Code. However, it is improbable that the parties would document one form of binding agreement without documenting another more commercially significant agreement. The alleged Supply Contract would necessarily overlap with the current Manufacturing Agreement, it incorporates terms from the Manufacturing Agreement and would have involved very significant obligations on both sides. There were also the successive Confidentiality Agreements. It is inherently improbable that there was no note or memorandum of, or written reference to, any such agreement, if it existed and was regarded as binding by both parties. 64 That improbability is underlined when the terms of the alleged agreement are more closely examined in the light of the facts. It will be recalled that the goods the subject of the Agreement were identified as those 'customarily acquired by Australian Naturalcare from Pan' and the quantities were 'those quantities Australian Naturalcare customarily obtained from Pan'. There are insuperable difficulties in the path of establishing the identity of the goods covered by the alleged Supply Contract. It will be recalled that it was also alleged in the pleading that the goods listed in Appendix 1 of the Manufacturing Agreement were substantially all of the goods that Naturalcare customarily acquired from Pan as at 1 March 2002. In evidence, Schadel referred to Appendix 1 as identifying the goods subject to the supply agreement. However, he also contended that the document was 'fluid' and that Pan had an obligation to supply any product that the applicant had ordered, even if only once, or that Pan had ever manufactured for Naturalcare in the 14 year relationship. 65 Honey's analysis of Naturalcare's purchases from Pan in two 12 month periods--1 March 2001 to 28 February 2002, and 1 March 2002 to 28 February 2003--illustrates the difficulty. Honey's analysis established that only eight of the 43 common products which were purchased in both 2001---2002 and 2002---2003 were purchased in both years within a variation in amount of 10 per cent. The remaining 35 products purchased in both years varied in volume from -316 per cent to +82 per cent. The lack of any pattern is borne out by the records of Pan in relation to the purchasing history of Naturalcare. 67 Schadel accepted that Naturalcare was free to shop around for a cheaper price. That was inevitable as the evidence showed that Naturalcare was obtaining supply from Lipa from the early days and was regularly transferring suppliers because of price. The contract case fails. Counsel referred to Waltons Stores (Interstate) Limited v Maher [1988] HCA 7 ; (1988) 164 CLR 387 at 416 per Brennan J; Commonwealth v Verwayen [1990] HCA 39 ; (1990) 170 CLR 394 at 430 per Brennan J; News Corporation Ltd v Lenfest Communications Inc (1996) 21 ACSR 553 at 569; and Gray (As Administrator of the Estate of Gray) v National Crime Authority [2003] NSWSC 111 at [153] ---[159] (cf Australian Crime Commission v Gray (As Administrator of the Estate of Gray) [2003] NSWCA 318 per Mason P at [40], agreed to by Tobias JA at [313]). Counsel for Pan submits that this claim is misconceived and that equitable estoppel can not be used as a sword otherwise than in equity. Counsel submits that Waltons Stores (Interstate) Ltd v Maher does not establish that equitable estoppel is a cause of action in itself capable of sounding in damages (legal or equitable) although it may assist in establishing a recognised cause of action such as breach of contract (as in that case). There is much to be said for that submission. However, the question is controversial (KR Handley, Estoppel by Conduct and Election, Sweet & Maxwell, London, 2006, Ch 13). As I have a clear view that the integers of promissory estoppel are not established, I need not deal further with this fundamental question. It should be noted that the claim for estoppel by convention is not pursued. 69 The estoppel case pleads the assumption that Pan was, and would continue to be, the exclusive supplier of soft gel goods and the supplier of the whole or the majority of the other therapeutic goods sold by Naturalcare for at least the term of the Manufacturing Agreement, including any renewed term. The case pleads an expectation by Naturalcare that Pan would continue to be its exclusive supplier of soft gel goods and the supplier of the whole or the majority of the other therapeutic goods sold by Naturalcare and that Pan would not be free to, or would not, withdraw from that expected relationship for at least the term of the Manufacturing Agreement, including any renewed term. 70 That assumption and that expectation are said to have arisen from the same course of conduct as was alleged to have given rise to the Supply Contract, together with some allegations of a general kind as to the relationship between the parties, also relied upon to establish a duty of care. Counsel for Naturalcare referred, in particular, to parts of a conversation between Schadel, Davis and Selim, which took place in 1995. 71 The first problem for Naturalcare is that promissory estoppel must be based upon conduct that is clear and unequivocal-- Legione v Hateley [1983] HCA 11 ; (1983) 152 CLR 406 at 435---437; Foran v Wight [1989] HCA 51 ; (1989) 168 CLR 385 at 410---411. Conduct not precise enough to form a contract would rarely be the basis for a promissory estoppel. It is sufficient to refer to the discrepancies in the contract case to illustrate the lack of a basis for promissory estoppel 72 The next problem is in identifying an appropriate subject matter for the assumption or expectation. They went on to point out that the failure to fulfil a promise does not, of itself, amount to unconscionable conduct and mere reliance upon an executory promise to do something does not bring promissory estoppel into play (also at 406). It is submitted by counsel for Naturalcare that the legal relationship in question was as supplier of Naturalcare's soft gel business and of the majority of Naturalcare's tablet business. In my opinion, that does not amount to a relevant assumption or expectation. It only illustrates a continuing commercial relationship. I have no difficulty in rejecting that contention. Such an assumption would be inconsistent with the course of dealings between the parties up to that time. Naturalcare had acquired soft gel products from non Pan sources and the majority of tablets from non Pan sources. Counsel for Naturalcare was only able to argue that Naturalcare gave Pan almost all of its soft gel business between January 2000 and April 2003, being 89 per cent by value and 48.2 per cent of its tablet products by value and Naturalcare acquired 58.25 per cent of its tablet products (by value) from Pan in the period January 2000 to April 2003, rather than 48.2 per cent but only if Healthy Joints figures are excluded. 74 Next, it is not at all clear how it is alleged that the assumption and expectation were unconscientiously departed from. The failure to supply products was not the kind of deliberate unconscientious departure from a state of affairs which might found a promissory estoppel. It was the result of action by the TGA pursuant to statute. 75 Other criticisms of the estoppel case were made by counsel for Pan. It is not necessary to deal with them. That case fails. For the purposes of argument, that can be taken as a fair summary of the statements by Selim from time to time and from the dealings between the parties over many years. (2) Naturalcare was vulnerable to Pan in the sense that it was unable to protect its own interests. Pan was in control of its own manufacturing processes and, to the extent that Naturalcare might have taken steps to protect its own interests, it was induced not to do so by Pan's express representations and conduct (referring to Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 ; (2003) 216 CLR 515 at [23] ; Perre v Apand Pty Limited at [10]---[13] per Gleeson CJ; at [42] per Gaudron J; at [118]---[119] per McHugh J; at [216] per Gummow J; at [298] per Kirby J; at [416] per Callinan J; Fortuna Seafoods Pty Ltd (as trustee for the Rowley Family Trust) v Ship 'Eternal Wind' [2005] QCA 405). (3) Pan had actual foresight of the likelihood that Naturalcare could suffer harm in the event that it manufactured and supplied product otherwise than conformably with requirements of the TGA and the Code. Pan was supplying goods for sale to, and ingestion by, humans. Pan knew that Naturalcare was taking the lion's share of its products from Pan and would be damaged if that supply ceased ( Perre v Apand Pty Limited at [13] per Gleeson CJ; at [50]; and [133] per McHugh J). (4) The statutory scheme meant that Pan assumed, for its own advantage, particular responsibilities which would give comfort to sponsors in the circumstances of Naturalcare ( Moorabool Shire Council v Taitapanui [2006] VSCA 30 at [3] , [82], [159]). (5) The case falls within at least one of the standard categories in which the common law has previously recognised that a duty of care may arise, namely, the negligent supply of goods ( Perre v Apand Pty Limited at [96] per McHugh J). (6) The policy consideration relating to indeterminacy of liability does not arise in the present case. Naturalcare was a first line victim. (7) Imposing a duty of care of the kind alleged would not impose an unreasonable burden on Pan ( Perre v Apand Pty Limited at [133] per McHugh J). It was indicated that the evidence contained in the reports by the TGA established that Pan must have known that it was in breach of those requirements and was at risk of losing its licence at any time. Its losses were of a class that was a reasonable foreseeable consequence of Pan's negligence ( Gates v City Mutual Life Assurance Society Limited [1986] HCA 3 ; (1986) 160 CLR 1 at 13). 80 This is a claim for pure economic loss. That is an opaque area of the law. The case is not pleaded as negligent misstatement. The case bears no real similarity to any previous pure economic loss case. Stripped to the essentials, a duty to continue to supply goods is claimed. That is a novel basis for a tortious claim. 81 Counsel for Pan has put forward a number of detailed reasons for its contention that the claim is misconceived. The most important is that Naturalcare was not 'vulnerable' in the sense required if that quality is to be a touchstone of liability as was submitted on behalf of Naturalcare. It would be necessary for Naturalcare to establish that it could not protect itself from the consequences of Pan's want of reasonable care, either entirely or at least in a way which would cast the consequences of the loss on the other party ( Woolcock Street Investments Pty Ltd v CDG Pty Ltd at [23] per Gleeson CJ, Gummow, Hayne and Heydon JJ; and Perre v Apand Pty Ltd per McHugh J at [120]). The risk of a supplier of goods not being able to maintain supply is an every day incident of commercial life. Many statutes regulate manufacturers and suppliers of goods. There is always a risk that if the statute is not complied with, the supply of goods may be prohibited or suspended. Various strategies to minimise risks of that kind and their impact are available to the intending purchaser. Particular contractual provisions can be framed, insurance can be sought, alternative suppliers located and so on. All available strategies were open to Naturalcare. The answer given on behalf of Naturalcare is that it was convinced by Selim's assurances not to take such prudent steps. That is no answer. It highlights the fact that the real complaint is about the alleged representations, not about failure to take reasonable care to ensure that the requirements of the Code were met. The first is that Pan would so conduct its manufacturing processes as to comply with the Code --- called the Quality Assurance representation. This representation is alleged to have been made by the 2002 Manufacturing Agreement in the light of previous dealings between the parties. Contractual promises can be the foundation of misleading and deceptive conduct for the purposes of s 52 in some circumstances ( HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54 ; (2004) 217 CLR 640 at [13] ). Whether these are such circumstances is best judged in a wider context. 83 It is also alleged 'further or in the alternative' that Pan represented to Naturalcare that Pan would continue to supply all, or most of, Naturalcare's requirements as to therapeutic goods or, alternatively, Naturalcare's requirements as to soft gel goods and all or most of Naturalcare's requirements as to other therapeutic goods --- called the Supply representation. That alleged representation is based upon particular statements in various discussions between Schadel and Selim including that Pan was the largest manufacturer of health care products in Australia and was compliant with the requirements of the TGA and, accordingly, that the risk associated with Naturalcare's reliance and dependence on Pan continuing to supply Naturalcare with those goods customarily purchased by it from Pan at the quantities customarily acquired was negligible or immaterial; and that Pan was ready, willing and able to continue to supply Naturalcare with all goods it customarily acquired from Pan at those quantities it customarily obtained from Pan. 84 It is submitted on behalf of Naturalcare that each of the Quality Assurance representation and the Supply representation was with respect to a future matter: in the one case, future conduct of the manufacturing process; and the other, the future ability to supply therapeutic goods, each broadly concerned with the continuing supply of therapeutic goods. It is contended that Pan has not established reasonable grounds for making either representation, with the result that the making of each of them was misleading and deceptive, or likely to mislead and deceive. It is further contended that Naturalcare relied upon the misleading conduct by continuing to conduct business on the basis that the bulk of the products it was to sell would be acquired from Pan and did not reorganise its business. This left it vulnerable to the sudden cessation of supply which occurred upon suspension of Pan's licence, leading to losses due to the disruption to its business. 85 Pan disputes each link in that chain. It denies the making of the representations. Pan then submits that the evidence of Schadel was that the assurances he received from Selim were in the present tense so, even if his evidence is accepted, the representations were about the then present capacity to manufacture and supply rather than being about a future matter. On that basis Pan contends that the representations are not shown to have been misleading. Even if the assurances were in respect of a future matter, Pan submits that no continuing representation was pleaded or proved. It would follow, so it was said, that even if Pan failed to carry the onus provided by s 51A, all that would be established was a breach of s 52 at the time of the making of the representations and there was no causal relationship between those breaches and the damage alleged to have been suffered. It was submitted that, in any event, there was a reasonable basis for any representations that were made. 86 Naturalcare places considerable emphasis upon the meetings in 1994 attended by Davis and those in 1998 and early 1999 attended by Robinson. Indeed, those are the only particular conversations which, in terms, are said to have included express representations as to compliance with TGA requirements. I have accepted the evidence of each of Davis and Robinson which in turn corroborates the substance of the evidence of Schadel about those meetings. 87 I also accept the substance of the evidence of Schadel that he continued to have regular discussions with Selim up to the time of the licence suspension, the content of which is only explicable upon the basis of the continuance of the arrangements between them and their respective companies based, amongst other things, upon the assurances received at the meetings with Davis and Robinson. Schadel's principal affidavit was broadly chronological in structure. After taking the narrative through to the sale of the Amrion interests in about May 2001, he dealt with the Healthy Joints dispute occurring around September 2001 and then with what was described as 'Other Business Collaboration' between Naturalcare and Pan involving discussions between Schadel and Selim. I did cause [Naturalcare] to obtain quotes for tablets or generic products from other suppliers. However this was largely a "check" to make sure that Pan was competitive on price. [Naturalcare] did diversify to an extent by having more tablets supplied by other manufacturers, but did not do so with its soft gels. I allowed [Naturalcare] to remain to a great extent reliant on Pan as its major supplier of tablets and virtually sole supplier of soft gel capsules, ... This was because I had faith in Mr Selim's assurances to me and Mr Davis and Mr Robinson about Pan and I felt as though I owed to Mr Selim a degree of the loyalty he expected. Pan was one of two Australian manufacturers producing soft gel capsules and it was the only one that could produce enteric coated soft gels. While some soft gels could have been obtained by [Naturalcare] overseas, I did not feel this was necessary due to Mr Selim's assurances about Pan continuing to supply [Naturalcare] . In addition, [Naturalcare] wanted to deal with Australian manufacturers and it did so until it was forced to look to overseas for products following the Pan recall. Pan had other advantages from [Naturalcare's] perspective which included the good service it provided, particularly through Mr Selim's personal collaboration with me, good price on the complex soft gel formulas and the ability to manufacture the quantities of product sought by [Naturalcare] quickly (e.g. within 3 months compared to R P Scherer's 6 months). That may not be of any great moment in itself. No Browne v Dunn point is taken. The parties are clearly at issue on matters such as that. I accept the substance of this evidence of Schadel, notwithstanding some exaggeration on his part. Pan is correct in submitting that those agreements only bite contractually as and when particular goods are ordered. Further, each such agreement includes an express term that it does not cover any other commercial arrangement. On the other hand, Pan is committed by the Agreement to stand ready for a period of at least three years (subject to termination on six months' notice) to comply with the nominated Code responsibilities in relation to all or any of the specified products. It is necessarily implicit that Pan was and would remain ready, willing and able to comply with the Code for the period of the Agreement. Compliance with the Code was fundamental to Pan's ability to manufacture therapeutic goods. 89 The question is whether entering into the Manufacturing Agreement in 2002 in the light of the previous dealings amounted to a representation or representations as pleaded and not whether a contractual promise was made. Reference has already been made to the judgment of Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd , dealing with the capacity of contractual promises to found representations for the purposes of s 52, which in turn refers to the judgment of Lockhart and Gummow JJ in Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 503---506 (see also Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 at 233---241). A practical example of the interplay between contractual promises and misleading or deceptive conduct is seen in the decision of Finn J in Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151. Nonetheless, some caution needs to be exercised in too readily equating the two ( Effem Foods Pty Ltd (t/as Uncle Ben's of Australia) v Lake Cumbeline Pty Ltd [1999] HCA 15 ; (1999) 161 ALR 599 per Gleeson CJ, Gaudron, Kirby and Hayne JJ at [12] and Callinan J at [60]; Wright v TNT Management Pty Ltd (1988) 15 NSWLR 679; and McWilliam's Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723). 90 I am satisfied that entering into the Manufacturing Agreement in 2002 did constitute conduct within the meaning of s 52 of the Trade Practices Act (read in the light of s 4) which was capable of being and was misleading and deceptive, particularly when considered in the context of the previous course of dealings between Pan and Naturalcare and between Selim and Schadel. The terms of the Manufacturing Agreement convey the Quality Assurance representation in a general fashion for the term of the agreement, not restricted to goods actually ordered. I am also satisfied that the explicit assurances by Selim, in the conversations with Schadel, Davis and Robinson, were implicitly carried forward by the same course of dealing. I am satisfied that Pan, at all times, represented itself to Naturalcare as a safe and reliable supplier, which was, and would remain ready, willing and able to comply with the Code. I thus find that the Supply representation was also made. 91 Was it misleading or deceptive, or likely to mislead or deceive, to make either or both of those representations? Pan admits that it did not comply with the Code in relation to the therapeutic goods manufactured and supplied by Pan to Naturalcare between 1 May 2002 and 28 April 2003 and makes a similar admission in relation to therapeutic goods manufactured and supplied by it to other customers between 1 May 2002 and 28 April 2003. It also admits that its manufacturing licence was suspended by the TGA as a result of its failure to comply with what is described as Good Manufacturing Processes. Pan takes the point that the admission is as from 1 May 2002 but the Agreement was entered into in April and was said to be operative from 1 March 2002. That distinction is of little merit. There is no evidence of any relevant change of circumstances between 1 March 2002 and 1 May 2002. The audits by the TGA on 30---31 January 2003, 24---25 February 2003 and 7---11 and 14 April 2003 and the reports upon them, together with the report of the TGA Expert Advisory Group of 23 April 2003, and the various notices pursuant to ss 30, 40 and 41 of the TGA Act given in 2003 are cogent evidence of the failure by Pan to comply with the Code by reason of serious systemic deficiencies. Pan did not call evidence to establish compliance with the Code during 2002 and 2003 or at any time. It did not call evidence to explain or rebut the effect of the TGA investigation and the conclusions that can be drawn from it. I am quite satisfied that Pan was in serious breach of the Code during 2002 and 2003. 92 The position in earlier years is not so clear. The TGA audit reports show significant deficiencies, but Pan continued to be licensed. Pan did not call evidence to prove compliance with the Code or that there was a proper basis for representations of compliance. On the other hand, Selim was not cross-examined on that topic. The extent of his involvement in, and knowledge of, the manufacturing process is not clear. The gist of the case is not based upon the earlier representations being a breach of s 52 when made. It is that they continued to be part of the basis upon which business was done in 2002 and 2003. It also follows that the fact that different Pan entities were involved in manufacturing prior to Pan Pharmaceuticals Limited taking over in 2000 does not affect the cause of action against it. 93 The consequence is that the Quality Assurance representation was misleading if viewed as a statement of existing circumstances at the commencement of and during the term of the 2002 Manufacturing Agreement. That contract continued in force until the recall. Breach of s 52 does not have to be intentional or negligent. If the Quality Assurance representation carried with it a representation as to future conduct, no reasonable grounds are established for making such a representation. 94 The situation in relation to the Supply representation is somewhat different. Pan was ready and willing to supply. Indeed, it continued to supply up until the suspension and recall. However, Pan was ultimately unable to supply because of the failure to comply with the Code leading to the consequent suspension and loss of licence. What is more, the true situation for all of 2002 and the relevant part of 2003 was that the failure to comply with the Code rendered Pan liable to suspension and cancellation of licence at all times. I am satisfied that the Supply representation was objectively misleading and deceptive for the whole of the relevant period. I am also satisfied that, to the extent that it related to the future, no reasonable grounds are established for making it. 95 I am satisfied that Naturalcare, through Schadel, did rely upon the Quality Assurance representation and the Supply representation. Counsel for Pan relied upon some factors to negative reliance, for example, the intention to source product from Amrion; the pattern of purchase from other suppliers; the freedom reserved by Schadel to acquire goods from other suppliers if price were favourable; and the variety of manufacturers Naturalcare had listed with the TGA to manufacture its products. It is submitted for Pan that the express evidence of reliance given by Schadel should be given little or no weight, citing Chappel v Hart [1998] HCA 55 ; (1998) 195 CLR 232 at 246 n64. 96 Chappel v Hart does not compel that conclusion. Indeed, the absence of such evidence could be fatal to a claim of reliance and causation. In the present case, Schadel's evidence accords with commercial reality. Naturalcare continued to acquire most of its goods from Pan and was lulled into what was a false sense of security by the assurances over the years and entry into the Manufacturing Agreements. It is obvious that if Schadel had thought that there was any real danger of Pan losing its licence because of non-compliance with the Code, he would have taken steps to reorganise the business to minimise dependence upon Pan for supplies. In essence, Schadel was induced not to reorganise the Naturalcare business to reduce dependence upon Pan as a supplier. The misleading conduct does not have to be the sole cause of the action or inaction said to cause the damage ( I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited [2002] HCA 41 ; (2002) 210 CLR 109 per Gleeson CJ at [33], per Gaudron, Gummow and Hayne JJ at [57], per McHugh J at [90]---[93] per Callinan J at [216]). Damages have been assessed by Naturalcare by estimating the loss of gross profits on product supplied to it by Pan as at April 2003 and then deducting from that amount any savings in costs and incidentals for a period until alternative suppliers were found. There are issues as to the particular methodology employed to arrive at that result which may be put aside for the moment. It is submitted for Pan that the basic approach is flawed. If Schadel's evidence is accepted then, on the hypothesis as to liability being explored, he would have commenced decreasing his reliance on Pan from March 2002, both by obtaining products from a range of other suppliers and by developing more generic products rather than complex slurry mix soft gels dependent upon Pan's particular expertise. Pan complains that there has been no attempt to estimate the difference between the position that would have been arrived at as a result of that conduct and the situation which existed at the time of the recall. In other words, Naturalcare has quantified damage on the basis of the continued supply of Pan products rather than upon the hypothesis that there would have been a substitution for Pan's products. 98 Naturalcare's claim for damages was formulated in a global fashion for all causes of action seeking to demonstrate what was lost by the inability to acquire and resell Pan products. It is submitted for Pan that this leaves the Court in a position where there is no proper basis for the assessment of damages in circumstances where a proper basis could, and should, have been put forward ( Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10 ; (2003) 196 ALR 257 at [38] per Hayne J; Optus Vision Pty Limited v Australian Rugby Football League Limited [2003] NSWSC 288 at [132] ---[137] (unaffected by the appeal at [2004] NSWCA 61). 99 Naturalcare responds that the approach that it has taken is likely to underestimate the quantum of potential damages as it does not take into account the fact that if it had reorganised its business it would have been in a stronger position in the market following the Pan recall than it ultimately was as its competitors would have been adversely affected by the recall and it would not have been. It, therefore, would have been likely to have increased its market share. It is also submitted that the method chosen uses actual figures and so reduces the necessity for hypothetical estimates which would inevitably be speculative. 100 In my opinion, the approach taken by Naturalcare is acceptable as a starting point ( Murphy v Overton Investments Pty Ltd [2004] HCA 3 ; (2004) 216 CLR 388 at [44] ---[52]). As it was induced to do nothing, it did not get out of the way and was a sitting duck when hit by the runaway train. Quantification of the effects of the train wreck is a good starting point for the assessment of loss. Of necessity, the assessment of damages in a case such as this is imprecise. There is a body of material in evidence as to the financial performance of the Naturalcare business prior to and after the suspension of licence and product recall which forms the raw material for the necessary assessment. The fact that the witnesses have approached the matter in one way or another is not decisive. 101 If reorganisation of the business could have been completed so as to eliminate dependence upon Pan prior to the suspension of Pan's licence, then the proposed measure of damages would be a good proxy for the loss caused by the misleading and deceptive conduct. If reorganisation would not have been completed, there would need to be a discount to reflect the extent to which reorganisation would not have taken place. The evidence of what occurred in relation to reorganisation after the recall is of some value in assessing what may have occurred in the 12 months prior to it. However, the latter period was complicated by widespread effect of the failure of Pan, which meant that many other customers apart from Naturalcare were scrambling to obtain supply. I am not satisfied that the divorce from Pan would have been complete by the time of the suspension of the licence, even if commenced in March 2002. 102 I agree with the submission by counsel for Naturalcare that the most striking aspect of the actual results post recall is the significant loss of total revenue by the business after the cessation of supply by Pan. The total revenue for the period 1 May 2001 to 30 April 2002 was $9 738 748 with an average monthly revenue of $811 562. In the period from 1 May 2002 to 30 April 2003, the total revenue was $11 240 026 with an average monthly revenue of $936 669. In the period from 1 May 2003 to 30 April 2004, the total revenue was $7 841 573 with an average monthly revenue of $653 464. In the period from 1 May 2004 to 30 April 2005, the total revenue was $10 667 344 with an average monthly revenue of $888 945. Thus, in what is roughly the year after the cessation of supply, the decrease in total revenue was $3 398 453 and in the ensuing 12 months the decrease was $572 682 in total which together can be rounded up to about $4 000 000. This pattern is broadly consistent with the evidence given as to the replacement of individual Pan products over the period. No other substantive reason has been advanced for the drop in revenue apart from the disturbance of supply of Pan products. I am satisfied that the interruption of supply was progressively alleviated over approximately two years. The total lost revenue in the two years would, as submitted by counsel for Naturalcare, understate the true loss as revenue had been on a rising plane up to the time of termination of supply by Pan. No doubt some of the effect of the unavailability of Pan products upon Naturalcare was due to Markethaven being unable to supply Pan products. It is reasonable to take account of that consequence because of the history of the relationship between Pan, Markethaven and Naturalcare. 103 Pan endeavoured to establish that Naturalcare had not taken reasonable or timely steps to obtain substituted supplies more quickly. There was an attempt to use cross-examination and some evidence to show that Naturalcare had not acted reasonably as there were sources of supply not examined at all or not examined promptly. In my opinion, that endeavour was unsuccessful. Naturalcare had every commercial reason to take all steps open to it to minimise the loss. There is no reason to doubt the motivation to do so. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken. Even if the result was not perfect, I am satisfied that Naturalcare took reasonable steps to restore supply. It is quite obvious, however, that a sudden loss of revenue by a continuing business will inevitably lead to a net loss. Fixed costs and many of the variable costs will remain. There was a good deal of attention in the evidence and in the submissions to assessing the net revenue lost. In my opinion, the endeavour by Naturalcare to found upon a gross profit margin applicable only to the goods supplied by Pan is not appropriate to an exercise to determine damages for breach of s 52. I am satisfied that, in this respect, it is appropriate to adopt a margin of 45 per cent in accordance with the opinion of Mr McGuiness. However, having studied his report, and taking into account his evidence under cross-examination, his assessment of MSD costs and other operating expenses and the saving of wages costs are all too high. In my opinion, they should be approximately 15 per cent in total, rather than 20 per cent as he proposed. Therefore, in broad terms, the loss of net revenue is calculated as follows: loss of revenue $4 000 000 x gross profit margin 45 per cent = $1 800 000, less costs etc x 15 per cent = $270 000, leaving net revenue of $1 530 000. Allowance then needs to be made for the overlap between that amount and the loss of profit on goods returned and goods ordered but not supplied. Then there should be some discount for the uncertainty as to whether the business would have been completely reorganised by the time of the licence suspension and for other uncertainties. 105 The principal difference between the parties in relation to the goods returned and goods not supplied claim relates to the gross profit margin. Naturalcare claims a gross margin of 58.5 per cent for goods sourced from Pan moderated to 55.2 per cent if freight is taken into account. In my opinion, the criticisms of the foundation for that claim made by McGuiness are valid. I prefer to adopt for those purposes the yardsticks I have adopted for the umbrella claim, ie gross margin of 45 per cent and MSD etc of 15 per cent. The amount which is to be allowed for loss of profits on those claims is to be deducted from the overall amount I found for net loss. I would then discount the net amount by 20 per cent to take account of the uncertainties to which I have referred. I do not see the necessity for any discount back to a present value at the date of breach. The time has now elapsed. The amounts in question reflect the dollar values at the time during the period of loss. On that basis, interest would not run from the date of breach but should be calculated to reflect the progressive occurrence of loss. The amount of judgment should also reflect amounts allowed for direct expenses incurred due to the disruption such as the packaging, costs of registration and so on. Unless there are special reasons to the contrary, costs should follow the event. 106 The proceeding will stand over to enable counsel for Naturalcare to bring in draft orders to reflect these reasons, including calculation of the amounts for damages and interest. The parties should also draw my attention to any issue that has been overlooked. | s 52 of the trade practices act 1974 (cth) contract as a representation as to ability to supply goods in light of history of dealings between the parties no contract spelled out of course of dealing integers of promissory estoppel not made out no duty to continue to supply goods damages assessment where representation as to ability to supply goods to reseller misleading and supply ceased trade practices contract estoppel tort |
The applicant, Super Choice Now Pty Ltd, as Corporate Trustee for The Julie Anne Barrow Charitable Trust ("The Charitable Trust"), seeks orders to set aside five separate creditor's statutory demands addressed to it for the respective amounts of $2,472,000, $536,666, $116,000, $100,000 and $2,385,000. On 10 July 2009 the applicant filed an interlocutory process pursuant to O 4 r14 of the Federal Court Rules seeking an order that Mr David Charles Barrow, the sole director of the applicant and a non-solicitor, be given leave to commence and carry on the proceeding on behalf of the applicant. The initiating process and the interlocutory process were filed by Mr Barrow. The respondent does not consent to the application that such leave be granted, nor does it oppose it. The respondent is the holder of a forty-five year concession awarded by the State of Queensland to design, construct, operate, maintain and finance the project known as "Airport Link", a toll way which, when complete, will connect Bowen Hills, Kedron and Toombul in Brisbane, Queensland. The respondent is the responsible entity of the BrisConnections Investment Trust ("BCIT") and the BrisConnections Holding Trust ("BCHT") within the meaning of Pt 5C of the Corporations Act 2001 (Cth) ("the Act"). The units in BCHT are stapled to the units in BCIT in the ratio of 1 BCHT unit to 1 BCIT unit. The principal relief sought by the applicant, namely the setting aside of the statutory demands, rises out of a claim by the respondent for the payment of the second instalment on the stapled units in the BCIT and the BCHT. The initiating application is supported by an affidavit by Mr Barrow in which he alleges that the issuing of each of the statutory demands in the circumstances to which he refers amounts to an abuse of process. For present purposes, it is not necessary to analyse in any detail the matters in respect of which the applicant claims that the statutory demands should be set aside. It is sufficient to note that the applicant alleges that the Constitutions of the BCIT and the BCHT have not been complied with. In an affidavit filed on 10 July 2009 Mr Barrow deposes to the following matters: The Charitable Trust is impecunious; The Charitable Trust is solvent; The audited financial statements of The Charitable Trust for the year ended 30 June 2008 disclose net assets of $6,797; As at 30 June 2009 the net assets of The Charitable Trust were reduced to $1,641 although there is a disputed debt of $5,609,666 claimed by the respondent; As at 1 July 2009 The Charitable Trust bank account showed a debit balance of $78.68. He sets out degrees he has been awarded in accounting and finance, philosophy and english literature and creative writing. He also says he is currently enrolled in the first year of Juris Doctor of Law at RMIT and is a fully qualified certified public accountant. (b) He has "advantageous experience in the superior Federal Court of Australia". He refers to his participation in proceedings before Gray J (VID 335 of 2008 David Charles Barrow v Blackrock Investment Management Limited ) and Gordon J, Julie Anne Barrow Charitable Trust v BrisConnections Management Company Ltd [2009] FCA 412. That discretion will be exercised in favour of the grant of leave where there is a "sufficient reason to do so". In Molnar Engineering Pty Ltd v Burns [1984] FCA 232 ; (1984) 3 FCR 68 , the majority of the Full Court of the Federal Court dismissed an appeal against the refusal by the trial judge to grant leave pursuant to O 4 r 14(2). Smithers J, with whom Sweeney J comprised the majority, considered that the discretion to be exercised was to be exercised judicially "according to the requirements of justice" (at 74). The dissenting judge Keely J agreed with this observation. Smithers J considered that where there was "sufficient reason" it was inevitable that the discretion be exercised in favour of a company. Smithers J then recognised that the problem was to determine what was sufficient reason. One would suppose that a company might successfully support an application to sue or defend without qualified assistance, not only where the company is bereft of funds, but also where having regard to the necessary or reasonable commitments of the company, the appropriation of funds to engage qualified assistance for the litigation in question would create financial difficulties with which the company could not cope, or with which it ought not be required to cope. The class of company involved, the nature of its undertaking, its financial structure, its ability to retain and pay its staff and no doubt other factors might be relevant in particular cases. So also would the capacity of a person by whom the litigation might be commenced and carried on. In this case Mr Molnar is, from the point of view of substance, a one man company. In addition, he is the inventor of the hoist in question and understands the technical factors relating to its safety. It could no doubt be urged that, in the case of a one man company which seeks leave to carry on the proceedings without a solicitor and which proposes that it be carried on by the one man of the company the situation approximates, in substance, that of a litigant in person. If Mr Molnar were carrying on business as personal proprietor thereof he would have the privilege of conducting litigation himself without qualified legal assistance. That ready accessibility to the courts should be available to a juristic person is no doubt similarly fundamental. However, it has been regarded as appropriate that when a trader decides to use the corporate form in which to carry on his business for the advantages flowing therefrom his accessibility to the courts as plaintiff and his appearance as a defendant should be made conditional as set forth in O 5, r 6 of the rules of the United Kingdom and the practice which it reflects. Factors relevant to the exercise of the discretion to give leave would include the class of company involved, the nature of its undertaking, its financial structure, its ability to retain and pay its staff, the identity of its shareholders and the spread of the shareholding. The fact that a company is the alter ego of a single person who has advantageous educational and technical qualifications might also be important (at 75). Sweeney J did not elaborate upon the principles regulating the discretion but dealt with the case on the basis that the Full Court should not interfere with the discretion of the trial judge. Keely J, who dissented in the result, nevertheless agreed with Smithers J that the discretion was to be "exercised judicially according to the requirements of justice and that it must be exercised in favour of a company where there is sufficient reason". Relevant factors for dispensing with that requirement include the financial capacity or lack of capacity of the corporation and those standing behind it, the effect of diverting company resources to paying legal expenses, the nature of the company's undertaking, its financial structure, its ability to retain and pay its staff and the identity and spread of its shareholders. The factual complexities of the case and the capacity of the proposed representative to conduct it effectively are also relevant --- VN International Video Pty Ltd v West End HK TVB Video & Others (1996) 14 ACLC 1308. I am satisfied, on the material placed before me by Mr Barrow, that the Charitable Trust is impecunious and that it does not have the ability to pay for legal advice or representation in this proceeding. I consider that that is a necessary factor to be established before the leave can be granted but I do not consider that it is a sufficient factor of itself to warrant the exercise or discretion in the applicant's favour. The factors identified in the authorities to which I have referred, need to be taken into account. I place little weight on the "advantageous education qualifications" and "advantageous experience in the superior Federal Court of Australia" relied upon by Mr Barrow. They do not demonstrate an ability similar to that possessed by a solicitor or counsel experienced in the practice of corporations law to make submissions in relation to the legal and factual issues relevant to an application to set aside a statutory demand. In my view, those educational qualifications and court experience are not such that Mr Barrow's position can be equated to that of a qualified legal practitioner so that the Court will have the opportunity of benefiting from Mr Barrow's legal knowledge. He does not possess any legal qualifications and, indeed, is presently in the course of the first year of a primary law degree. Nevertheless, I am satisfied that the applicant has demonstrated sufficient reason to warrant the exercise of the discretion under O 4 r14 in favour of the applicant so as to enable Mr Barrow to appear on the substantive application to set aside five statutory demands addressed to the applicant. The applicant is impecunious. This is established through the production of audited and non-audited financial statements. What particularly weighs in my consideration is that although the applicant is the moving party in the application, the application is, in substance, a defence. If a statutory demand is not set aside pursuant to the provisions of Div 3 of Pt 5.4 of the Act, so that the Company is obliged to comply with the statutory demands and fails to do so then in an application to wind up the Company on the ground of insolvency pursuant to s 459P of the Act the Court must presume that the Company is insolvent if the Company failed to comply with the statutory demands within three months before on the day in which the application to wind up the Company is made. The court does not have to consider questions of solvency or abuse of process, it merely has to focus on the matters set out in s 459H, namely, whether there is a genuine dispute and/or whether the company has an offsetting claim: see s 459J. Thus it would seem to me that the present regime involves a much closer connection with the winding up proceedings that have been initiated by the service of the statutory demand than was the case under the previous procedure. Commercially speaking, the person who issued the statutory demand is the attacker and an applicant for an order under s 459G is responding to that attack. I think it is appropriate that this court should follow the Federal Court decisions in cases such as Amalgamated Mining Services Pty Ltd v Warman International Ltd and hold that one should focus on the question as to whether in a commercial sense the defendant to litigation is the aggressor. Even if one takes a different tack and says that one must find a legal aggressor, it seems to me that under the existing structure of the Corporations Law the person who issues the statutory demand is the legal aggressor. Put another way, the applicant has been forced to institute the proceedings in order to avoid the application of a presumption of insolvency in any winding up proceedings brought against it by the respondent. In these circumstances, I consider that the Court should take a more benevolent approach to the exercise of the discretion under O 4 r14 than it would in circumstances where the applicant was, in a practical sense, the moving party or the practical aggressor. I am conscious of the fact that I have reached a conclusion different to that of Gordon J in Julie Anne Barrow Charitable Trust v BrisConnections Management Company Ltd [2009] FCA 412 but I consider that there are a number of features of the application before me which distinguish that application from the application made before Gordon J. In the proceeding before Gordon J Mr Barrow applied for leave to appear on behalf of the named applicant but Gordon J refused his application. The principal distinguishing feature is that in the proceeding before Gordon J the applicant was seeking affirmative relief and was not in the position of being a defendant to a claim or potential claim brought against it. Further, the issues of fact and law raised before me are quite different from the issues of fact and law raised before Gordon J. Although Mr Barrow is the principal witness in this proceeding, as he was in the proceeding before Gordon J, I consider that the issues raised in the applicant's claim to set aside the statutory demands are substantially based on documentation rather than the viva voce evidence of Mr Barrow. There is also evidence before me, which apparently was not before Gordon J, that the applicant and The Charitable Trust are impecunious and cannot afford to pay for legal advice or legal representation. It is also important to note that Gordon J concluded that even if leave was granted to Mr Barrow to appear on behalf of the Corporate Trustee the applicant faced significant obstacles which needed to be overcome before any substantive application could be heard. As I understand the present proceeding the applicant does not face the same significant obstacles. It was accordingly for these reasons that I made the order on 8 September 2009. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | application for company to be represented by an agent not being a solicitor or counsel nature of the discretion conferred upon the court under o 4 r 14 of the federal court rules relevance of fact that the company is seeking to be represented in an action where the company is, in substance, the defendant. application pursuant to s 459g of the corporations act 2001 (cth) to set aside statutory demands whether a party making an application to set aside a statutory demand is, in substance, a defendant. practice and procedure corporations |
2 Before dealing specifically with those Notices of Motion, it is helpful to set out the history of the matter. 3 The proceedings were last before the Court on 5 December 2005, when I heard an interlocutory application for an injunction restraining one of the respondents in these proceedings from taking possession of property. I made no orders on that date, and adjourned the application pending the outcome of proceedings in the New South Wales Supreme Court. 4 On 5 December 2005, I declined to reinstate proceedings QUD224/2004, which proceedings were brought by Gregory Eric Rogers, and which had been dismissed. 5 Subsequent to 5 December 2005, no step was taken in proceedings QUD525/2005. On 4 July 2006, that is to say, more than six months after the events on 5 December 2005, the file in these proceedings QUD525/2005 was closed due to inaction. 6 On 11 August 2006, the file was reopened when the applicant filed a lengthy Statement of Claim of some 705 paragraphs over 70 pages. That Statement of Claim is substantially the same as had been filed by Mr Gregory Rogers in proceedings QUD130/2006. 7 The first Notice of Motion of which I am concerned was filed on 19 September 2006 by Mrs Rogers. The Notice of Motion sought directions that "a summary judgment hearing take place as a Defence had not been filed in the application within the time period set out in the Federal Court Rules ", as well as various other orders. 8 The second Notice of Motion is one filed by the respondents on 20 September 2006 seeking the applicant's proceeding be dismissed, or, in the alternative, that they be permanently stayed, together with costs. 9 It is difficult to avoid the conclusion that these proceedings in the name of Lynne Maree Rogers have been instituted, and then resurrected, because earlier proceedings brought by the applicant's husband were the subject of orders of dismissal in the light of the bankruptcy of Gregory Rogers and the decision by his trustee in bankruptcy not to pursue those proceedings. 10 The gravamen of the complaints in the present Statement of Claim are essentially a replica of claims made by the applicant's husband in the earlier proceedings. 11 Greenwood J in Rogers v Asset Loan Co Pty Ltd & Ors [2006] FCA 434 was concerned with applications for relief by Mr Rogers, who sought various orders, including interlocutory relief restraining the respondents from exercising a power of sale, and in respect of a number of loan agreements, deeds of settlement, mortgages, and other instruments relating to various properties. The alleged contraventions of the Trade Practices Act 1974 (Cth) which are mere conclusionary assertions are relied upon as the basis for final orders with respect to the interests of the bankrupt in property which interests have become vested in the trustee. 15 After the judgment of Greenwood J, Mr Rogers filed an Amended Statement of Claim on 19 June 2006, seeking, in conformity with observations of Greenwood J, to formulate a Statement of Claim so as to plead claims coming within the exemption of s 116(2)(g) of the Bankruptcy Act . 16 On 7 December 2006, Collier J held that the proceedings by Mr Rogers in QUD130/2006 commenced by application filed 7 April 2006 by Mr Rogers, and in which the Amended Statement of Claim was filed on 19 June 2006, be dismissed with costs. 17 Her Honour held that in respect of each of the applicant's claims, the applicant either did not have standing, or the claims were not actionable in the Federal Court, or the pleadings were deficient. Her Honour held that the applicant should not be given a further opportunity to replead, and dismissed the applicant's application. 18 The earlier proceedings by Mr Rogers, namely QUD224/2004, was the subject of orders by me on 6 October 2005. The action QUD 224/2004 is deemed abandoned by operation of s60(3) of the The Bankruptcy Act 1966 (Cth). The proceeding is struck out. 3. No order as to costs. Leanne Percival left Russell Percival when she found out that he had burgled the applicant's husband's home in company with his young Asian student girlfriend. Orders that the respondents surrender all cash or other considerations obtained by the sale of property in these transactions to the applicant or her husband. Orders that protect the applicant, her husband and her children from retribution, harassment or intimidation by the respondents. Orders that a Summary Judgment hearing take place as a Defence has not been filed in the application within the time period set out in the Federal Court Rules . Orders requiring the respondents to remove liens over two motor vehicles that are the subject of the Statement of Claim filed in this matter pursuant to a Deed dated 4 August 2004. Orders that the respondents themselves or their agents, not harass, stalk, intimidate or put pressure on the applicant and her family having regard to conduct outlined in the Statement of Claim and the affidavits filed. Orders that the respondents pay the applicant's costs in the motion and proceedings. Any further orders that the court deems fit. What is sought in the prayer for relief number 3 does not appear to be included in any of the relief claimed in the Statement of Claim. The prayer for relief number 4 extends to the applicant's family. 2 Alternatively, that the Applicant's proceeding be permanently stayed. 31 On 6 December 2005, despite the respondents agreeing by consent to the judgment of the New South Wales Supreme Court being set aside, there was no appearance by or on behalf of Mrs Rogers before the New South Wales Supreme Court on 6 December 2005. Those proceedings were adjourned to 12 December 2005. 32 On that day, Mr Rogers appeared before the New South Wales Supreme Court on behalf of his wife, and notwithstanding that counsel for the respondents advised the Court that the respondents consented to the judgment previously made in the New South Wales Supreme Court being set aside, Mr Rogers, on his wife's behalf, moved the Court for orders that Mrs Rogers' application be dismissed. 33 In consequence, on 12 December 2005, the New South Wales Supreme Court struck out Mrs Rogers' summons and ordered that she pay the respondents' costs of the hearing on 6 and 12 December 2005. 34 As noted above, this file was closed on 4 July 2006 because no action had been taken for six months. It was only after the publication of that action by the registry that the voluminous Statement of Claim by Mrs Rogers was filed on 11 August 2006. 35 My conclusions can be summarily stated. 36 I have analysed the extensive Statement of Claim in considerable detail. I have had regard to the reasons for judgment of Greenwood J in Rogers v Asset Loan Co Pty Ltd & Ors [2006] FCA 434 and the reasons for judgment of Collier J in Rogers v Asset Loan Co Pty Ltd [2006] FCA 1708. 37 I have, in addition, had regard to two affidavits of Lynne Rogers filed on 19 September 2006, and the two affidavits of James Sean Whittle, a solicitor for the respondents, which was filed, in Court, on the hearing of the two motions. 38 Notwithstanding the voluminous material in the Statement of Claim, the concern of Mrs Rogers in these proceedings as at December 2005 was directed at obtaining orders in relation to property at Fingal in New South Wales, which had been the subject of orders of the New South Wales Supreme Court in the matter 5702/2005. 39 In the proceedings before me, Mrs Rogers alleged that the respondents were seeking to enforce an improperly obtained consent judgment and writ in respect of the Fingal property. The respondents acknowledged that the judgment entered in the New South Wales Supreme Court did not accord with the terms upon which the respondent in the New South Wales matter, namely Mrs Rogers, consented to judgment being entered against her. 40 I was informed that Mrs Rogers had applied for that judgment to be set aside, and I was told by the respondents that they had agreed to consent to that judgment being set aside. 41 There was no agreement or acknowledgment by or on behalf of the respondents that they would consent to a variation of the judgment in the New South Wales Supreme Court so as to accord with the terms upon which Mrs Rogers had consented to judgment being entered against her. 42 It is in that context that the conduct of Mr Rogers, on behalf of his wife, on 12 December 2005, has to be judged. (transcript of proceedings, p9). That Further Amended Statement of Claim comprised some 706 paragraphs. 45 Having regard to the detailed consideration of the allegations in Mr Rogers' proceedings, QUD130/2006, it is right to order that these proceedings by Lynne Maree Rogers against each of the respondents be dismissed, and that the applicant pay the respondents' costs of and incidental to those proceedings and the Notices of Motion. 46 In addition to the reasons contained in Collier Js reasons for judgment in proceedings QUD130/2006, it should be noted that by a deed of settlement dated 4 August 2006, Mrs Rogers acknowledged that loan moneys borrowed by Mr Rogers and Living Space Holdings Pty Ltd from Asset Loan Company Pty Ltd had been secured by, amongst other things, guarantees provided by Lynne Rogers. Mrs Rogers had provided security and the registered mortgagee was entitled to pursue its rights pursuant to that mortgage. 47 It seems to me plain that the present Statement of Claim has to be seen against the deliberate decision on Mrs Rogers' behalf on 12 December 2005 to ask the New South Wales Supreme Court to dismiss her application in respect of the judgment. 48 It is true that the judgment, as recorded, involved a typographical error, which does not reflect the consent given by Mrs Rogers to the making of that judgment, but the offer by the respondents in that proceeding to have the judgment set aside was not acceded to by Mrs Rogers. 49 Having regard to the entirety of the material, it is appropriate to order that the application by Lynne Maree Rogers in QUD525/05 be dismissed with costs. 50 It follows that the relief sought by her Notice of Motion filed 19 September 2006 is not granted. 51 I proceeded in this matter on the basis of O 20 r 2 of the Federal Court Rules . That section was inserted by the Migration Litigation Reform Act 2005 (Cth). It applies to all cases commenced on or after 1 December 2005. 53 The Explanatory Memorandum to the amendment identifies that the "no reasonable prospects of success test" is designed to allow the court greater flexibility in giving summary judgment than the previous "no reasonable cause of action" test. 54 According to the Explanatory Memorandum, the purpose of s 31A was to introduce a lower standard for summary dismissal. 55 The application by Mrs Rogers was filed two days before s 31A came into effect. I have therefore proceeded under O 20 r 2 which tests are said to be more stringent. I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. Friend of the Court, Gregory Rogers, made submissions on her behalf. | notice of motion by applicant notion to dismiss by respondents whether claim substantially identical to earlier dismissed claim where current claim so identical and motion to dismiss granted practice and procedure |
The appellant is a citizen of the People's Republic of China. She claimed to have a well-founded fear of persecution on the Convention grounds of imputed political opinion and membership of a particular social group, namely local business people. The appellant's claims were set out in a statutory declaration to which the Tribunal referred in giving its reasons for the decision. The appellant claimed that she and her husband operated a furniture shop in a province of China. She claimed that the local police used to obtain furniture from the shop and then refuse to pay for it. She claimed that the same thing happened to other businesses in the area, as a result of which a local businessman committed suicide. The appellant said that she took pity on the local businessman's widow and encouraged her to protest against the corruption. She also claimed that, in mid-2007, she organised a protest of approximately 50 or 60 people. The appellant claimed that the police treated her actions as anti-government activities and arrested her. She said that she was detained, interrogated and tortured. The Tribunal did not accept the appellant as a witness of truth. In coming to this view, it relied upon a number of inconsistencies between the evidence given by the appellant at the oral hearing and what she had said in earlier evidence, either at the hearing or in her statutory declaration. The Tribunal set out the most significant inconsistencies at [65] of its written reasons. The Tribunal also relied on other inconsistencies in coming to the view that it could not accept as factual any of the key substantive claims which the appellant made. The first was that the Tribunal failed to take into account that she had been nervous and under pressure, and that the Tribunal's decision was affected by a reasonable apprehension of bias. This ground of review therefore contained two separate parts. The first was her claim that she had been nervous and under pressure. Scarlett FM said at [22] that she had not established that the Tribunal was made aware of any such unusual pressure or nervousness. The second part of this claim was the claim of a reasonable apprehension of bias. Scarlett FM set out the test stated by the High Court in Re Refugee Review Tribunal; ex parte H [2001] HCA 28 ; (2001) 179 ALR 425. His Honour was of the view that there was nothing in the Tribunal's reasons or in the evidence which disclosed a reasonable apprehension of bias within the test stated by the High Court. The second ground of review was that the Tribunal failed to comply with its obligations under section 424AA of the Migration Act 1958 (Cth) ("the Act"). His Honour approached the matter upon the basis that the word "information" in section 424AA has the same meaning as it has in section 424A(1). Scarlett FM was of the view that there was no information that would come under the purview of section 424A(1) of the Act and he observed, at [26], that the decision of the High Court in SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609 at [18] is authority for the proposition that inconsistencies in an applicant's evidence do not amount to information for the purposes of section 424A. The third ground of review was that the Tribunal made its finding without any substantial ground apart from its assumption. Scarlett FM, at [27], was of the view that this ground could not be maintained because it was an attempt to seek merits review which, of course, is not available in the Federal Magistrates Court. Although it was apparently not raised as a ground of review in her application in the Federal Magistrates Court, Scarlett FM observed, at [29], that the appellant complained about the standard of interpretation in the Refugee Review Tribunal. His Honour rejected that complaint, referring to an authority of the Full Court of the Federal Court in Appellant P119/2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 230. She was assisted by a Mandarin interpreter. She addressed me orally on the grounds of appeal, which essentially amount to a re-argument of the grounds of review which were rejected by Scarlett FM. As I have already said, the first ground falls into two parts. The appellant expanded very slightly on the first part of this ground this morning. She said that she had been nervous and under what she called "spiritual pressure". In my view, this ground must be rejected for the reasons given by Scarlett FM in [22] of his reasons. The second aspect of this ground of appeal was also expanded upon this morning. The appellant put to me that the attitude of the Tribunal revealed bias. This was because, the appellant said, the Presiding Member picked faults with her evidence instead of listening to her without interruption. It followed, according to the appellant, that the Tribunal had already decided the case against her. The answer to this submission is to be found in the observations of the High Court in Re Refugee Review Tribunal; ex parte H at [30]. The appellant argued the second ground upon the basis of a breach of section 424A of the Act. She was unable to identify precisely what information the Tribunal was required to disclose to her, but the effect of what she said was that the Tribunal ought to have provided her with information about the inconsistencies in her evidence, so as to give her an opportunity to address those inconsistencies. Whether this issue is approached upon the basis of a claimed contravention of section 424A(1) or section 424AA , the result is the same. There is authority for the proposition that "information" in section 424AA has the same meaning as "information" under section 424A: SZLXI v Minister for Immigration and Citizenship [2008] FCA 1270 at [27] per Cowdroy J. It is well established that the Tribunal's disbelief of an applicant's evidence arising from inconsistencies in it cannot be characterised as constituting "information" within section 424A(1): see SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609 at [18]. Accordingly, this ground of appeal must also be rejected. The third ground of appeal was said to be unfairness. The appellant claimed that she had been treated unfairly, because the Tribunal described her evidence as "vague". This is not an accurate description of the Tribunal's reasons. As I said earlier, it rejected the appellant as a witness of truth. In any event, it seems to me that this is sufficiently covered by what Scarlett FM said at [29] and following paragraphs of his reasons for judgment. Accordingly, the orders that I will make are that the appeal be dismissed with costs. | no reasonable apprehension of bias in decision of the refugee review tribunal tribunal's disbelief of applicant's evidence not "information" within s 424a(1) of the migration act 1958 (cth) meaning of "information" in s 424aa of the migration act no procedural unfairness migration |
An amended application was filed on 29 July 2009. The amended application detailed the applicant's claim as one for declaratory relief, injunctive relief, findings of fact for the purposes of section 83 of the Trade Practices Act 1974 (Cth) ('the Act') and costs. In addition, the amended application included a claim for interlocutory relief. On 30 July 2009 the duty judge granted interlocutory injunctive relief, including mandatory injunctive relief, until further order. The matter was before the Court for first directions referable to the ultimate hearing, on 17 August 2009. On that day the Court was informed that the respondents consented to the final relief sought. However, it was indicated that it would be necessary for the Court to consider the evidence by reference to which the applicant sought the declaratory relief, so that it might be persuaded to make the declarations sought. The matter was listed for final hearing on 20 August 2009. When the matter was called for hearing today, Senior Counsel for the applicant handed up proposed orders which, in paragraphs numbered 1 - 8 inclusive, sought the same relief as was set out in paragraphs 1 - 7 of the Amended Application filed 29 July 2009, but split the injunctive relief sought in paragraph 3 into two paragraphs which became paragraphs 3 and 4 in the draft orders. The draft orders did not propose any relief under s 83 of the Act. They did, however, include a proposed order that the respondents pay the applicant's costs in an amount to be agreed or, in lieu of agreement, as taxed. Such an order was not opposed by the respondents. In relation to the proposed injunctive relief s 80(1AA) of the Act provides for the granting of injunctions by consent. It is apparent that the word 'from' was missing from the proposed orders numbered 6 and 7 in the Amended Application, and leave was granted to the applicant to amend the Amended Application to insert that word before the word 'representing' in each of those paragraphs. The draft orders proposed by the applicant corrected the omission. The question arises as to whether or not, in the circumstances, the Court should order declaratory relief as sought, or at all. Section 21 of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act') empowers the court in relation to a matter in which it has original jurisdiction to make binding declarations of right whether or not any consequential relief is or could be claimed. The respondents are purveyors of quack medical advice and quack medicine. They have, through websites on the world wide web, offered for sale e-books which have addresses suggesting that, by reference to those websites, one may learn how to defeat asthma, endometriosis, fibromyalgia, genital herpes, hemochromatosis, Lyme Disease, menopause, myastheniagravis, sarcoidosis, scleroderma, sebaceous cyst, shingles, prostate cancer, 'MM', Addison's Disease, anemia, cellulite, colitis, diverticulitis, endometriosis, genital warts, hemochromatosis, multiple sclerosis, reflux, staph infection, Tourettes-Disorder, tuberculosis, breast cancer, heartburn, ringworm, ulcers, scabies, cysts, hives, ganglion cyst, mononucleosis, Gullian Barre Syndrome, schizophrenia, dyslexia, impetigo, gonorrhoea and larangitis. If one accesses the several websites at which these cures and treatments are said to be offered, one may purchase, for approximately $US25, an e-book containing the medical advice offered, and for $US32.00 one may acquire a 'Miracle Mineral Solution', being 'WATER PURIFICATION DROPS', the label bearing the words 'PGL International', 'MMS Professional™'. The bottle has around its lid a wrapper endorsed with words to the effect, 'Sealed for your protection'. Sodium chlorite content 22.4%. THIS PRODUCT IS NOT INTENDED TO TREAT, DIAGNOSE, CURE OR PREVENT ANY DISEASE. A distinguished Professor of Medicine, Emeritus Professor John Michael Dwyer AO, has debunked the claims made in the several e-books which he was called upon to consider. It is clear that a number of representations contained in the material on the websites and in the e-books is false, misleading and deceptive. The website material includes testimonials, some of which are included with a depiction of a particular author who, on different sites, is given a different name. In relation to asthma a photograph appears, said to be that of 'Debbie DeAngello'. In relation to Addison's Disease, the same photograph appears, said to be that of 'Marsha Menendez'. In relation to endometriosis, the same photograph appears, said to be that of 'Sharon Cresler'. In relation to fibromyalgia, the same lady's photograph appears, said to be that of 'Kiera Clarkson'. When used in relation to Lyme Disease, the same photograph is said to be that of 'Amielle Archer'. The inclusion in the websites of the testimonials said to have been given by people who have followed the advice or utilised the recommended treatment is plainly contrived. Given that the websites are accessible internationally, it is not surprising that the deceit perpetrated has operated internationally. It would appear that the respondents were responsible for the deceit, and that they have profited financially from it. They are the sole directors of Spectaz Pty Limited, whose registered address is unit 16, 7 Mead Drive, Chipping Norton, NSW. They are the co-owners of a property at Cecil Hills in New South Wales. The evidence which is before the Court includes records of two payment collection organisations which were apparently used for processing sales of the e-books and of the salt water. These included an organisation known as 'PayPal' and another known as 'ClickBank'. Records referable to bank accounts maintained by the respondents with St George Bank Limited demonstrate regular and substantial credits into the various accounts which emanated from 'PayPal Australia' and 'Clkbank'. One PayPal document in respect of the first respondent includes, under the heading 'Financials', details of an 'Account Balance', an account of amounts received in the 'Last 3 Months', and a 'Total Amount Received'. The PayPal document created on 21 October 2008 suggests that the amounts received in the preceding three months were $US60,957.32, $US83,160.76 and $US78,602.02. Under the heading 'Total Amount Received', the figure of $US1,044,205.99 appeared. The uncontested hearsay evidence placed before the Court included advice from Senior Counsel at the Washington State Attorney General's Office in the United States of America suggesting that there had been 66 Australian customers who purchased e-books referable to colitis, 112 Australian customers who purchased e-books referable to diverticulitis, 203 Australian customers who purchased e-books referable to genital warts, one who purchased an e-book referable to genital herpes, 440 Australian customers who purchased e-books referable to menopause and 229 Australian customers who purchased e-books referable to shingles between December 2008 and 3 June 2009. The applicant asks the Court to make declarations descending into, if I may say so, minute detail in respect of the claims made by the respondents through the websites and referable to the salt water which are said to be false, misleading and deceptive. Whilst I am reluctant to make declarations in the absence of a contradictor and in circumstances where some of the evidence relied upon is no more than hearsay, I consider that it would be appropriate to grant declaratory relief to the effect that, between about June 2008 and July 2009, each of the first and second respondents made representations by the various websites, which should be listed, that if a person followed the advice contained in the e-books, listing them, and undertook the treatment proposed therein, including the use of 'WATER PURIFICATION DROPS' labelled 'MMS Professional™', a person's health would improve, and that such representations were false, misleading or deceptive. I propose to dissolve the interim injunctions which have been ordered and to grant injunctions in the terms proposed in the draft order, which the applicant has handed up, and I am willing to make a declaration generally along the lines of the declaration which I have just proposed. I will, of course, make an order for the payment by the respondents of the applicant's costs in an amount to be agreed or, in lieu of agreement, as taxed. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | circumstances in which it is appropriate to grant declaratory relief practice and procedure |
In so far and as the appeals were brought by Citrus Queensland, I did so because the liquidator of the company had indicated it did not wish to participate further in the appeal proceedings and plainly, it did not intend to prosecute the appeal. In so far as the appeals were brought by Mr Tracy and Sunstate Citrus, I did so with their consent. I also ordered the appellants to pay the respondents' costs. This was not opposed. The respondents submitted that the costs should be payable on an indemnity basis. The solicitor for the second and third appellants resisted this order. This judgment deals with that question. Much of the relevant history of the litigation between the parties is recounted by Greenwood J in the judgment given on 6 May 2009 ordering the winding up of Citrus Queensland: [2009] FCA 452 at [3] - [10]. Other relevant events and the more recent history of significance are as follows. The appeals were listed before Spender J as the appeals call-over judge on 13 March 2009. His Honour listed the appeals for hearing on 17 to 20 August 2009 inclusive. The Court informed the parties on about 26 May 2009 that the settling of the appeal book index was listed to 15 June 2009. The appellants failed to file and serve a draft appeal book index on or before 5 June 2009 as was required by the rules (8 June being a public holiday). At the request of the appellants on about 12 June 2009, the Court gave the appellants 14 days to determine whether the appeals were to proceed and, accordingly, the Court adjourned the settling of the appeal books. On 9 July 2009 the Court notified the parties that the index would be settled on 20 July 2009. No draft index was filed and served by any of the appellants and the first appellant did not attend the hearing to settle it. On 21 July 2009, the respondents filed a notice of motion seeking that the appeals be dismissed for want of prosecution. It was listed for hearing on 24 July 2009 when the orders referred to earlier dismissing the appeals were made. The gravamen of the argument of the respondents was that the appellants had not prosecuted the appeals, they had been put on notice that it would be necessary for the respondents to prepare for the hearing of the appeals and their conduct was, in all the circumstances, so unreasonable as to warrant an order for indemnity costs. Reference was made to Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536 ; (1993) 46 FCR 225 , Davidova v Murphy [2009] FCA 601 at [23] and Khera v Jones [2008] FCA 548 at [24] . The solicitor appearing for the second and third appellants submitted that the circumstances have to be viewed through the prism created by the liquidation of the first appellant on the application of the respondents. I agree. It is true that the appellants have not prosecuted the appeals with alacrity. In relation to the first appellant, that is understandable because the appointment of a liquidator alters, obviously enough, the circumstances in which and the basis on which the company then might continue to prosecute litigation in which it was involved at the time it was wound up. Almost invariably that will complicate and often delay the prosecution of such litigation even if it proceeds. In a case such as the present where the direct primary beneficiary of any successful appeal was likely to be the first appellant, the winding up of the company had an impact on the participation in the litigation of other parties whose interests are allied to impose of the company in liquidation. While it is regrettable that the liquidator was not able to make a decision about prosecution of the appeal until 23 July 2009, I do not view the conduct of the first appellant and the consequential or at least allied indecision on the part of the second and third appellant as evidencing conduct which would warrant costs being ordered on an indemnity basis. I refuse to do so. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice MOORE. | basis of payment conduct of parties indemnity costs |
Order 78 r 12 of the Federal Court Rules provides an application for review must be filed within 42 days of the notification of the Registrar's decision. There is presently no requirement on claimants to amend their claim to meet the requirements of the registration test. The amendments inserted by item 73 are intended to provide a greater focus on the responsibility of applicants to take steps to improve the quality of their claims, recognising that poor quality claims are a burden on the native title system. Pursuant to s 190F(6) of the NTA, the Court may consider any 'other reason' why an application should not be dismissed. As to the principles applicable to how s 190F(6) should operate, I refer to and respectfully adopt, (without repeating), the recent analysis by Logan J in Christine George & Ors on behalf of the Gurambilbarra People v State of Queensland [2008] FCA 1518. One respondent has also filed submissions in reply. By submissions of the applicant under the title of Central West Goldfields People, arguments were made on behalf of all members of the applicant in the proceeding other than Ms Sue Wyatt and Mr Victor Cooper. Those submissions point to the fact that the Native Title Registrar has considered the claim on three occasions (on 4 October 1999 when it was accepted for registration under s 190A NTA; on 18 September 2006 when it was not accepted for registration pursuant to s 190A NTA; and on 16 September 2008 when it was not accepted for registration). The submissions, in summary, trace the reasons given in each instance. For present purposes it is unnecessary to focus on that detail. In relation to the most recent decisions, the applicant concedes that it has not taken any steps seeking review or reconsideration of the Registrar's decisions. In particular it has not taken any step of a kind contemplated by subpar (i)-(iv) of s 190F(5)(b) NTA. The primary difficulty as explained in the submissions is that the Central West claim is described as being in a state of deadlock for some years with two of the applicants, Ms Wyatt and Mr Cooper, being in disagreement with the remaining applicants. Those disputes, it is said, have centred on handling of 'future act' matters, monies paid under 'future act' matters and the strength of the connection of the Cooper applicant's immediate families to the Central West claim group. One of the consequences has been, according to the submissions, that the Goldfields Land and Sea Council (GLSC) has ceased to act for and has stopped funding the Central West claim. There has been a consequential breakdown in the relationship with the GLSC and a difficulty in obtaining separate legal representation for the applicant's future act matters. The details of that difficulty do not presently require consideration. Notwithstanding all these difficulties, the solicitors for the applicant say that considerable resources have been put into the preparation of the Central West claim with extensive research undertaken into the laws, customs and historical and cultural connections of the Central West people. Expert reports have been filed by an anthropologist, a linguist and an ethno-botanical expert giving a degree of weight to the notion that the claim is serious and proper and deserving of further attention by the Court and the respondents. In addition, over the years, the Central West claim has entered into, it is said, numerous heritage and land use agreements, particularly with the mining companies within the claim area. Again, there have been legal difficulties in relation to funds accruing and issues arising in the Supreme Court of Western Australia in connection with the proper treatment of those funds and related legal issues. More significantly, the applicant has indicated that whilst no active steps have been taken in regards to the claim including the holding of a claim group meeting, this is primarily because of the existence of these disputes. The applicant believes that holding a claim group meeting would be the first step in reactivating the Central West claim. The applicant believes there is likely to be a change in the composition of the applicant if such a meeting is held and that if issues as to the membership of the claim group can be satisfactorily resolved, then the claim is likely to be re-registered. Through its solicitors, the applicant has given an assurance that it will take all such steps to achieve registration in such event. The applicant acknowledges that the holding of a further claim group meeting or meetings and attempting to have the claim re-registered will need to be dealt with in a timely manner. Certain specific arrangements have been taking place to attempt to fund the claim group meeting. While it is difficult to be satisfied at this stage that the outcome of such a meeting will be for the application to be amended in a way that could give rise to its registration, the extensive submissions filed and the assurances given by the solicitors for the applicant, at least, lead to an inference that there is a reasonable and imminent possibility of that event occurring. In those circumstances I do not propose to dismiss 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 McKerracher. | court's discretionary power to dismiss an application on its own motion if the application has not been amended since earlier failure of registration test whether application likely to be amended in a way that would lead to a different outcome native title |
Because the parties had not made submissions in relation to costs, the question of costs was reserved to be determined. David Walters and Rhondda Walters provided short submissions on 27 August 2007 and the Commissioner of Taxation provided short written submissions on 3 September 2007. 2 David Walters and Rhondda Walters accept that there are no special circumstances which would alter the burden of the usual order for costs. Since the Commissioner of Taxation has been successful in both Applications, the Order of the Court will be that David James Walters and Rhondda Isobel Walters are to pay the costs of the Commissioner of Taxation of and incidental to each Application. I certify that the preceding two (2) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | resolution of the question of costs arising out of walters v commissioner of taxation [2007] fca 1270 taxation and revenue |
The primary judge dealt with an application for an extension of time to file and serve a notice of appeal from the orders of the Federal Magistrates Court given on 19 July 2006. Although the primary judge considered that there was an argument that the Refugee Review Tribunal's decision was affected by jurisdictional error, his Honour noted that this was not the only consideration with respect to the application to extend time. More than two years had elapsed since the time for filing and serving a notice of appeal expired. Further, the appellant initially commenced appeal proceedings in August 2006 which he discontinued in November 2006, leading to the inference that the appellant and his advisers accepted the correctness of the decision. The primary judge dismissed the application for an extension of time albeit not "without some hesitation" (at [9]). The appellant stressed that the primary judge (in substance) had found the Tribunal and Federal Magistrates Court to have erred. Further, the appellant said that the primary judge himself had found the issue difficult to resolve despite ultimately refusing to grant the extension of time. Given the seriousness of the consequences of the refusal for the appellant and the lack of any prejudice to the Minister, the appellant submitted that justice required that his appeal be heard. It is easy to understand the appellant's concerns. From the appellant's point of view the Tribunal and Federal Magistrates Court erred and yet his appeal cannot be heard in order to correct the error. These matters clearly weighed heavily on the mind of the primary judge exercising the discretion to grant or refuse an extension of time even though he ultimately refused to do so having regard to all of the circumstances of the application. With respect to the present notice of motion, the difficulty for the appellant is that s 24(1AAA) of the Federal Court of Australia Act 1976 (Cth) provides that an appeal may not be brought to the Court from a judgment of the Court constituted by a single Judge exercising the appellate jurisdiction of the Court in relation to an appeal from the Federal Magistrates Court. In NBDW v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 24 , the Full Court (Weinberg, Jacobson and Lander JJ) found that a single Judge dismissing an application for an extension of time was exercising the appellate jurisdiction of the Court so that the effect of s 24(1AAA) was that the purported appeal was incompetent. The Full Court (citing Wati v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 543) further held that, by reason of ss 24(1A) and 25(2) of the Federal Court Act, no appeal lies from a decision of a single Judge dismissing an application for an extension of time to seek leave to appeal except by special leave to the High Court. It follows that, irrespective of the potential strength of the arguments about jurisdictional error (which were recognised by the primary judge), the appellant has exhausted his appeal rights in this Court. It also follows that any alleged errors by the primary judge in respect of the exercise of discretion are not able to be dealt with by the notice of motion as the appeal is barred by s 24(1AAA) of the Federal Court Act. The appellant's only possible avenue for further legal action in relation to this matter is to seek leave to appeal from the High Court. I should also mention that the appellant forwarded a letter to my chambers after the hearing dated 11 February 2009. That letter did not raise any matter capable of altering the legal position as set by s 24(1AAA) but reiterated the appellant's feeling of grievance that the Tribunal's decision appeared to disclose jurisdictional error but circumstances left him without a remedy. I have already mentioned above the fact that the same issue clearly weighed heavily on the mind of Edmonds J when he decided to refuse leave to extend time not "without some hesitation". Given s 24(1AAA) this Court can now do no more. In BZAC v Refugee Review Tribunal [2005] FCA 675 Spender J held that a single judge could dismiss an appeal manifestly incompetent having regard to s 24(1AAA). I agree and thus dismiss the notice of motion with costs. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | appeal from a decision of the federal court of australia refusing an application for extension of time to appeal from an order of the federal magistrates court appeal incompetent migration |
In that case his Honour dismissed an application for review of a decision of the Refugee Review Tribunal (the Tribunal) dated 31 January 2008. The Tribunal had affirmed a decision of a delegate of the first respondent dated 19 October 2008 wherein the delegate refused the grant of a protection (class XA) visa to the appellant pursuant to the Migration Act 1958 (Cth) (the Act). He arrived in Australia on 26 August 2007 on a Subclass 456 Temp Business Visa and applied for a protection (class XA) visa on 20 September 2007. The appellant claimed to have suffered persecution from the current Indonesian government on the basis that he expressed a preference for the former Indonesian leader, Mr Soeharto. 3 The appellant claims he was imprisoned in Indonesia for a one month period because he had been critical of the new Indonesian government and expressed a preference for Mr Soeharto. The appellant asserts that following his graduation from University, the police visited him frequently. On one occasion the police came to his house and asked him what he thought of the Indonesian government. When he answered that he hated the new government, he was beaten, arrested and imprisoned for one month. 4 The appellant also claims that the new Indonesian government has made life for his family hard because his mother was a member of the Soeharto government while his father has been accused of being a "Soeharto person". The Tribunal invited the appellant to attend a hearing on 10 January 2008 to present arguments and give oral evidence. The appellant was also advised that non-attendance at the hearing could lead to a decision being entered without further notice. The Tribunal did not receive a response from the appellant and he was not present at the Tribunal hearing. 6 The Tribunal found that the appellant had made a number of claims that had not been substantiated. 7 Based on the information before it and in the absence of either attendance by the appellant at the hearing or further material submitted by the appellant, the Tribunal was not satisfied the appellant was a person owed protection obligations under the Refugee Convention as having a well-founded fear of persecution. 8 Accordingly, the Tribunal affirmed the decision of the delegate not to grant the appellant a protection (class XA) visa. There was no evidence of the other materials to justify the making of the decision [ sic ]. 2. I am entitled to a protection visa. 3. I was prosecuted by the current Indonesian Government because I support our previous Government. 11 In general, his Honour found the decision arrived at by the Tribunal had not been attended by any error. As the appellant was invited to attend the hearing and was warned of the consequences of non-attendance, the Tribunal were entitled to make a decision in the appellant's absence pursuant to s 426A of the Act. That process was not attended by any error. The Tribunal failed to consider the real chance of risk of being jailed if the applicant return to her original country [ sic ]. 2. There was no evidence or the other materials to justify the making of the decision [ sic ]. 3. It is not reasonable for the Tribunal to deny my application for a protection visa. The decision of the Refugee Review Tribunal be set aside. 2. An order requiring the second respondent reconsider my application for a protection visa according to law. 3. Costs. 14 This matter was originally set down for hearing yesterday morning. At that time the appellant appeared in person and the respondent was represented by Mr Maycock. It was immediately apparent that the appellant was in need of an interpreter. Despite the onus being on the appellant to inform the Court of his need for an interpreter and a letter from Registry dated 9 July 2008 asking the appellant to inform the Court if an interpreter was required the Court was not so advised. I adjourned the hearing to today in order for an interpreter to be located for the purposes of the hearing. 15 At the hearing this afternoon, the appellant was again self-represented but an interpreter accompanied him. The Indonesian authorities conceal details of his case from people overseas. 16 The first respondent was represented by its solicitor, Mr Hickey. Mr Hickey relied in substance on his written submissions. 18 In my view the grounds of appeal stated in the appellant's Notice of Appeal are without substance. No error in the decision of the Federal Magistrate has been demonstrated by the appellant. I form this view for the following reasons. 19 In relation to the first ground of appeal it is clear that the Tribunal had informed the appellant that it was unable to make a decision in his favour on the basis of the material before it. The Tribunal observed in its reasons for decision that the appellant neither sent further material, nor took the opportunity to attend a hearing and present his claims orally. The learned Federal Magistrate correctly pointed out that a visa must only be granted where the Minister is satisfied the prescribed criteria has been fulfilled ( SZGFG v Minister for Immigration and Citizenship [2007] FCA 483). Further, it is clear that it is for the applicant before the Tribunal to make his or her case to the Tribunal --- the Tribunal is under no obligation to make the case for the applicant ( Abebe v The Commonwealth [2004] HCA 32 ; (1999) 197 CLR 510 at 576). The Tribunal made a decision based on such material as was before it, and the appellant cannot now claim that the Tribunal erred in making that decision. 20 In my view the appellant's first ground of appeal is not substantiated. 21 The appellant's second ground of appeal is identical to the first ground of review before Jarrett FM. In my view there was no evidence or other materials before the Refugee Review Tribunal that would justify making a decision other than the decision that it made in the circumstances of this case. The difficulty faced by the appellant in establishing jurisdictional error in relation to this ground of appeal is that the lack of evidence before the Tribunal was the very reason why the application was dismissed. This ground of appeal is not an allegation of jurisdictional error. Instead, the appellant is seeking to reopen the decision of the Tribunal. The Court cannot engage in review of the merits of the appellant's case: NAHI v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 10 at [10] . 23 In my view the appellant's second ground of appeal is not substantiated. 24 In relation to the appellant's third ground of appeal, the appellant has not provided any particulars to explain this ground or as to why the Tribunal's decision was unreasonable. In any event, to the extent that the appellant claims unreasonableness in accordance with the principles articulated in Associated Provincial Picture Homes Ltd v Wednesbury Corporation [1948] 1 KB 223, I note that the Full Court has found that "unreasonableness" does not constitute jurisdictional defect (see Andary v Minister for Immigration and Multicultural Affairs [2003] FCAFC 211 and QAAA of 2004 v Minister for Immigration and Multicultural and Indigenous Affairs [2007] FCA 1918). Accordingly, the appellant's third ground of appeal is not substantiated. 25 Finally, I consider that the oral submissions of the appellant today constituted an attempt to re-agitate his claims before the Tribunal. It is not the function of this Court to review the merits of the Tribunal's decision. 26 I am unable to identify any error in the decision of the learned Federal Magistrate below. Accordingly, the appropriate order is to dismiss the appeal with costs. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. | application for a protection (class xa) visa migration |
Each is an appeal against an appellable objection decision brought under Part IVC of the Taxation Administration Act 1953 (Cth). The substantive tax issues have been resolved in favour of the applicants. The question of costs remains. 2 In the financial years ended 30 June 1995 to 30 June 1999 ("the relevant period"), Macom Pty Ltd ("Macom") as trustee of the Macom Unit Trust ("the Macom Trust"), claimed deductions for contributions to employee trusts which the respondent, the Commissioner of Taxation of the Commonwealth of Australia ("the Commissioner"), subsequently disallowed under s 51(1) of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act ") or s 8-1 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act ") and Part IVA of the 1936 Act . The Commissioner's decisions disallowing Macom's objections to those assessments were not in issue in these proceedings. 3 Four family trusts were unit holders in the Macom Trust. Each trust was a discretionary trust. 4 These appeals concern only the 1995 and 1999 years of income. Appeals concerning the balance of the period (the income years 1996, 1997 and 1998) have been earlier discontinued by consent on the basis that the Commissioner pay each taxpayer's costs of those appeals. 5 There is no dispute that the Commissioner had power to issue these alternative assessments: Deputy Commissioner of Taxation v Richard Walter Pty Ltd [1995] HCA 23 ; (1995) 183 CLR 168 at 200-202. Each of the taxpayers appealed against the Commissioner's decisions to disallow in whole or in part objections against the alternative assessments issued to them. The Commissioner accepts that the alternative assessments are excessive. As I have noted earlier, the sole remaining issue between the taxpayer and the Commissioner concerns the costs of each proceeding. Each taxpayer seeks an order that the Commissioner pay its costs. The Commissioner seeks an order that each taxpayer bear its own costs on and from 1 September 2005. For the reasons that follow, the appropriate order is that each taxpayer bear its own costs on and from 1 September 2005. 7 It is sufficient to refer to some of the history in order to appreciate the unsatisfactory manner in which these proceedings have been conducted. Some of the appeals the subject of these proceedings were lodged in the Federal Court in December 2004. Further appeals were lodged in March 2006. Settlement of the substantive issues in these proceedings was directly raised by the Commissioner with the taxpayers' legal advisers no later than February 2005. Despite settlement being discussed and settlement offers being made, the parties continued to prepare their respective cases for trial for in excess of two years. 8 By no later than 30 June 2005, the Commissioner had requested the taxpayers provide trust deeds, financial statements and trustee resolutions for the relevant years of income to support the taxpayers' assertions regarding the income of the unit holders (the trusts) and the beneficiaries of those trusts. At that point in time, the 1995 to 1999 years of income (inclusive) were in dispute. On 28 July 2005, the Commissioner informed the taxpayers' legal adviser that he would no longer be pursuing the alternative assessments for the years ended 30 June 1996, 1997 and 1998 on the basis that the Macom Trust was in a trust loss position for that period. The appeals in relation to these assessments were later discontinued by consent on the basis that the Commissioner pay the relevant taxpayer's costs of the appeals. However, the Commissioner confirmed that he was pursuing the alternative assessments for the income years ending June 1995 and June 1999 and again asked the taxpayers to provide the trust deeds, financial statements and trustee resolutions for each year in dispute. That request was reiterated on 29 August 2005. 9 On 1 September 2005, the taxpayers' legal adviser forwarded a letter to the Commissioner's solicitor. The contents of that letter are worth restating. 10 On 8 September 2005, the taxpayers' legal adviser provided the Commissioner with a copy of the financial accounts for the Macom Trust for the 1996, 1997 and 1999 years of income. The accounts for the 1996 year included, by way of comparison, the accounts for the 1995 year. The accounts for the 1999 year included, by way of comparison, the accounts for the 1998 year. Those accounts recorded that Macom did not distribute its accounting income for the 1995 year and that there were carried forward losses in the 1996, 1997 and 1998 years of income. 11 On 14 December 2005, the Commissioner advised the taxpayers' legal adviser that the amended assessments raised against certain beneficiaries of the unit holders for the years ended 30 June 1995 and 30 June 1999 had been raised after the four year period prescribed by s 170(2)(b) of the 1936 Act and that the Commissioner had decided to withdraw those amended assessments. Appeals in respect of those matters were later discontinued by consent on the basis that the Commissioner pay the relevant taxpayer's costs of the appeals. 12 On 24 March 2006, in relation to the 1999 year of income, the Commissioner requested Macom's legal adviser to provide information as to the treatment by Macom of the accounting profit in that year including minutes of meetings and other documents or correspondence recording or evidencing steps taken by Macom in relation to the accounting profit. On 3 April 2006, Macom's legal adviser informed the Commissioner that Macom passed no distribution minute because it took the view that there was no accounting profit available for distribution. The Commissioner was not prepared to accept such an assertion and informed him that in the absence of documents recording or evidencing steps taken by Macom in respect of the accounting profit in the 1999 year, the Commissioner was not in a position to determine whether or not there was a beneficiary presently entitled to a share of income in that year. 13 The period between August 2006 and May 2007 is significant. In August 2006, the taxpayers filed and served their statements of facts, issues and contentions ("the SFICs"). It is to be presumed that the SFICs were prepared on proper instructions. 14 On 24 November 2006, the Full Court of the Federal Court handed down its reasons for decision in Cajkusic v Commissioner of Taxation [2006] FCAFC 164 ; (2006) 155 FCR 430 which concerned an employee benefit trust arrangement. As the reasons for decision made clear, the terms of the relevant trust instrument, inter alia, were critical to the determination of whether a beneficiary of the trust was properly to be assessed in respect of the income of the trust estate. 15 On 24 December 2006, the taxpayers filed and served their lists of documents. The lists included references to distribution minutes of Macom. The Commissioner requested copies of the minutes in March 2007. The last paragraph of the first page of the letter suggests that each of Preston Point Pty Ltd as trustee of the A & J Morris Family Trust, PA & LR Pty Ltd as trustee of the P & A Coleman Family Trust and L & A Maglio Pty Ltd as trustee of the l & A Maglio Family Trust passed no distribution minutes and no minutes exist in respect of the years ended 30 June 1995, 1996, 1997, 1998 and 1999. The difference is due to a misunderstanding of our instructions. We enclose, for your assistance, a copy of the minute dated 30 June 1995. All minutes referred to above are in the respective applicants' discovered documents. 18 On 24 April 2007, the High Court refused the Commissioner special leave to appeal the decision of the Full Court of the Federal Court in Cajkusic : see [2007] HCATrans 157. 19 On reviewing the relevant trust deed and the minutes, the Commissioner formed the view that for years ended 30 June 1995 and 30 June 1999, the unit holders did not have a right to demand payment of income from Macom and could not have been presently entitled to that income. Accordingly, on 2 May 2007, the Commissioner informed the taxpayers that he was prepared to agree that the taxpayer to be assessed for all years in question was Macom and proposed that the current proceedings be finalised. That was over 3 months ago. Prior to locating the minutes as part of the discovery process, I had been told by Mr John Denton, a former accountant for the Macom Unit Trust and some of the other, but not all, Applicants, that there were no distribution minutes". In each of these cases the court did not consider it necessary to determine the substantive merits of the matter before determining the appropriate order as to costs. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. I was referred to the decision of Heerey J in Findlay v Commissioner of Taxation [2002] FCA 1074 in support of that proposition. In that case, his Honour was considering two issues --- an application for costs by the unsuccessful party and an application for costs by the successful party --- where the Commissioner had conceded that the assessments were excessive. I think there is force in the argument of counsel for the Commissioner that the problem which has led to this litigation arises from matters entirely within the knowledge of the taxpayers. The bank statements clearly show the receipt of the payment in question in the 2001 year. This on the face of it seems a very simple and routine record. It remains a matter of some puzzlement to me as to why the factual inquiry became as protracted as it did. Had the correct date of the payment been disclosed in the ordinary way, this litigation in relation to the 2000 tax year would never have occurred. The answer to that question is important. The answer will determine the general rule or proposition on the question of costs. If the substantive issues were before the Court, costs usually follow the event. If they were not, the court will usually make no order as to the costs of the proceeding. In Part IVC proceedings, the question of whether the substantive issues were before the Court may sometimes be more easily resolved if the Commissioner concedes the assessments were excessive on a particular identified basis or bases. However, each Part IVC proceeding needs to be considered by reference to the particular substantive issues, the history of the proceedings and the manner in which the proceedings are ultimately resolved. The present appeals provide a good example of why there can be no hard and fast rule. 25 In each of the current appeals, the Commissioner accepted the assessments were excessive. The circumstances in which, and the basis on which, the Commissioner made that concession was not in dispute. However, as the background to these proceedings demonstrates (see [6] to [20] above, the history of the proceedings and the manner in which the proceedings were resolved is far from straightforward. 26 In May 2007 after the taxpayers produced the minutes referred to in [17] above, being the minutes requested by the Commissioner by no later than 30 June 2005, the Commissioner accepted that the assessments the subject of these proceedings were excessive. The minutes had in fact been listed by the taxpayers in lists of documents provided to the Commissioner on 24 December 2006. Copies of the documents were obtained by the Commissioner in March 2007. And it was not until April 2006 that the taxpayers' legal advisers wrote to the Commissioner and corrected what he had told the Commissioner in September 2005 - that the minutes did not exist. 27 In substance, the taxpayers assert that the minutes were unnecessary and the Commissioner should have made the concession earlier. The Commissioner submits that the minutes should have been provided by 1 September 2005 and that the taxpayers' explanation is unsatisfactory. There is force in the Commissioner's submissions. 28 First, the taxpayers' explanation for the delay in producing these minutes is less than satisfactory. The taxpayers' legal adviser informed the court that the minutes were not located until he was in course of preparing the affidavits of documents in December 2006. His explanation for the delay was that, up until that time, he had relied upon what he had been told by a former accountant for the Macom Unit Trust and some of the other, but not all, of the taxpayers. When he asked the accountant about the existence of the minutes was not disclosed. Where the minutes were ultimately located and, in what circumstances, was never disclosed. 29 Secondly, the minutes were, by hypothesis, relevant. The minutes had been requested by the Commissioner since 30 June 2005. The taxpayers' legal adviser had asked the accountant about their existence. The taxpayers' legal adviser had written to the Commissioner saying that they did not exist. The minutes were disclosed in the taxpayers' lists of documents dated 24 December 2006 and were the subject of the letter of correction to the Commissioner dated 16 April 2007. Finally, each minute was exhibited to the affidavits filed on behalf of the taxpayers which were intended to be relied upon by them at any hearing of the substantive issues. 30 The taxpayers' submission that the minutes were not critical to the resolution of the substantive issues and that the financial accounts provided in September 2005 provided the necessary information may ultimately have proved to be correct. However, having regard to the terms of the Macom Trust instrument, the contents of the accounts that were produced, the fact that no separate accounts were produced for the 1995 year and the history of the correspondence between the parties including the events from August 2006, it is apparent the taxpayers did not commence detailed preparation of their appeals and, in particular, identification and location of documents relevant to particular issues, sufficiently early in the conduct of the litigation. 31 The taxpayers' alternative submission was that they, in any event, should be entitled to their costs in respect of the 1999 year of income. Even if I was to put to one side the inevitable practical difficulties of allocating particular costs to a particular year, I see no basis for drawing a distinction between the 1995 and 1999 years of income. 32 In my view, as a result of the taxpayers' conduct (or that of their advisers), they should be deprived of their costs from 1 September 2005. Who ultimately bears those costs is a matter for the taxpayers to resolve with their respective advisers. However, those costs should not be borne by the Commissioner. In each proceeding, I order the Commissioner to pay the applicant's costs of the proceeding up to and including 31 August 2005. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. | costs taxation appeal allowed by consent whether costs should follow the event practice and procedure |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs to refuse the appellant a protection visa. 2 The appellant is a citizen of the Republic of China, also known as Taiwan. He claimed to fear persecution if returned to Taiwan in the reasonably foreseeable future by reason of his religion and his membership of a particular social group. He said that his business activities often took him to the People's Republic of China. On one occasion he claimed that he was arrested there and allowed to return to Taiwan on the condition that he collected information for the Chinese secret service on Falun Gong practices. He said that the information he provided resulted in about ten Falun Gong leaders from Taiwan being refused entry to China. He also said that he tried to stop his spying activities but Chinese authorities threatened the quality of life of his sister who resides in mainland China. 3 The appellant's statement in support of his application for refugee status did not clearly articulate which religion he observed, apart from saying that he liked Falun Gong. He also did not specify the alleged social group he belonged to or what would happen to him if he returned to Taiwan. 4 The Tribunal invited the appellant to a hearing so that he could give oral evidence in support of his application. The appellant failed to attend the hearing. The Tribunal then determined the matter pursuant to s 426A(1) of the Migration Act 1958 (Cth) without taking any further action to enable the appellant to appear before it. 5 The Tribunal found the appellant's claims to be lacking in detail. It said that it was unable to make any findings regarding his claims and could not be satisfied that he had a well-founded fear of persecution for a Convention reason. 8 In his notice of appeal to this Court, the appellant does not refer to any alleged error in the reasons of Smith FM. The notice of appeal refers to alleged errors made by the Tribunal again without any specificity. 9 The appeal is unarguable. The Tribunal determined the matter under s 426A(1) as it was entitled to do in the absence of the appellant's response to a hearing invitation. Its decision is free of jurisdictional error. The appellant did not provide it with any information which would justify it even considering the possible grant of a protection visa. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | application for protection visa refused application for review by refugee review tribunal refused application for judicial review by federal magistrates court dismissed appeal no jurisdictional error appeal dismissed migration |
In part, the applicant alleges that the respondent discriminated against her in breach of the respondent's obligations under the Disability Discrimination Act 1992 (Cth) and that the respondent engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act 1974 (Cth). The applicant now seeks interlocutory relief arising out of these claims. For the reasons which follow, I am of the view that the applicant's motion dated 21 July 2009 should be dismissed. It is relevant only to note that it is said to contain the applicant's entire student, academic and personal record with the respondent. The Act, in part, establishes a regime for access to and the protection of information held by "agencies". In respect of each injunction, the applicant claims that the conduct or proposed conduct amounts to an interference with her privacy, as defined by the Act, as the conduct is said to breach s 14 of the Act. The applicant relies also on the Higher Education Support Act 2003 (Cth) ("the HES Act") to bring the respondent within the scope of the Act. Counsel for the respondent submits that his client is not bound by the Act and that the Court has no basis on which to order the injunctions the applicant seeks. The respondent also contends that the expanded reach of the Act as a result of the HES Act is limited and applies only to information obtained in respect of the payment of debts, the provision of financial assistance or relating to units wholly consisting of work experience in industry. Counsel for the respondent submits that these provisions would not apply to the student record sought by the applicant. Following the conclusion of oral argument on 3 August 2009, the applicant was directed to file and serve any reply to the respondent's oral submissions in writing by 28 August 2009. This deadline was subsequently extended to 11 September 2009. The applicant did not file any additional submissions in reply in accordance with that order. Agencies are required to comply with the IPPs; see s 16 of the Act. The application of the IPPs is set out by s 15 of the Act. (2) Information Privacy Principles 4 to 9, inclusive, apply in relation to information contained in a record in the possession or under the control of an agency, whether the information was collected before, or is collected after, the commencement of this Act. The respondent is not an agency within the meaning of the Act as it is not established by a Commonwealth enactment nor is it a Commonwealth body. The respondent also does not fall under any of the other categories of an agency outlined in 6(1) of the Act. Accordingly, the respondent is not required to comply with the IPPs. (2) A higher education provider must have a procedure under which a student enrolled with the provider may apply to the provider for, and receive, a copy of *personal information that the provider holds in relation to that student. A "higher education provider" includes entities that are "listed providers"; see ss 16-1 and 16-10 of the HES Act. The respondent is named as a listed provider in s 16-15 of the HES Act. The respondent must therefore comply with the requirements of s 19-60 of the HES Act. Section 19-60(1) applies only to "personal information" gathered for the purposes of s 36-22, Ch 3 or Ch 4 of the HES Act. Section 36-22 regulates the repayment of amounts in special circumstances to students who enrolled in units entirely consisting of industry work experience. Chapter 3 and Ch 4 of the HES Act regulate the provision of financial assistance to students and the repayment of loans. The student record which the applicant seeks is said to consist of her entire academic, personal and enrolment records with the respondent. As described, the applicant's student record cannot be said to have been gathered for the purposes of s 36-22, Ch 3 or Ch 4 of the HES Act. The requirements of s 19-60(2) and (3) apply only to "personal information" relating to students. Somewhat circuitously, "personal information" is defined in the Dictionary to the HES Act as having the meaning given to it by s 179-5 of that Act. As noted above, Ch 3 and Ch 4 relate to the provision of financial assistance to students and the repayment of loans. There is no suggestion that the "student record" sought by the applicant is information which relates to the provision of financial assistance or to the repayment of a loan. The "student record" which the applicant seeks is said to consist of enrolment, academic and person information. It cannot be said to be "personal information" within the meaning of s 179-5 as it evidently not gathered or created for the purposes of s 36-22, Ch 3 or Ch 4 of the HES Act. As a consequence, the requirements of s 19-60 do not apply to the information described by the applicant as her "student record". The applicant also relies on ss 19-65 and 179-35 of the HES Act. Section 19-65 is of little assistance to the applicant as it simply requires a higher education provider to comply with the HES Act, its regulations and any guideline made under that Act. Section 179-35 creates an offence for the unauthorised access to or modification of personal information. This question does not arise as the information sought by the applicant is not personal information within the meaning of the HES Act. Similarly, the respondent is not subject to the expanded reach of the IPPs detailed in the HES Act, as the document sought by the applicant is not "personal information" for the purposes of the HES Act. Accordingly, there is no basis to issue an injunction requiring the respondent to provide the applicant with documents pursuant to the Act. There is also no basis for there to be an injunction restraining the respondent from conduct which would breach the Act. The applicant's notice of motion dated 21 July 2009 is without merit and must be dismissed. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | injunctions applicant seeking injunction to access documents described as the applicant's "student record" pursuant to privacy act 1988 (cth) ("the act") applicant seeking injunction to prevent breaches of the act whether respondent bound by s 13 of the act whether respondent an "agency" whether higher education support act 2003 (cth) extends operation of the act to the respondent whether student record "personal information" for the purposes of the higher education support act 2003 (cth) practice and procedure human rights |
The RRT affirmed a decision of a delegate of the Minister not to grant the appellant a protection visa. 2 The only issue which arises on the appeal is whether the Federal Magistrate erred in the exercise of his discretion to refuse relief on the ground of delay, jurisdictional error by the RRT being conceded. He applied for refugee status and a Protection (Permanent) Entry visa on 18 May 1994. By virtue of amendments to the Migration Act 1958 (Cth) ("the Act ") which came into force in September 1994, the application was treated as being for a protection visa. A delegate of the Minister refused to issue a protection visa on 16 February 1995. The appellant sought review of the decision of the RRT by an application dated 23 March 1995. 4 On 4 September 1996, the RRT wrote to the appellant stating that it had considered all of the papers in his case but that it was unable to make a favourable decision on the papers. It invited the appellant to attend a hearing to be held on 24 October 1996. 5 The letter of 4 September 1996 requested the appellant to complete and return an enclosed form within seven days of the date of the letter. The RRT went on to say that if the appellant did not do so, the hearing would not take place and the RRT may make a decision on the evidence it already had. 6 On 11 September 1996, the RRT again wrote to the appellant attaching another hearing form to be completed and returned. The RRT stated that the completed document should be returned within seven days of the date of the letter. The appellant was again informed that if he did not respond within the specified time the RRT would decide the case on the evidence available to it. 7 The appellant did not respond to either of the letters from the RRT and did not complete or return a hearing form. 8 The RRT did not await the appointed hearing date of 24 October 1996. Instead, it proceeded to decide the application and made its decision, adverse to the appellant, on 23 September 1996. 9 Evidence filed on behalf of the Minister in the application before the Federal Magistrate states that the appellant was notified of the decision of the RRT by letter dated 24 September 1996. A copy of the letter was annexed. 10 There was also evidence before the Federal Magistrate that the file of the Department of Immigration and Multicultural and Indigenous Affairs for the relevant application was destroyed on 17 July 2003, five years after the last action on the file was completed. 11 However, an officer of the Department produced a printout from a database search which showed that on 27 June 1997, the Minister had declined to exercise the power granted by s 417 of the Act to substitute a more favourable decision. This was nearly nine years after the date of the RRT's decision. Indeed it was not made until almost two years after the appellant was placed in immigration detention in September 2003. Reference was made to Xie v Minister for Immigration and Multicultural Affairs [1999] FCA 1480 ; (1999) 95 FCR 543 in which Cooper J held that an applicant's failure to respond to an invitation does not entitle the RRT to assume that the person does not wish to attend. Federal Magistrate Scarlett also recorded the Minister's concession that this was an error going to jurisdiction. 14 His Honour then referred at [15] --- [16] to the Minister's submission that relief should be refused on discretionary grounds because of the appellant's "unwarrantable" and "extraordinary" delay. 15 The Federal Magistrate noted that the appellant did not file written submissions. However, his Honour recorded what he apparently considered to be the substance of the appellant's oral submissions. Most of what was recorded by the Federal Magistrate at [17] --- [21] consisted of evidence given to the Federal Magistrate from the bar table. There is no suggestion that the appellant filed any affidavit evidence or that he entered the witness box. 16 At [17] the learned Federal Magistrate states that the appellant told the Court that he was not aware of the decision of the RRT until it was translated for him at Court. That was, clearly enough, a reference to the hearing before the Federal Magistrate on 28 November 2005. 17 The Federal Magistrate went on to record at [18] that the appellant said that he did not attend the hearing, that is to say the hearing before the RRT, because he did not receive a letter notifying him, otherwise he would have gone. 18 The Federal Magistrate also recorded at [18] that the appellant said that when he was in immigration detention, he wanted to bring a case but he did not have money for a lawyer. 19 At [19] the learned Federal Magistrate recorded that the appellant had said he believed he had been placed in detention "because he had become illegal" and that he had only commenced the proceeding after he was interviewed by Chinese Government officials. This had caused him to fear persecution if he was returned to China. 20 The Federal Magistrate recorded at [21] that the appellant stated that he knew an application had been made on his behalf to the RRT but he did not enquire of the RRT as to the status of his application because his immigration lawyer had cheated him and he did not make enquiries of the Department because he feared he would be deported. 21 At [22] Scarlett FM observed that delay has always been a bar to relief of the kind sought in the present matter, citing Applicant M70 of 2002 v Minister for Immigration, Multicultural and Indigenous Affairs [2004] FCAFC 132 (" Applicant M70") and Re Commonwealth of Australia; Ex Parte Marks [2000] HCA 67 ; (2000) 177 ALR 491 (" Marks") at 495-6 per McHugh J. The learned Magistrate also made reference to S58 of 2003 v Minister for Immigration, Multicultural and Indigenous Affairs [2004] FCAFC 283 (" S58 "), emphasising that in S58 the Full Court had held it was open to the trial judge in that case to characterise the appellant's delay as poorly or unsatisfactorily explained. 22 The learned Magistrate dismissed the application, finding that the appellant had not established an explanation for the "extraordinary delay" in commencing the proceedings, and that there appeared to be no reason why the interests of justice required that relief should be granted. In this case the delay is over eight years from the time the decision was made until the applicant filed his application for judicial review. It is well established that an application to the Minister to substitute a more favourable decision under s.417 of the Migration Act is not an adequate reason for delay, nor is inability to afford legal advice. This shows that someone must have known prior to that date that there had been a decision by the Refugee Review Tribunal, and that decision had been unfavourable to the applicant. It is clear that the applicant chose not to make inquiries from the Department because he did not wish to draw attention to himself. The applicant has not established any explanation for the extraordinary delay in commencing these proceedings. Noting the error in procedure by the Tribunal, which is a jurisdictional error, I am satisfied that a court may well have considered granting relief to the applicant if he had taken proceedings within a reasonable time after the decision had been handed down. However, the applicant chose not to take that course. He remained out of sight, avoiding officers of the Department of Immigration and Multicultural and Indigenous Affairs until he was located and placed into detention in September 2003. Whilst he said that he had remained in detention for over two years rather than return to China, he was satisfied to leave his wife and children there. He said he has not seen them for ten years. In effect, he has abandoned them. There appears to me to be no reason why the interests of justice require that relief should be granted notwithstanding the applicant's lengthy and unsatisfactorily explained delay. As stated above, the Minister conceded jurisdictional error but the learned Federal Magistrate refused relief on discretionary grounds for unwarrantable delay. 24 In Re Refugee Review Tribunal; Ex Parte Aala [2000] HCA 57 ; (2000) 204 CLR 82 at [51] --- [60], Gaudron and Gummow JJ set out what their Honours considered to be the correct approach to the exercise of the discretion to refuse constitutional relief under s 75(v) of the Constitution . 25 Their Honours referred at [51] to the statement of Gibbs CJ in R v Ross-Jones; Ex parte Green [1984] HCA 82 ; (1984) 156 CLR 185 at 194 that if a clear case of want or excess of jurisdiction is made out, the writ will issue almost as of right but the Court retains its discretion to refuse relief if in all the circumstances that seems proper. Gaudron and Gummow JJ said at [52] that this should be accepted as the correct approach. 26 Their Honours went on to say at [53] that the recognition of the discretion involves two separate questions. The first is whether the officer in question has acted in want of or in excess of jurisdiction. It is clear from what their Honours said at [54] that the same principles apply to the grant of all constitutional writs under s 75(v). 27 It should be noted that at [55] their Honours pointed out that the discretion to refuse relief is not to be exercised lightly. This is borne out by the observations of Gaudron J in Enfield City Corporation v Development Assessment Commission [2000] HCA 5 ; (2000) 199 CLR 135 at [56] which were set out. They pointed out at [59] that the rationale in this type of case is different from that which underpins the doctrine of excess of power or jurisdiction. As their Honours said, the concern is with observance of fair decision making procedures rather than the character of the decision which emerges from the observance of those procedures. 29 Other authorities which have examined the basis upon which the discretion is exercised contain statements of principle to much the same effect as those set out above. 30 In Gararth v Minister for Immigration, Multicultural and Indigenous Affairs [2006] FCA 316 , Wilcox J said at [62] that there is ample authority for the proposition that excessive, unexplained delay will justify the refusal of relief. As to the length of time which will be considered excessive, his Honour said that it must always be necessary for the Court to examine all of the circumstances of the case. 31 Wilcox J went on to say that there is no rigid rule about the length of delay, although a delay of five years would ordinarily be difficult to excuse and two years would require explanation; see at [62] --- [63]. His Honour referred to the observations of McHugh J in Marks and Madgwick J at first instance in S58 ; see [2004] FCA 451. 32 Although in Marks at [16] McHugh J considered a delay of 17 months to be inexcusable, it should be noted that his Honour's observations were about a person who "with knowledge of the decision" delayed for that period before seeking relief. 33 An important consideration which informs the exercise of the discretion on the ground of delay is that the public interest requires there be an end to litigation about the efficacy of acts and decisions of public bodies and officials; see Applicant M221 v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 45 at [19] per Weinberg J; see also the Full Court in S58 at [4]. 34 In the present case it is clear that applying these authorities, a delay of nearly nine years would be excessive and very difficult to excuse. Even a delay of nearly two years from the time the appellant entered immigration detention would call for a clear explanation. 35 But what the authorities make plain is that the length of the delay is computed from when an applicant becomes aware of the decision and all the circumstances must be examined. There are no hard and fast rules as to what length of time will preclude relief. 36 Here, the learned Federal Magistrate found the delay was over eight years from the time the decision was made. Whilst his Honour did not say so expressly, he seems to have proceeded on the assumption that the appellant was aware of the decision from the time when it was made in 1996. 37 His Honour also seems to have assumed that the appellant was aware of the decision from at least the time when an unsuccessful application was made to the Minister under s 417 of the Act . His Honour did not state uncategorically that the appellant was then aware of the decision but he said that the request under s 417 showed that "someone must have known" of the decision of the RRT before 27 June 1997. 38 It may well be, as the learned Federal Magistrate found, that there was excessive delay. And it may well be, as his Honour held, that the appellant has no explanation for it. 39 However, the difficulty with the approach which the Federal Magistrate adopted was that he made findings of fact without hearing any evidence from the appellant. He acted solely upon submissions from the bar table and without testing any of the statements which were made to him by an unrepresented applicant. 40 I understand the pressures on the Federal Magistrates' Court to provide a speedy and efficient determination of matters which come before it. I am also mindful of what might be thought to be a practical and commonsense approach to the disposition of cases. Nevertheless, as a general rule, the judicial power of the Commonwealth cannot be exercised to deny relief for admitted jurisdictional error, consisting as it does in this case, of a denial of statutory procedural fairness, without evidence tested in the ordinary way. 41 That is especially so in the present case because the learned Federal Magistrate apparently did not believe the explanation proffered from the bar table. The appellant's overall explanation for his delay was that he did not know of the decision until 28 November 2005. The Federal Magistrate cannot have believed this because he proceeded on the basis that the appellant knew of the decision either from 1996 or at least when the unsuccessful request was made under s 417. 42 There is authority for the proposition that a person who seeks the exercise of the Minister's powers under s 417 implicitly asserts that there is a decision of which he or she is aware; see S58 at first instance per Madgwick J at [18]. But, in the absence of evidence from the appellant and in light of the learned magistrate's finding that "someone must have known", it cannot be said that this issue has been adequately addressed by the learned magistrate. It may be unlikely that the s 417 request was made without instructions from the appellant, but that was an issue of fact to be tested by proper evidence. 43 It may well be that, as the learned Federal Magistrate apparently assumed, the appellant's decision to avoid Departmental officers, constituted a deliberate decision to abandon his case. But it was necessary for that to be tested in the witness box, particularly as it was at odds with the appellant's stated explanation that he had only just become aware of the decision. 44 I note that the learned Federal Magistrate made reference to the appellant's abandonment of his wife and children in China. It is difficult to see why that constituted a relevant consideration. The Minister's counsel submitted that these were merely passing comments. I do not need to consider whether I should accept that submission because of the views I have reached as set out above. 45 It follows from what I have said, that the discretion to refuse relief miscarried within the well known principle stated in House v The King [1936] HCA 40 ; (1936) 55 CLR 499 at 504 --- 505. It was not open to the learned Federal Magistrate to find that the appellant's delay was lengthy or unsatisfactory upon the basis of untested statements made from the bar table. 46 I will make orders setting aside the orders of the Federal Magistrate and remitting the proceeding to the Federal Magistrates Court. It will of course be a matter for that Court as to whether it is heard by the same or another Federal Magistrate. I have considered the documents and in my opinion, they fail the test stated in the well known authorities. I would not admit these documents under s 27 of the Federal Court of Australia Act 1976 (Cth). The appeal be allowed. 2. The orders of the Federal Magistrates Court made on 28 November 2005 be set aside. 3. The proceeding be remitted to the Federal Magistrates Court for further hearing and determination in accordance with these reasons. | conceded jurisdictional error seven year delay in application for judicial review discretion to refuse relief explanation for delay evidence migration |
However, in the present proceedings, Federal Magistrate Driver found that a misdescription of the statute under which post-judgment interest was claimed was a substantial defect in the bankruptcy notice which could not be cured by reference to that provision. 2 Thus, the learned Federal Magistrate's decision appears, at first sight, to be at odds with the unanimous judgment of the High Court in Adams. The principal question which arises on this appeal, therefore, is whether his Honour correctly applied the principles stated by the High Court. 3 In deciding that the defect was substantive, Driver FM had regard to the certificate supporting the bankruptcy notice which stated that interest was not payable on the amount claimed whereas the bankruptcy notice claimed interest in the sum of $16,509.96. 4 His Honour accepted that this was a claim for post-judgment interest but he took into account the terms of an earlier bankruptcy notice served on the debtor which made no claim for interest. His Honour concluded that this, coupled with the misdescription of the statute under which post-judgment interest was claimed (and an incorrect reference in the costs certificate to a provision in the Legal Profession Act 1987 (NSW) dealing with pre-judgment interest) would have left the debtor "hopelessly confused" as to what was necessary to comply with the notice. 5 The creditor appeals against his Honour's order dismissing the petition. He seeks an order under s 52(1) of the Act. However, if the appeal is allowed a difficulty arises because the creditor's petition appears to have lapsed under s 52(4) of the Act, in the circumstances referred to below. In legal proceedings which appear to have a long history dating back to the 1990's, he represented a company of which Mr Roskell was a shareholder and director. The proceedings were unsuccessful, the company went in to liquidation, and Mr Snelgrove claimed his costs from Mr Roskell personally. 7 Driver FM found at [4] that in the course of the proceedings Mr Roskell agreed to become personally liable for the costs, although he later sought to dispute his liability. As a result, Mr Snelgrove brought proceedings against Mr Roskell in the Supreme Court of New South Wales. 8 On 15 May 2000, a costs assessor of that Court issued a certificate as to determination of costs in the amount of $33,967.62. This was the certificate upon which bankruptcy notice NN3366/04 was founded. It claimed that Mr Roskell owed Mr Snelgrove a debt of $50,477.58 as shown in the schedule. 10 The schedule stated the amount of the judgment as $33,967.62 and went on to claim "interest accrued since the date of Judgments or Orders" of $16,509.96. 11 Attached to the bankruptcy notice was an interest calculation. It stated that judgment was entered against Mr Roskell in the Local Court on 22 June 2000 and that interest was claimed from the date of judgment to 15 December 2004. 12 The attachment went on to say that interest was claimed under s 39 of the District Court (Civil Claims) Act 1970 (NSW). That was an error and was struck out by a handwritten amendment, apparently by an officer of the Official Receiver prior to the issue of the bankruptcy notice. It was replaced by a reference to s 85 of the District Court Act 1973 (NSW). However, that too was an error because in fact interest should have been claimed under s 39 of the Local Court (Civil Claims) Act 1970 (NSW). 13 The attachment then set out the applicable interest rates payable for the period from 22 June 2000 to 15 December 2004 and a calculation of the total amount of interest payable. 14 The certificate as to determination of costs was also attached to the bankruptcy notice. It stated that interest was not payable on the amount of costs assessed, ie $33,967.62. This was followed by an incorrect reference to s 203E of the Legal Profession Act . 15 The certificate was accompanied, as the last page of the attachments to the bankruptcy notice, by a backsheet from the Local Court with a handwritten plaint number and an illegible stamp. The stamp may be from the Local Court indicating that the costs certificate was filed in that Court. 17 The only ground on which Mr Roskell opposed the petition was that he was not personally liable for the debt. His Honour satisfied himself that this objection had no substance but during the hearing he raised two issues concerning the validity of the bankruptcy notice. Mr Roskell was not legally represented and was happy to adopt those points as grounds of opposition to the petition; see at [5]. 18 The first ground was that the certificate stated that interest was not payable on the amount of costs assessed but the bankruptcy notice claimed interest of $16,509.96. 19 The second ground was the incorrect statement of the statutory source of liability for post-judgment interest. 20 Having raised both of these issues, his Honour adjourned the matter pending delivery of the judgment by the High Court in Adams. A fter the decision in Adams was handed down, Driver FM called for written submissions to be delivered by the parties by 26 April 2006 . He then determined the matter, delivering judgment on 6 June 2006. 21 When his Honour handed down judgment he noted, at footnote 11, that there may be a third error in the bankruptcy notice because of the illegible certificate of judgment attached to the notice. He noted that judgment was entered in the Local Court on 22 June 2000 but queried whether the annexure satisfied the description of a certificate of judgment. However, this issue was not raised before Driver FM and his Honour did not deal with it. 22 His Honour described the bankruptcy notice and the certificate of judgment attached to it as "scrappy". 23 It was in this context that he went on to deal with the two errors that he had identified. 24 His Honour seems to have proceeded on the basis that the statement in the costs certificate that interest was not payable was an error. He described it as an error in [16] although he accepted the appellant's submission that it was a reference to pre-judgment interest. It would have followed from this that the statement was perfectly correct, the only error being the incorrect reference to s 203E of the Legal Profession Act . 26 His Honour then referred to the second error, namely the statement in the interest calculation attached to the bankruptcy notice, that interest was claimed under s 85 of the District Court Act . He referred in this regard to the fact that the reference to the District Court (Civil Claims) Act had been struck out. 27 The learned Federal Magistrate then went on to deal with these errors upon the footing that they were compounded by the fact that this was the second bankruptcy notice served on Mr Roskell; see at [18]. In my opinion, a debtor in the position of Mr Roskell would have been left hopelessly confused. Interest was initially not claimed and then claimed. The certificate of judgment annexed to both bankruptcy notices appeared to indicate that no interest was payable . . It would have been next to impossible for him to check his liability because both the certificate of judgment and the bankruptcy notice referred to incorrect statutory provisions. He did not do so. However, in my view, the bankruptcy notice, coupled with the costs certificate and the earlier bankruptcy notice was so confusing as to have left Mr Roskell in no position to determine whether he was entitled to make such a claim. Notice pursuant to s.41(5) must be given before the time for compliance with the bankruptcy notice expires. It is now too late for such a notice to be given. In my view, the confusion created by the errors in the second bankruptcy notice and its attached certificate gave rise to confusion resulting in injustice which is now irremediable. It follows that the defects are substantive and not formal and cannot be corrected pursuant to s.306 of the Bankruptcy Act . If it is, it is then necessary to ask whether substantial injustice has been caused by the defect or irregularity and whether the injustice cannot be remedied by an order of the Court. It must be borne in mind that these are separate and distinct questions. 30 The first question, that is, whether the defect or irregularity is formal, involves two levels of enquiry. These were stated by an earlier decision of the High Court in Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34 ; (1988) 165 CLR 71, and applied in Adams at [25]ff. 31 The relevant enquiry is: does the bankruptcy notice fail to meet a requirement made essential by the Act or the Regulations; or could it reasonably mislead a debtor as to what is necessary to comply with the notice; see Kleinwort Benson at 79; Adams at [25]. 32 In the present case the first defect identified by the learned magistrate was that the costs certificate stated that interest was not payable on the amount of costs assessed. But in my respectful opinion this was not an error at all. His Honour correctly accepted at [16] that this was a statement that no interest was payable up until judgment. That should have been sufficient to dispose of the issue. 33 I do not see how the incorrect reference to s 203E of the Legal Profession Act converted the correct statement about pre-judgment interest into an error in the bankruptcy notice. 34 Even if the incorrect reference to the section of the Legal Profession Act is to be treated as a defect, in my opinion it was a formal one. My reasons for this view are stated in the following paragraphs. 35 Regulation 4.02 and Form 1 of the Bankruptcy Regulations 1996 (Cth) requires the bankruptcy notice to state the provision under which interest is being claimed. Here, interest was not being claimed on pre-judgment costs. Accordingly, I do not see how the Regulations contained any requirement with respect to this statement, let alone one which would strike down as invalid an act done in breach of it within the principles stated in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355 at [93] . 36 Moreover, consistently with the observation of the Court in Adams , it cannot be said that a mistaken reference to the section of the Legal Profession Act could be said to have been an essential requirement for validity of the notice or to have misled the debtor as to what was necessary to comply with it. 37 Upon the proper construction of the bankruptcy notice as a whole, it was plain that interest was being claimed only post-judgment. The notice stated in express terms that judgment was entered in the Local Court on 22 June 2000 and that interest was claimed for the period from 22 June 2000 to 15 December 2004. This appeared in (b) and (c) of the interest calculation attached to the notice. The summary of interest calculation in (c) set out precisely how the amount of $16,509.96 was calculated for that period. 38 The bankruptcy notice in the present case is therefore indistinguishable from the notice in Adams . That is to say the only defect was the second error identified by Driver FM, namely an incorrect citation of the source of entitlement to post-judgment interest. That was a formal defect within the purview of s 306 of the Act, not a substantive one as found by the Federal Magistrate; see Adams at [32] --- [34]. 39 There was no suggestion in the present case that post-judgment interest was incorrectly calculated. Indeed the figure seems to have been correct, the rate prescribed under the District Court Act being exactly the same as that prescribed from time to time under the Local Courts (Civil Claims) Act . 40 The learned Federal Magistrate's view that a debtor in Mr Roskell's position would have been hopelessly confused cannot, with respect, be sustained. As I have already said, the bankruptcy notice, considered as a whole, made it plain that interest was only claimed for the period after judgment. 41 In determining whether a bankruptcy notice could reasonably mislead a debtor the court is not confined to an examination of the notice; it may look at facts extraneous to the notice, including the terms of an earlier bankruptcy notice served on the debtor; see Re Wimborne; Ex parte the Debtor (1979) 24 ALR 494 (Lockhart J); Clyne v Deputy Commissioner of Taxation (1982) 42 ALR 703 (Lockhart J); Roufos v Andrea (1981) 57 FLR 10 at 15-16 (Deane, Fisher & Fitzgerald JJ). 42 It was therefore open to Driver FM to determine whether Mr Roskell could have been misled by considering the bankruptcy notice in light of the amount stated in the earlier notice. However, rather than demonstrating that Mr Roskell could have been misled, the earlier notice would have re-enforced the obvious conclusion that interest was claimed for the period that had elapsed after judgment. No other conclusion could have followed from the fact that interest was not claimed on the earlier notice whereas it was claimed for the period after judgment in the current notice. 43 The Federal Magistrate's view that Mr Roskell could have disputed the claim for interest on the second notice pursuant to s 41(5) of the Act is not correct because, as I have said, the amount was correctly stated. It follows that his Honour's conclusion that Mr Roskell suffered irremediable injustice, must also be incorrect. 44 Mr Roskell asserted that the errors in the bankruptcy notice, when viewed together, were sufficient to render it invalid. He referred in his written submissions to the citation of the wrong statutory provisions and the fact that interest was claimed notwithstanding the note in the costs certificate that interest was not claimed. These submissions are contrary to the plain construction of the notice and to the observations of the High Court in Adams. I will deal with that issue below. 46 Mr Roskell appeared in person on the appeal. He argued, strenuously and with apparent conviction, that he was not personally liable for the costs, or at very least that the amount was overstated. 47 However, the learned Federal Magistrate declined to exercise his discretion to go behind the judgment, satisfying himself that there was no substance in Mr Roskell's objection. It is true that in an appropriate case, where substantial reasons are shown, the Court may exercise a discretion to go behind the judgment debt; see Wren v Mahony [1972] HCA 5 ; (1972) 126 CLR 212 at 224-225; Makhoul v Barnes (1995) 60 FCR 572 at 580-582. But in the present case, no error has been demonstrated in the Federal Magistrate's determination of this question. 48 Mr Roskell also argued that he suffered substantial injustice, in particular because he was not liable for the debt. However, this argument must also fail because of the Federal Magistrate's determination that Mr Roskell was personally liable. 49 In summary therefore, in my opinion the learned Federal Magistrate failed to correctly apply the principles stated in Adams . The only defect in the bankruptcy notice was a formal one which fell within the purview of s 306. There was no substantial injustice caused by the defect. However, he submitted that "a copy of the record of judgement [sic]" was not attached to the bankruptcy notice. Since he was not legally represented, I took this to be a submission to the effect that the notice was affected by a defect, analogous to the further issue mentioned by the Federal Magistrate and which I set out above at [20]. This was whether the costs certificate satisfied the description of a certificate of judgment. Accordingly, I propose to grant leave to Mr Roskell, nunc pro nunc, to raise this submission without the need to file a notice of contention. 51 The form prescribed by the Bankruptcy Regulations requires the notice to attach a copy of the judgment or order relied upon; see Reg 4.02 and Form 1; see also Franks v Warringah Council [2003] FCA 1047 ; (2003) 131 FCR 287 at [12] . 52 The schedule to Form 1 provides, in note 1, that if legal costs are claimed in the notice, a certificate of the assessed costs must be attached to the notice. The certificate is, upon filing in the office or registry of a court of competent jurisdiction, taken to be a judgment of that Court for the amount of the unpaid costs; Legal Profession Act , s 208J(3). 53 However, a certificate that sets out a determination of the costs assessor, without being filed in a court of competent jurisdiction, is not sufficient to found a bankruptcy notice; Franks at [27]. 54 Here, there was evidence in the affidavit of Mr Snelgrove filed on 5 July 2005 that judgment was entered in the Local Court on 22 June 2000. Also Ms Rachel Menassa's affidavit of 17 December 2004 deposes to the fact that a certificate of judgment was obtained from the Local Court on 22 June 2000 and she annexes that document to her affidavit. This was the backsheet from the Local Court with the attached costs certificate in the same form as was annexed to the bankruptcy notice. 55 It follows in my view that there was evidence before the Federal Magistrate that the costs certificate was filed in a court of competent jurisdiction. It is therefore taken to be a judgment of the Local Court and it was annexed to the bankruptcy notice. This was sufficient to found the notice. 57 Provision is made for an extension of the twelve month period but s 52(5) provides, expressly, for the extension to be obtained before the expiration of the initial twelve month period. 58 Here the petition was presented on 26 April 2005 but, at the creditor's request, the Federal Magistrate adjourned it pending the delivery of judgment in Adams . At the time when the adjournment was granted, no consideration seems to have been given to the question of the lapsing date of the petition. 59 The Federal Magistrate's order dismissing the petition was made on 6 June 2006, more than twelve months after the petition was presented. 60 Nor was any application apparently made before the lapsing date for an extension of time under s 52(5). 61 It follows that, subject to the application of certain principles which I will refer to briefly below, the petition was stale when the Federal Magistrate made his orders and a sequestration order cannot be made. 62 A Full Court has stated in explicit terms that the life of a bankruptcy petition cannot be extended after the petition has lapsed; see Re Young; Ex parte Smith (1985) 5 FCR 204 (Bowen CJ, Sweeney and Lockhart JJ). Notwithstanding this, orders have been made extending a petition after the expiry date pursuant to the 'slip rule'; see for example Re Howell; Ex parte Commissioner of Taxation (1996) 70 FCR 261 (Burchett J). The authorities are summarised in the 5 th Edition of McDonald, Henry & Meek Australian Bankruptcy Law & Practice at [52.5.05]. 63 This issue was not argued before me. In the circumstances, it is appropriate for me to remit the matter to the Federal Magistrates Court to determine whether the Court has power to make a sequestration order and, if so, whether an order ought to be made. The matter is to be remitted to the Federal Magistrates Court to be determined in accordance with my reasons for judgment. I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | appeal by appellant against decision of federal magistrate dismissing creditor's petition whether errors identified in bankruptcy notice fall within purview of s 306 of bankruptcy act 1966 (cth) application of principles stated by the high court in adams v lambert whether errors amount to a 'formal defect or irregularity' proper construction of bankruptcy notice extraneous material may be referred to in determination of whether bankruptcy notice could reasonably mislead debtor federal magistrate failed to correctly apply principles in adams v lambert appeal allowed whether creditor's petition has lapsed proceedings adjourned pending delivery of high court decision in adams v lambert no application for extension made by appellant application of s 52 of bankruptcy act 1966 (cth) order made by federal magistrate more than 12 months after creditor's petition presented matter remitted for consideration by federal magistrates court ss 52 , 306 bankruptcy regulations 1996 (cth) reg 4.02 legal profession act 1987 (nsw) s 208j(3) bankruptcy bankruptcy bankruptcy act 1966 (cth) |
First, for damages of $75,000 which he says he sustained when the company unlawfully dismissed him from his position as its general manager and, secondly, for a debt of $172,824.74. He lodged proofs of debt for those amounts with the administrator of the company, Mr Cant, who disallowed the first proof in its entirety and admitted the second only to an amount of $85,064.39. The reason for rejecting the first proof was that Mr Hem had not been dismissed but had voluntarily resigned from his employment. 2 The notices of rejection of the proofs of debt informed Mr Hem that he had fourteen days within which to appeal the administrator's decision. In fact he had twenty-one days. However that may be, Mr Hem did not appeal within the prescribed period. On the other hand he did apply for an extension ten days after the time for appeal had passed. A registrar refused to grant the extension but, on appeal from the registrar's decision (technically the appeal was a rehearing), I granted the extension. It is not necessary to explain in detail why the appeal was allowed, save to say that, contrary to the views of the registrar, I was satisfied that Mr Hem had an adequate explanation for the delay and his appeal was not hopeless. Since the grant of leave, Mr Hem's appeal in relation to the debt claim has been compromised. All that remains is his claim for wrongful dismissal. 3 The history of the matter may be briefly stated. Coulco Trading, formerly known as Motorgear Parts & Accessories Pty Ltd, was a wholesaler and retailer of motor vehicle parts and accessories. The company was owned by Graham Coulson and his family. Mr Coulson was the company's sole director and its secretary. The company had operated for many years and most of the time its business was successful. 4 Mr Hem, then a 19 year old who had just completed a motor mechanic's apprenticeship, joined the company in 1980. He worked in sales for a few months and later as an area manager for seventeen years. In 1999 Mr Hem was appointed as general manager of the company. He was given wide-ranging responsibilities, which included the supervision of the company's sixty or so employees. He reported only to Mr Coulson. For the most part Mr Hem and Mr Coulson were on good terms. 5 In 2000 or thereabouts there was a decline in the company's fortunes. While turnover was around $10 million per annum, profitability began to drop. The company suffered a trading loss of about $900,000. It needed an injection of funds. In 2001 Mr Hem lent the company $220,000 without which it may not have survived. Mr Hem raised the money from his banker and put up his home as security. In return Mr Coulson agreed that in due course Mr Hem would receive 10 per cent of the capital. 6 In late 2003 Mr Coulson decided to put the business up for sale. Mr Hem in conjunction with another employee offered to purchase the business. Their offer was refused. Instead the business was sold to a third party, Burson Automotive Pty Ltd, with settlement to take place in early April 2004. Mr Coulson said that Burson's offer was superior to Mr Hem's. 7 Mr Hem was not warned that the business might be sold to Burson. When he found out he became extremely angry. He was particularly worried about the security of his loan. He pressed Mr Coulson again and again for an assurance that he be given 10 per cent of the purchase price. Mr Coulson would not agree. 8 From that point relations between the two took a turn for the worse. Each says that the other expressed hostility towards him. It is impossible, however, not to sympathise with Mr Hem's position. It was beginning to look like his loan could not be repaid and his home was at risk. As a result Mr Hem began pushing for a written assurance that Mr Coulson assume personal responsibility to repay the loan. Mr Coulson refused. 9 As the settlement date approached Mr Hem began to arrange for staff to obtain alternative employment. This angered Mr Coulson who wanted the staff to remain to ensure an orderly transfer of the company's business. This and other events caused serious disagreement between Mr Coulson and Mr Hem. He was totally out of control. If he is out of control ie out of control in your business you must have said something to him, mustn't you? I did remind him that he was --- he wasn't the owner of the business and I was the person that owned the business. On that day there was a conversation between Mr Hem and Mr Coulson which is at the heart of this dispute. They are at loggerheads regarding what was said. Mr Hem says he was dismissed. Mr Coulson says he resigned. I propose, in the first instance, to put each person's version and then consider the consequences. 11 Mr Hem said he was called into Mr Coulson's office and told that Mr Coulson no longer wanted him to remain with the company. Mr Coulson accused him of stealing a linishing machine. Mr Hem denied the theft. He said he had paid for the machine and produced some paperwork to prove payment. ' He said, 'I just don't trust you any more. I don't trust what you are doing. I want you out of the company. ' And he said, 'Well, look, you know, I will give you a redundancy pay. ' He said, 'I want you to sign a resignation now. ' I said, 'I am not signing a resignation now, Graham. ' He said, 'I want you to sign a resignation. ' I said, 'The only way I will consider a resignation is if you pay me all my entitlements and a redundancy package. ' ... He said, 'I want you to go, I want you out of here now, pack your stuff. Go. He asked me to resign. He wanted me to sign a letter there and then. I refused to do that. He asked me to resign. Did you appreciate the significance of a resignation? He was called into Mr Hem's office. Mr Hem commenced the discussion by demanding to be given 10 per cent of the stock, goodwill and all other assets of the company. Mr Coulson responded that he could not give him 10 per cent of the assets as the net liabilities of the company were of approximately the same value. There was then a discussion about the contribution Mr Hem had made to the business. Mr Hem accused Mr Coulson of "doing the wrong thing by him" by selling the business. The conversation then became heated when Mr Hem continued to insist that he be given 10 per cent of the assets. Mr Coulson told him that he had lost his trust as he knew that he had been stealing from Coulco. Mr Coulson identified as one of the stolen goods the linishing machine which he had seen in the boot of Mr Hem's car. Mr Hem's response was that if Mr Coulson did not trust him it was better that he resign. Mr Coulson asked him not to resign pending completion of the sale to Burson. 13 In his oral evidence Mr Coulson added to what appeared in his affidavit. He said Mr Hem kept insisting that Mr Coulson write a letter that Mr Coulson would repay the money that Coulco owed to Mr Hem. Mr Coulson replied he could not do that because he "[did not] know what the wash-up of the business is going to be. ' And that is when he said 'Well, better I resign then', and he just got up and walked out. He didn't respond, he just got up and walked out. He spoke to Miss Ahern who worked in the administration section and was responsible for the payroll. He told Miss Ahern that he had resigned and asked her to make up his pay. Miss Ahern asked why he had resigned. Mr Hem replied "It's best that I go now", or something to that effect. Mr Hem also had a conversation with Mr Anthony, a co-employee with whom he ultimately set up a business. He told Mr Anthony that he had resigned from his employment. 15 A week later Mr Hem consulted his solicitors. He was accompanied by Mr Anthony who was also after legal advice. Ms Davies, one of the solicitors at the meeting made notes. According to her notes Mr Hem said: "They claimed that I resigned. They asked me to resign. As you are aware, our client is a longstanding and valued employee of Motorgear having in excess of 22 years of service with the company. The nature of your actions appear to have necessitated our client having to take mental stress leave. The letter was written in response to the allegation that Mr Hem had resigned as general manager of Motorgear. He became aggressive and on a number of occasions requested our client resign. On 18 March 2004, our client was left with no choice, following a heated discussion, to verbally tender his resignation. It was not done voluntarily and clearly constituted constructive dismissal. If that had occurred I am sure Mr Hem would have told his solicitors. I am confident that Mr Hem did tell his solicitors what appears in Ms Davies file note and what is recounted in their two letters, namely that he had been forced to resign. 19 I do not discount the possibility that Mr Coulson asked Mr Hem to resign. I rather think that something along those lines was suggested. Having accused him of theft it would not be surprising had Mr Coulson asked Mr Hem to resign. By the time of the conversation the ill-will between the two was significant. If Mr Hem had been asked to resign to avoid a dismissal that would be equivalent to an actual dismissal. The cases do not in terms go further than that. We find the principle to be one of causation. In cases such as that which we have just hypothesised, and those reported, the causation is the threat. It is the existence of the threat which causes the employee to be willing to sign, and to sign, a resignation letter or be willing to give, and to give, the oral resignation. But where that willingness is brought about by other considerations and the actual causation of the resignation is no longer the threat which has been made but is the state of mind of the resigning employee, that he is willing and content to resign on the terms which he has negotiated and which are satisfactory to him, then we think there is no room for the principle to be derived from the decided cases. The reason is that it is not in dispute that during the discussion Mr Hem was accused of being a thief. In the absence of any justification (and none was proffered) that accusation constitutes what in some cases is referred to as a "constructive dismissal". 21 As to the applicable principles I will refer to only two cases. The first is Easling v Mahoney Insurance Brokers Pty Ltd (2001) 78 SASR 489 a decision of the Full Court of the Supreme Court of South Australia. This was explored by me in some detail in Blaikie v SA Superannuation Board (1996) 65 SASR 85. I adhere to what I there said at pages 102-105. Suffice to reiterate that the notion of constructive dismissal implies the existence of conduct on the part of an employer which is plainly inimical to a continuance of a contract of employment according to its express or implied terms. The authorities establish the concept that there is implied in a contract of employment a term that the employer will not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. An intention to repudiate need not be proved. Rather, it is a matter of objectively looking at the employer's conduct as a whole and determining whether its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it. It will be taken to be a dismissal (hence the word 'constructive') if the employer has behaved towards the employee in a way that entitles the employee to treat the employment as at an end. How that behaviour of the employer is to be described is at the heart of the matter. One difficulty in a simple enunciation of the common law principle is the existence of legislation and caselaw on closely related topics. However, if one is to approach the matter in straightforward contractual terms there is ample authority for the implication of a term in a contract of employment that the employer will not, without reasonable cause, conduct itself in a manner likely to damage or destroy the relationship of confidence and trust between the parties as employer and employee. " He cited with approval the judgments of Olsson J in Blaikie v South Australian Superannuation Board and in Easling v Mahoney Insurance Brokers Pty Ltd which he said: "expressed the principle with clarity. So, in Isle of Wight Tourist Board v Coombes [1976] IRLR 413 a director said of his secretary: "She is an intolerable bitch on a Monday morning", leading Bristow J to find there had been a constructive dismissal. In Courtaulds Northern Textiles Ltd v Anderson [1979] IRLR 84 an assistant manager said to an employee: "You can't do the bloody job anyway", not believing this to be true. Again constructive dismissal was established. In Robinson v Compton Parkinson Ltd [1978] ICR 401 an employee who was falsely accused of theft was found to have been "constructively dismissed". Likewise in Moores v Bude-Stratton Town Council [2000] IRLR 676 where an employee was called: "a lying toe-rag". 24 This brings me to the quantum of Mr Hem's claim. It was not seriously disputed that Mr Hem was entitled to twelve months notice of termination. He had worked for the company for more than twenty years. He was its most senior employee. He received a salary of approximately $62,000 per annum together with a motor vehicle worth $15,000 per annum. He had put his own money into the company's business with the expectation of obtaining a 10 per cent interest. It was anticipated that he would remain with the company for the rest of his life. In the event he left, he would have difficulty finding alternative employment. Cases such as Dyer v Peverill [1979] 2 NTR 1; Quinn v Jack Chia (Australia) Ltd [2000] VSCA 75 ; [1992] 1 VR 567; O'Donnell v GIO Insurance Ltd (1996) 64 IR 297; Caulfield v Broken Hill City Council (1995) 60 IR 211; Rankin v Marine Power International Pty Ltd (2001) 107 IR 117 show that in these circumstances a reasonable period of notice would be twelve months. 25 In a wrongful dismissal claim it is the plaintiff's duty to mitigate his loss by using reasonable diligence to find other suitable employment or income. The duty is not unduly onerous and does not require the plaintiff to be successful. He must, though, act reasonably. 26 Here Mr Hem did take steps to mitigate his loss. He and Mr Anthony set up a company to distribute motor vehicle parts and accessories to service stations. The company was called Service Station Suppliers Australia Pty Ltd and was incorporated on 4 March 2004. The question is whether he received any income from that company that must be set off against his claim. 27 According to Mr Anthony, when he and Mr Hem discussed setting up the new company Mr Anthony suggested that each be paid a weekly wage or commission of $1,100 until 30 June 2004 plus a car allowance of $200 per week. Mr Anthony also proposed that as from July 2004 their weekly remuneration should be increased to $1,250. Mr Anthony said that Mr Hem agreed. He produced a spreadsheet which he said had been sent by Mr Hem which shows that as at 30 December 2004 Mr Hem's loan account had been debited with consultancy fees for approximately $35,000. 28 For his part, Mr Hem denies the agreement to receive fees. He also denies sending the spreadsheet to Mr Anthony, accusing Mr Anthony of preparing the document containing false information. The two are involved in a dispute in the Supreme Court of Victoria about SSSA, so their disagreement is not surprising. 29 I incline to the view that Mr Hem is not being frank about the spreadsheet. Nor is he being frank about the agreement to be paid a fee by the new company. Nevertheless, that is not fatal to his claim. 30 The principle I intend to apply is that if a plaintiff earns any money which he is not able to collect, he is not to be charged with that money. I have not been able to find any Anglo-Australian authority on point but I did come across a decision of the New York Court of Common Pleas that is in point. The case is Bassett v French 64 NY St Rep 292 (1895). The action was for damages for wrongful dismissal. Having credited the defendant with every dollar he actually received, he is not responsible for money he earned but could not collect. At least Mr Cant, on whom the onus falls, has not shown otherwise. Thus, there will therefore be no deduction from the claim. 32 The appeal will be allowed and Mr Cant will be directed to admit Mr Hem's proof for $75,000. On the question of costs, I think that Mr Hem should have them on a solicitor and client basis save for the costs incurred on 3 October 2006. Not only was Mr Hem successful on the appeal, on the evidence available to Mr Cant he had no basis for rejecting the proof. I have excluded the costs of 3 October 2006 because they were incurred when Mr Hem applied for and was granted leave to reopen his case and tender additional evidence. The costs of that day (also on a solicitor and client basis) should be borne by Mr Hem. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | constructive dismissal whether unfounded accusation of theft sufficient to constitute mitigation of loss whether money earned in mitigation but which cannot be collected should be set off against damages employment damages |
The matter is listed for hearing on 27 March 2006. The applicant made a previous application to amend its statement of claim which was heard and dismissed by Mansfield J on 23 February 2006. At the time that his Honour dismissed that application, his Honour said that the applicant could, if advised, make a further application. 2 The applicant seeks to amend paragraph 39 of the statement of claim to include the words 'or to be supplied' and to include a reference to paragraphs (a) and (b). There has been no opposition to that application and I give the applicant leave to amend the statement of claim to include paragraphs (a) and (b) in the first and second lines and the words 'or to be supplied' in the fourth line. 3 The applicant, however, has sought to amend the statement of claim in other respects. The applicant has sought to introduce a new plea in which the applicant says it particularises an arrangement or understanding which may be inferred from the particulars already contained in the statement of claim. The applicant's claim against the respondents is that the respondents entered into an arrangement or understanding some time between November and December of 2002 in which they agreed that they would no longer provide estimating services to their customers but, instead, would pass on to the customers any charges incurred and costs. 7 It was put to me by Ms Strong, who appeared for the applicant, that paragraph 35(c) ought to be understood as meaning that the arrangement or understanding between the respondents was to include the cost of estimation twice to each of the customers. In my opinion, that is a false reading of the proposed paragraph 35(c) in any event but, even if it were the correct reading, the particulars, which are said to support the plea which are contained in paragraph 35(b) A to I, do not support the plea. 8 Mr Whitington QC, who appeared for the third and fourth respondents, said that in the circumstances where the particulars do not support the amendment, the amendment which is sought so late in the day ought to be refused. I accept that submission. In my opinion, the particulars do not support the proposed amendment. In those circumstances, the proposed amendments to the statement of claim, except as to paragraph 39 which I have already identified, must be refused. There will be an order accordingly. 9 The order will be that the applicant pay the costs of the third, fourth, fifth and sixth respondents of the application. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application to amend statement of claim circumstances where particulars did not support the proposed amendment application refused except as to one paragraph where there was no opposition to the amendment. practice and procedure |
At issue on their applications is whether an agreement for arbitration was concluded as between all of the parties or as between the respondents. A further issue is raised by the first respondent as to whether electronic mails ( 'e-mails' ) passing between the parties may constitute a 'written agreement' within the meaning of the International Arbitration Act 1974 (Cth) ('the Act') and the Convention and Model Law to which it refers. It is convenient to refer to this requirement at the outset. 2 Section 7(2) of the Act provides for a mandatory stay of legal proceedings where there is an arbitration clause applying to the resolution of the dispute in question. The operation of the Act and its relationship to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention of 1958) and the 1989 amendments to the Act giving effect to the Model Law on International Commercial Arbitration were explained by Allsop J in Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192 , at [37] and following. For present purposes it is sufficient to observe that Article II of the Convention requires a court in Australia to refer the parties to an arbitration when they have made an agreement to that end. Given that the place of the arbitration is here said to be the United States of America, only certain Articles of the Model Law apply. Relevantly Article 7, which does apply, provides the definition of an arbitration agreement and the form it takes. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of tele-communication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract. 4 The first respondent submitted that the agreement for arbitration must itself be in writing and that a strict view should be taken of that requirement. Reliance was placed in that regard upon the primary judge's decision in Pan Australian Shipping Pty Ltd v The Ship Comandate (No 2) [2006] FCA 1112. That part of the primary decision was however held to be erroneous by the Full Court. It was explained by Allsop J (in the appeal decision at [148]-[151]) that Article II requires bilateral recognition of an arbitration agreement. Relevantly to this matter the Court held that it does not require that the contract be formed by an exchange of letters. Conduct might suffice. What is required is that the terms of the agreement and assent to those terms are in exchanged documents. 5 A distinction may therefore be seen to be drawn between the requirements of the common law as to agreements coming into effect and the requirements of the provisions for enforcement, internationally, of agreements so concluded. The latter require recognition of the agreement. It may be however that in some cases the exchange of correspondence may be relied upon both for the conclusion of a binding agreement having been reached by the parties and their overt acceptance of that conclusion. This is such a case. 6 These proceedings concern the transportation of machinery and equipment from the United States of America to Queensland. The applicants claim their charges as freight forwarders from both respondents, although it would seem the second respondent is liable to pay them. The second respondent has a claim against the first respondent arising out of their contractual arrangements relating to the carriage of the goods. 7 The starting point with respect to any alleged agreement to arbitrate is the meeting held on 12 September 2006 in Los Angeles between all the parties. The United States lawyer for the applicants, Mr Kaplan, asserts that although the dispute was not settled that day, it was orally agreed that the parties would undertake mediation and, if it was not successful, arbitration. Both were to be conducted in the United States. The mediator and arbitration was nominated, a retired judge, Judge Wisot. It is not clear if Mr Kaplan is contending that the appointment of Judge Wisot was agreed to on 12 September. No other party does and the e-mail correspondence shows the topic of the identity of the arbitrator arising later. Mr Kaplan's affidavit is unhelpful in other respects, because it states conclusions without facts and details, including dates. Mr Kaplan, for example, asserts that a problem arose, concerning Judge Wisot's cancellation fee if the arbitration proceeded, but that this was somehow overcome. It is not said when this arose, how it was resolved and the correspondence does not show that it was. There are other general assertions which do not appear to be supported by the correspondence between the parties, in particular those which suggest that, following the mediation held on 5 and 6 December 2006, the parties were finalising the details of their agreement to arbitrate and talking of an extended time-frame for undertaking it. 8 The version of events given by the second respondent's United States lawyer Mr Roberts, is not the same as that of the applicants' lawyer. He does not suggest that there was anything more than an agreement 'in principle' reached on 12 September 2006 for mediation, and arbitration if necessary. Nor does he suggest that the parties followed up on some previous agreement for arbitration at the conclusion of the mediation on 6 December. He says that at that time he asked the Australian lawyer for the first respondent to enter into an arbitration agreement before he left Los Angeles but he was not prepared to do so. Mr Roberts concludes by suggesting that the parties ought to be bound by the spirit of their agreement or understanding, whether 'in principle' or otherwise. 9 The first respondent's Australian lawyer, Mr Kinneally, responds in some detail to the assertions by Mr Kaplan. He accepts that there were some discussions on 12 September 2006 as to the prospect of mediation and arbitration, but denies that agreement was reached. He recalls a long discussion as to possible venues and possible mediators and arbitrators, with none selected. The name of Judge Wisot, who was later appointed as mediator, was not mentioned until later in following correspondence. The parties necessary to the arbitration were not resolved, the issues between the applicants and the second respondent and as between the respondents being different. 10 Mr Kinneally says that following an agreement later reached with the applicants, which is recorded in an Interlocutory Settlement Deed (' the Deed' ) dated 22 September 2006, the first respondent made many attempts to persuade the second respondent to take part in alternative dispute resolution. The second respondent was not prepared to enter into any binding agreement unless the 'neutral' person was directly agreed upon. At a meeting conducted by telephone between the lawyers for the parties, on 26 October 2006, it was apparent that the applicants wanted to put arbitration in place, in order to put pressure upon the parties; the second respondent thought it should be abandoned and the parties focus upon the mediation; and the first respondent was generally in agreement with the second respondent. In the event the parties undertook mediation pursuant to a standard agreement with an alternative dispute resolution provider (JAMS). As to the discussions at, or following, the mediation on 6 December, he points out that neither the applicants nor their lawyer was present. He attempted to speak to the applicants' lawyer by telephone on 5 December 2006. He was told by the mediator that the applicants' lawyer had contacted him and had suggested, for the first time, that the matter proceed to arbitration. The conversation between the respondents' lawyers at the conclusion of the mediation did not assume that there had been any agreement for arbitration. The question raised by Mr Roberts was whether it was appropriate to discuss it further. 11 The arguments put for the applicants and the second respondent shifted somewhat from the case disclosed by their United States' lawyers. For the applicants it was submitted that the relevant agreement was that reflected in the Deed. The difficulty, that the second respondent was not a party to it, was sought to be overcome by each of the parties having 'ratified' the agreement in subsequent correspondence. The applicants relied in this regard upon the exchanges occurring in the period 12-14 December 2006, leading up to the making of consent orders adjourning the directions hearing which was to be held on 15 December 2006. The applicants say that it may be seen that the common purpose of the adjournment was to permit arbitration to take place before the next directions hearing, due on 9 February 2006. 12 The second respondent, in argument, contended that the terms of the draft arbitration agreements, together with e-mails relating to them, and exchanged between the respondents from and after 22 September 2006, show that they were basically of the same mind upon the terms of an arbitration agreement. It is submitted that their subsequent conduct is consistent with agreement having been reached. 13 It seems plain enough that no concluded agreement was reached by the parties, or as between the respondents, on 12 September 2006. The correspondence which follows provides no support for such a conclusion. There may have been something approaching an agreement 'in principle' between the parties, at the conclusion of their negotiations, that mediation should take place with an arbitration to follow if necessary. The first respondent's Australian lawyer appears to have thought so when he e-mailed his colleague the following day. At this point the applicants and the first respondent were co-operating, with the objective of persuading the second respondent to commit to such a course. It is in this connexion that the Deed dated 22 September 2006, signed by the applicants and the first respondent on 27 and 28 September 2006, came into existence. For that purpose CJ will use its commercially reasonable endeavours to procure execution by MS of the Arbitration Agreement exhibited as Attachment 4 hereto, within 14 days of the date of execution of this Deed by the last party to sign'. It went on to say that if the second respondent does not agree, the first respondent would use its 'commercially reasonable' endeavours to prosecute a cross-claim against it as expeditiously as the proceedings allow. 14 On 22 September 2006 the first respondent's lawyer wrote to the second respondent's lawyer enclosing the draft arbitration agreement, which had been annexed to the Deed. He had apparently obtained his client's approval to its terms. The agreement was said to note matters of agreement and to identify issues to be addressed. It was recognised that there may be other issues which might be raised. It was observed that, so far as arbitrators were concerned, the first respondent's lawyers viewed the matters between the respondents as essentially contractual while those involving the applicants involved shipping law and practice. 15 The second respondent did not respond promptly. After the first respondent again sought the second respondent's lawyer's instructions as to the draft, he replied on 3 October 2006 attaching a revised arbitration agreement which had been executed by him and the second respondent. It appears from subsequent correspondence that the place for arbitration was not in dispute. The second respondent submits that the essential subject matter of the arbitration was the same and the method of appointment of the arbitrator was agreed. It would not however appear that the first respondent's lawyer was at this point of that view. Having said that, subject to Andrew's agreement, CJ are prepared to be flexible on many of the items. One thing that concerns us is not having a mechanism in place as to the appointment of a arbitrator in the absence of agreement. There is no point in having an agreement unless we know it will go ahead. Now that we know LA is the place. I will seek CJ attorneys in LA to act but in the meantime could you suggest arbitrators you believe would be appropriate. The e-mail concluded with a request for a discussion. The second respondent's lawyer wrote the following day advising that all he had done was to remove 'excess verbiage to clarify the items in dispute. The major issue is, and has always been, whether the MS-CJ contract is cost plus or cost inclusive. As we both acknowledged in LA, everything else is just 'details'. ' He went on to discuss who might handle the 'mediation/arbitration' . 17 Communications followed concerning nominees for the position of arbitrator and the considerable costs involved. On 23 October 2006 the first respondent's lawyer wrote to the second respondent's lawyer recommending five persons as arbitrators. The second respondent shortly afterwards nominated Judge Wisot and said that he would contact the entity which provided the arbitration services and check upon his availability. In what follows the respondents appear to be talking of Judge Wisot conducting both the mediation and the arbitration, if the latter were also necessary. Although the communications on 23 October continue to bare the reference to the Judge by later that evening it appears that other names were being considered, inferentially because of concerns about the rates charged by Judge Wisot and his cancellation fee in the event that an arbitration did not proceed. 18 On 25 October 2006 the lawyer for the second respondent wrote to the first respondent's and the applicants' lawyers, discussing the rates charged by the other candidates and their qualifications and suggesting one of them (Judge Haberfield)to be the best. We have been wasting a great deal of time and expense to finalize the details of the arbitration agreements. Your client wants more detail on the issues and we want less. That's a bit like two chefs fighting over a restaurant menu, where one wants a detailed description of each entrée and its ingredients, and one wants only a general description of the dish. The meal is the same, the price is the same, and the customer can ask if anything is unclear. I think we should hire the very best mediator we can find, either Judge Wisot or Judge Haberfield, abandon the arbitration, and stay with mediation until the case is settled. The resumes of the candidates all indicate that disputes worth many times what is at stake here ... have been settled ...'. This is the date referred to in the Deed, between the applicants and the first respondent, but not a date which appears to have been discussed in the correspondence. The applicant's lawyer suggested a revised scheduling for mediation and an arbitration if necessary. He went on to say that he would obtain instructions about postponing any arbitration if that was ' the only obstacle to getting all Agreements signed and MS appearing in the Australian proceedings'. He enclosed a revised Arbitration agreement ' which I will change to reflect about arrangement after our discussion' . He advised that once there was 'broad commercial agreement' he would redraft it and send it to his principals. He enquired of the second respondent whether it had lodged an appearance to these proceedings. By a later e-mail that day the second respondent sought a booking for a mediation for 5 and 6 December 2006. The parties did so pursuant to a basic standard agreement with the service provider. 22 The communications relied upon by the second respondent end at this point. Those relied upon by the applicants commence after the mediation and on 12 December 2006. By this time the second respondent had filed an appearance to these proceedings. It had done so on 10 November 2006, prior to the mediation. The topics of a further mediation and adjournment of the directions hearing were discussed. On 14 December 2006 the second respondent's Australian lawyer advised, by e-mail, that it did not wish to further mediate, but observed that there had previously been discussions between the parties 'as to the matter proceeding to arbitration and that each of your clients might be amenable to arbitration' . They sought the agreement of the parties to adjourn the proceedings on the basis 'that the parties will continue to engage in discussions with a view to reaching agreement as to the basis on which the matters in dispute might proceed to arbitration in the near future' . In a following e-mail the same day the lawyer noted that they were unaware of the position of the first respondent in relation to the adjournment of the matter 'on the basis proposed in the writer's earlier e-mail' . A draft consent order was enclosed, which understandably, did not contain the reference to the purpose of the adjournment. The first respondents' solicitors replied only that their client consented to the matter being adjourned and said nothing as to balance of the second respondent's enquiry. 23 The first respondent subsequently denied that it was bound to arbitrate and contended that the terms of the Deed did not continue in force. The second respondents have served a formal demand for arbitration. 24 The position of the applicants as a party to any agreement to arbitrate and the status of the Deed as such an agreement may be dealt with shortly. The Deed entered into in September 2006 was not a tripartite agreement; it was not even an agreement to arbitrate as between the applicants and the first respondent. The applicants reliance upon it is somewhat surprising. If it was at any later time used as the point of reference for discussions about mediation and arbitration that is not apparent from the evidence put before the Court. It is true that the applicants, in the course of following discussions, do make reference to matters contained within it, such as the date by which the two forms of alternative dispute resolution are to take place, 15 December 2006. That is to say, on the few occasions where they actively take part in the discussions. The fact that they were provided with copies of much of the correspondence between those parties does not give them the status of parties to any agreement to arbitrate which may have been reached by the respondents, as the applicants suggested in argument. 25 The dispute which was seen at the outset as necessary to be resolved, before the applicants' claim could be met and these proceedings concluded, was as between the respondents. The Deed recognised this. It contained an undertaking by the first respondent to endeavour to persuade the second respondent to undertake alternative dispute resolution with the first respondent. The applicants and the first respondent at this point saw their interests as aligned. It was the second respondent which was not committed to this course at this point. That reluctance persisted. 26 The course that the respondents discussed after 22 September, when the first draft of an agreement to arbitrate was sent by the first respondent to the second respondent, combined, and the first respondent accepted, mediation and arbitration. At the point when the second respondent's lawyers recommended the two methods of dispute resolution be split, and the focus put on an outcome from mediation, the second respondent had not committed to the terms of an agreement to arbitrate. It may be that the respondents were not far apart in their requirements as to the terms of such an agreement. They had effectively reached a consensus about venue. The selection of an arbitrator suitable to the second respondent, which it appears to have insisted upon, might have been resolved in the exchanges which took place between 23 and 25 October 2006. Whether there was consensus about the identification or description of the issues is not so clear. It is not apparent from the exchanges what it was that concerned each of the respondents in this regard. It is not neither possible nor necessary to resolve this issue, for what is absent, critically, is anything amounting to a confirmation or acceptance by the parties that they were in agreement on all terms and consider themselves to be bound to perform it. A review of the correspondence from 3 October 2006, concerning the draft arbitration agreement, might suggest that the parties were speaking about the same matters but sought to express it differently. The point is that they were not prepared to commit at that point, whatever be the reason. Moreover it is apparent from the discussions about the drafts that a written agreement was envisaged, one which was to be signed. The second respondent in particular can be seen to have proceeded upon this basis. That formality was understood to be required may be seen from the applicants' communication on 25 October 2006. The fact that no binding agreement had been reached is confirmed by the approach taken by the second respondent's lawyer both following mediation and at the point of the adjournment. It is apparent that further discussions were considered to be necessary. 27 There was no agreement to arbitrate reached between any of the parties to these proceedings and therefore nothing to enforce. The applications will be dismissed. The applicant and the second respondent should pay the first respondent's costs on both applications. I will speak to the parties concerning further directions in the matter. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. | whether or not agreement to arbitrate reached between parties by the exchange of e-mails whether written agreement agreement to arbitrate |
This matter has a long history. Mr Macks is the trustee of the bankrupt estate of Andrew Morton Garrett and Mr Duncan, the trustee of the bankrupt estate of Averil Garrett. Mr Garrett was made bankrupt on 24 September 2004 and Ms Garrett on 22 December 2004. There has been a multitude of actions brought by Mr Garrett in relation to the events leading up to his bankruptcy and events since his bankruptcy. 2 In 2005, the trustees of the two estates sought to recover the assets of the estate and the assets of trusts of which Mr and Ms Garrett were trustees prior to their bankruptcy. Following their bankruptcy, Evajade Proprietary Limited, a company apparently controlled by Mr Garrett, became the trustee. 3 Evidence disclosed that during 2005, assets were transferred from one trust to another ahead of the efforts of the two trustees to recover the assets. On 31 January 2006, Mr Garrett gave two undertakings to the Court. The first was that no further charges would be created affecting the assets of the Andrew Garrett Family Trust No 3. The second undertaking was that no further charges would be created affecting the assets of the Andrew Garrett Family Trust No 1 or No 2. 4 A number of directions hearing were heard in early 2006. On 1 March 2006, Mr Sandow, who was then the director of Evajade Proprietary Limited, purported to resign and Mr Garrett asserted that by virtue of a power of attorney over Evajade, he had appointed a new director to Evajade, a Mr Tsouvelis, who was not then present in Court. 5 Later in the course of that hearing, Mr Garrett asserted that on 9 February 2006 a person named Mr Joseph Nicolazzo had been appointed joint trustee of the Andrew Garrett Family Trust No 3. The addition of the joint trustee to the Andrew Garrett Family Trust No 3 had the inevitable consequence of causing the matter to be adjourned to enable Mr Nicolazzo to be joined as a party and to afford the cross-claimants an opportunity to re-amend their statement of claim. In addition, Mr Garrett asserted on that day that he had been appointed as joint trustee of the Andrew Garrett Family Trust No 1 and No 2 on 27 January 2006, which also had the inevitable consequence of delaying the proceedings. 6 Towards the end of the hearing on 1 March 2006, I asked Mr Garrett to give undertakings to the Court that he would not appoint any new trustees for any of the Andrew Garrett Family Trusts and he would not dispose of any assets of any of the three Andrew Garrett Family Trusts without the leave of the Court. Mr Garrett indicated that he could give the first undertaking but could not give the second. He referred to an unexecuted assignment of debt which purported to assign the Berringer Blass royalty stream to Zoltan Varveghy and Antoine Jacques Alcides for consideration of $1 plus, (1) assignment of international bill of exchange with serial number 12123353, and ASIN:CB!79472537 to the account of Andrew Morton Garrett and Joseph Nicolazzo as trustees of the Andrew Garrett Family Trust No 3; (2) execution of irrevocable direction and authority to Berringer Blass Wine Estates in favour of Andrew Morton Garrett as trustee of the Andrew Garrett Family Trust No 3 for $100,000 per annum; (3) a fee of $US25 million payable pro rata on success judgement of the damages of $US50 million in an action to be brought against the defendant, to be named in a Court action brought in the name of Zolton Zarszeghy (sic), Antoine Jacques Alcides and Credit Net Bank International (plaintiffs). 7 The assignment of debt had been executed by Mr Garrett but not by Mr Nicolazzo, Mr Varveghy or Mr Alcides. I put it to Mr Garrett during the hearing that if his execution of the assignment of debt had the effect of devaluing the asset of the Berringer Blass royalty stream, that he might be in breach of the undertaking he made to the Court on 31 January 2006. If executed, the effect of the assignment of debt was to effectively replace an asset of the Andrew Garrett Family Trust No 3 with a chose in action. 8 I adjourned the matter to enable Mr Varveghy, Mr Alcides and Mr Nicolazzo to be joined as parties. I also made orders in the nature of injunctions so as to protect the position pending their being joined. The seventh and eighth cross-respondents are restrained from executing a document, being an assignment of debt, between Andrew Morton Garrett and Joseph Nicolazzo as trustees of the Andrew Garrett Family Trust (No 3), and Zoltan Varveghy and Antoine Jacques Alcides, and described as Exhibit MM in these proceedings. The first cross-respondent, Joseph Nicolazzo is restrained from executing the document referred to in paragraph 5(i) hereof and described as Exhibit MM in these proceedings. The trustees of the Andrew Garrett Family Trust (No 1) and the Andrew Garrett Family Trust (No 2) and the Andrew Garrett Family Trust (No 3), are restrained from disposing of, or dealing in any way with any of the assets of those trusts. The seventh and eighth cross-respondents, Zoltan Varveghy and Antoine Jacques Alcides are restrained from disposing of, or dealing in any way with any assets acquired by them pursuant to the terms of the document described in 5(i) hereof and described as Exhibit MM in these proceedings. Mr Garrett now seeks damages which he says the Andrew Garrett Family Trust No 3 has suffered as a result of the making of those orders. In my opinion, the application fails in its premise. I am not satisfied on any of the evidence which has been put to me that the orders made were inappropriate, having regard to the circumstances which then existed. 10 There was a history leading up to 1 March 2006 which disclosed that Mr Garrett was taking steps to put assets beyond the reach of the trustees. The trustees had been given no notice prior to the hearing that it was intended that the transaction which was contemplated in exhibit MM would occur. They were entitled, in my opinion, to seek to restrain the execution of the document pending their investigations. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application for damages for undertaking given by counsel application dismissed. interlocutory application |
They perform garment making work often at absurdly low rates in locations outside their employer's premises. This frequently occurs in the homes of outworkers. 2 To help alleviate this blatant exploitation the Australian Industrial Relations Commission has sought to regulate the provision of outwork in the clothing industry. The current manifestation of that intention is found in Part 9 of the Clothing Trades Award 1999 . 3 The issues for determination in this proceeding concern whether the respondent, Southern Cross Clothing, has acted in breach of the outwork and related provisions found in Part 9. 4 Each of Southern Cross and the Textile Clothing and Footwear Union of Australia is a party to and bound by the Award. The Union alleges that Southern Cross has breached terms contained in cll 46, 47 and 48 of the Award, all of which are found in Part 9. 5 Southern Cross has not filed an appearance in the proceeding. It failed to file a defence, in defiance of an order of the Court that it do so. Its solicitor has informed the Court, in writing, that Southern Cross does not intend to participate in the proceeding. He suggested it was considering entering into voluntary liquidation. There is evidence before the Court that it is yet to do so. A company search relied upon by the Union disclosed that Southern Cross' registration is current as at today. Notwithstanding its unregistered status, its director, Mr David Leongue, has admitted to officers of the Union that Southern Cross has given out work to be performed away from its premises. Southern Cross gave outwork involving the finishing and making up of articles of clothing to Vibe Creation, Jenny Ngo Fashions and Giang Son Fashions. It intended that such work be performed outside the premises of Southern Cross. 9 Mr Leongue informed Ms Kruschel of the Union that he had "no idea" whether the persons to whom Southern Cross gave outwork were respondents to the Award. He said that between November/December 2003 and 8 September 2004, Southern Cross had given out work valued at about $70,000 and had been doing so for two to three years before 8 September 2004. 10 Mr Leongue admitted to Ms Kruschel that Southern Cross was not registered to give work out. He also stated that it maintained no records concerning the giving out of work. 11 I am satisfied that Southern Cross gave out work as defined by cl 45 of the Award. Apart from Mr Leongue's admission in that regard, Southern Cross does not appear on the List of Employers registered by the Clothing Trades Board of Registration held by the Australian Industrial Registry. 13 Southern Cross acted in breach of cl 48.1 of the Award from the time it became a party to the Award on 20 December 2002, until 8 September 2004. The Industrial Registrar has no record of any application for registration by Southern Cross. The three persons or entities to whom work was given out referred to at [8] above were not respondents to the Award, they were in the category of one of three classes of non- respondents identified in cl 46.1.1(c), (d) and (e). 16 Southern Cross breached cl 46.2.1 by not making work records when giving out work. Mr Leongue admitted that it kept no records of the entities to whom it gave out work. The only relevant documents kept by Southern Cross show that there are about 50 invoices from three persons or entities referred to at [8]. 17 The obligation to keep work records carries with it the duty to keep records containing the prescriptive detail found in cl 46.2.3 which include, without being exhaustive, the identity and address of the person to whom work is given, the address where the work is to be performed, the date for the giving out of work and completion of work, a description of the nature of the work to be performed and the price to be paid for each garment and article. 18 I am satisfied that the breach of cl 46.2.1 occurred on at least the 50 occasions on which the work was given out by Southern Cross as demonstrated by the invoices in evidence. 19 The failure to provide work records carries with it a breach of the obligation to provide the details to be contained in the work records as set out in cl 46.2.3 and a breach of the obligation to provide a copy of such records to the person performing the work as set out in cl 46.2.6. The evidence discloses at least 50 occasions where Southern Cross breached these provisions. Similar requirements to keep records are also contained in cl 47.16 in respect of information provided to an outworker. The evidence discloses no provision of any information or records to any outworker by Southern Cross. Consequently it has also breached cl 47.16 of the Award. Southern Cross breached cl 46.4.1 of the Award by not contracting with Ms Ngo to ensure that she received no less favourable conditions than those provided by the Award. A simultaneous breach of cl 47.3.1 occurred. It obliges an employer not to employ an outworker unless a written agreement is first made which includes a range of matters prescribed by cl 47.3.2. 23 Southern Cross also gave out work to other classes of non-respondents, referred to at [8] above, in breach of cl 46.4.2 and did not enter into agreements with them. It also provides that copies of these lists are to be given to the Industrial Registrar and the Union. Southern Cross did not keep such lists in the period 20 December 2002 to 8 September 2004 and consequently provided none to the Industrial Registrar or the Union. Three different classes of lists were to be provided to two entities on four occasions in each of 2003 and 2004. This did not occur and resulted in 48 separate breaches of cl 46 over the relevant period. The Award - provision of information. Southern Cross did not give such information to Ms Ngo. It therefore breached cl 46.7 of the Award in respect of her. A member of the family which operated Vibe Creation factory informed her that sometimes Vibe gave out work. It is not clear that the work which Vibe gave out was the same work which was given to it by Southern Cross. On that basis I am not satisfied that Southern Cross has breached cl 46.6.1 by hindering, preventing or discouraging compliance with the Award by giving work to an entity which gave it on to a further entity. For the reasons set out above, save for the reference to cl 46.6.1, I adopt it. Term of Award Breached Approx. The multiple breaches of cll 46.2.1, 46.2.3, 46.2.6, 46.4.1, 46.4.2, 47.3.1 and 46.7 will be treated as a single breach in those terms of the Award. The principal remedy under s 178 of the Act is the remedy of a penalty which is ordinarily paid to the applicant. There is no additional need for the Court to make declarations that the relevant breach has occurred. It is sufficiently evident from these reasons for judgment and the penalties imposed that the breaches occurred. 30 It is appropriate to impose penalties because the relevant breaches were numerous and occurred over a period of nearly two years. I also accept the submission of counsel for the Union that the breaches were ones which offended an important regulatory regime. It is a regulatory regime designed to stop flagrant exploitation of outworkers in an industry notorious for such behaviour; see Clothing and Allied Trades Union v J & J Saggio Clothing Manufacturers Pty Ltd (1990) 34 IR 26 at 37, per Gray J. The breaches are serious and appear to have been committed in defiance of Part 9 of the Award. 31 Given the above factors, it would ordinarily be appropriate to order a high range penalty in respect of the breach of each term of the Award. However, a countervailing factor is that there is no evidence of any prior offending behaviour by Southern Cross. Also, Mr Leongue, when interviewed by Union officials did not attempt to conceal the Award breaches and co-operated with the Union. 32 In Textile Clothing and Footwear Union of Australia v Lotus Cove Pty Ltd [2004] FCA 43 , Merkel J found that various breaches of cl 46 and cl 48 of the Award had occurred over a period of about one year. He imposed a penalty of 60 per cent of the maximum available on Lotus Cove for breach of the requirement to register imposed by cl 48.1. He imposed no additional penalty on Lotus Cove for related breach of cl 46.1.3 for failing to make an application to register. 33 The circumstances prevailing in this matter and the circumstances in Lotus Cove are very similar, save that the period of time over which the breaches occurred in this instance is almost twice as long. As with Southern Cross, Lotus Cove co-operated with officers of the Union and did not try to hide the breaches from them. 34 Given the similarity between the two matters I would ordinarily take the same approach and impose a penalty on Southern Cross of 60 per cent of the maximum of $33,000, being $19,800. However, Southern Cross was advised of the outcome of the Lotus Cove case by a letter dated 2 September 2004 and still failed to apply to register under Part 9 of the Award. In these circumstances a penalty of 70 per cent of the maximum is more appropriate, being a penalty of $23,100. That penalty will be imposed in respect of cl 48.1 of the Award. Although the non-observance of cl 46.1.3 is technically another breach of a term of an award, consistently with the reasoning of Merkel J in Lotus Cove at [49], I consider that the breach of cl 48.1 and that of cl 46.1.3 to "essentially relate to one omission". That omission was the failure to apply for and achieve registration. Consequently, no additional penalty will be imposed for the breach of cl 46.1.3 of the Award. 35 In Lotus Cove at [50], Merkel J imposed a single penalty of 40 per cent of the maximum available for breaches of cl 46.2.1 and the related cl 46.2.6, concerning the making of work records and the provision of a copy of work records. Applying a consistent penalty in this matter involves the Court in imposing a penalty of $13,200 on Southern Cross for breach of cl 46.2.1 of the Award and no additional penalty for its breach of cl 46.2.6. 36 In Lotus Cove , Merkel J imposed an additional penalty of 24 per cent of the maximum for breach of cl 46.2.3 of the Award. I raise that amount slightly to 25 per cent, having regard to the longer period over which the breaches occurred in this case. Accordingly, I impose a penalty of $8,250 for breach of cl 46.2.3. 37 Merkel J imposed a penalty of 36 per cent of the maximum for breach of cl 46.4.3 concerning the provision of lists. Considering the extra length of time involved in the current transgressions, it is appropriate to impose a penalty of 40 per cent of the maximum, being $13,200 in respect of the breach of cl 46.4.3. His Honour imposed no extra penalty for the breach of the requirement to provide copies of a list to the Industrial Registrar and the Union. I see no reason to depart from that approach. 38 In Lotus Cove , Merkel J imposed a penalty of 40 per cent of the maximum available for the breach of cl 46.7 concerning the failure of Lotus Cove to provide information to an outworker. In the similar circumstances of this matter a like penalty is appropriate and I impose a penalty of $13,200 on Southern Cross for its breach of cl 46.7. 39 In Lotus Cove there was no separate finding of a breach of any of the following terms of the Award; cll 46.4.1, 46.4.2 and 47.3.1. I consider that the breaches of those terms of the Award are no less serious than those in respect of which penalties have been imposed at 40 per cent of the maximum rate. Accordingly, I impose a penalty of $13,200 in respect of each such breach. A penalty in the sum of $23,100 for breach of cl 48.1 of the Clothing Trades Award 1999 ("the Award") between 20 December 2002 and 8 September 2004 be imposed on the respondent. 2. A penalty in the sum of $13,200 for breach of cl 46.2.1 of the Award between 20 December 2002 and 8 September 2004 be imposed on the respondent. 3. A penalty in the sum of $8,250 for breach of cl 46.2.3 of the Award between 20 December 2002 and 8 September 2004 be imposed on the respondent. 4. A penalty in the sum of $13,200 for breach of cl 46.4.1 of the Award between 20 December 2002 and 8 September 2004 be imposed on the respondent. 5. A penalty in the sum of $13,200 for breach of cl 46.4.2 of the Award between 20 December 2002 and 8 September 2004 be imposed on the respondent. 6. A penalty in the sum of $13,200 for breach of cl 47.3.1 of the Award between 20 December 2002 and 8 September 2004 be imposed on the respondent. 7. A penalty in the sum of $13,200 for breach of cl 46.4.3 of the Award between 20 December 2002 and 8 September 2004 be imposed on the respondent. 8. A penalty in the sum of $13,200 for breach of cl 46.7 of the Award between 20 December 2002 and 8 September 2004 be imposed on the respondent. The total penalties in Lotus Cove were $20,000. However, since that time the maximum penalty has more than tripled and more breaches of the Award were alleged and found in this matter than in Lotus Cove . In addition, the failure to register in this matter occurred after Southern Cross was advised of the outcome in Lotus Cove . I see no reason to depart from that approach and will order that each of the penalties in this matter be paid to the Union. 43 In addition to the orders referred to at [40] above, I will add an order that the penalties so imposed be paid to the applicant. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | outworkers application for penalty for breach of part 9 of the clothing trades award 1999 no appearance or defence filed by respondent calculation of penalty industrial law |
2 When the matter was before the Court for pre-trial directions on 9 March 2006 a direction was made requiring the Appellant's written submissions to be filed and served at least five clear working days before the date fixed for the hearing of the appeal, i.e. Thursday 20 April 2006. A direction was also made requiring the First Respondent's written submissions to be filed and served at least three clear working days before the hearing date. In other words the last day for written submissions from the Appellant was Monday 10 April 2006 and the last day for written submissions from the Respondents was Wednesday 12 April 2006. 3 As it transpires nothing was received from the Appellant by the due date. In the circumstances the First Respondent provided written submissions on Wednesday 18 April. It was not until mid afternoon on the day before the hearing, i.e. 19 April 2006, that written submissions were provided by the Appellant. 4 I mention the late provision of the Appellant's written submissions to emphasise the unfortunate history of this matter to which I will return shortly. 5 The Appellant, who was born on 16 December 1967 is a citizen of the People's Republic of China who arrived in Australia on 24 January 1996 travelling on a Hong Kong passport. The Appellant left the People's Republic of China on 1 December 1995 travelling to the Philippines whence he departed for Australia on 23 January 1996. The Appellant contends that the passport on which he travelled was a forgery. 6 On 21 April 2005 the Appellant lodged an application for a Protection (Class XA) Visa with the then Department of Immigration and Multicultural and Indigenous Affairs. That application was lodged on behalf of the Appellant by a solicitor working for the Legal Aid Commission of NSW. The application was supported by a statutory declaration made by the Appellant on 20 April 2005. That statutory declaration recorded that the Appellant travelled to Beijing on or about 20 May 1989 following which he regularly attended Tiananmen Square 'to watch the students'. The Appellant says that on 4 June 1989 he went to the Square with a friend and found himself with students at the edge of the Square. He saw troops enter the Square and saw them fire on the students. He says that he was very frightened. 7 The Appellant was married in 1990. 8 After 1994 the Appellant says that he decided that he should leave China. He said 'Things were very difficult for me in China and I thought if I went away it would be easier for me to find work'. 9 In September 2003 the Appellant was placed in detention in Australia as he did not have a visa. Whilst he was detained a previous workmate suggested to the Appellant that he should learn Falun Gong. The friend knew that the Appellant had some work injuries and also had problems with his lower back and stomach since he left China. 10 In his statutory declaration the Appellant said that Falun Gong was essential to his health and that it helped him recover from his various injuries. I fear that I will face persecution if I am forced to return to China. I am a Falun Gong practitioner. I need to practise Falun Gong every day for my health. Every person who is a Falun Gong practitioner is at risk in China. Falun Gong is my heartfelt belief. I cannot return to China because it means that my life will be in danger. The delegate was not satisfied that the Appellant was a person to whom Australia owed protection obligations for the purposes of s 36 of the Migration Act 1958 (Cth) ('the Act'). The delegate found that the Appellant did not have a well-founded fear of Convention based persecution in China. By letter dated 28 April 2005 the Appellant was notified of the Minister's delegate's decision. 12 On 2 May 2005 the Appellant applied to the Refugee Review Tribunal ('the Tribunal') for review of the Minister's delegate's decision. 13 On 20 May 2005 the Tribunal wrote to the Appellant's solicitor advising that the Tribunal was unable to make a decision in the Appellant's favour on the material which it had before it alone. 14 By letter dated 27 May 2005 the Appellant's solicitor forwarded certain documents to the Tribunal including a statutory declaration made by the Appellant on 6 May 2005. I fear that I will face persecution when I return to China because I will continue to practise Falun Gong. This will put me in real danger. It was not satisfied that the Appellant was a person to whom Australia had protection obligations under the Convention Relating to the Status of Refugees 1951 as amended by the Protocol Relating to the Status of Refugees 1967 ('the Refugees Convention'). In the circumstances the Tribunal affirmed the decision of the Minister's delegate not to grant the Appellant a protection visa. In the Tribunal's published reasons, which were forwarded to the Appellant's solicitor under cover of a letter dated 30 June 2005, the Tribunal recorded the Appellant's claim for a protection visa as being currently 'only because of Falun Gong'. He said that currently it is only because of Falun Gong. He does not believe that he will be persecuted because of his involvement in demonstrations in June 1989 but he said that the situation is still the same; he will still not be able to obtain a business licence unless he pays to get things done. The applicant does not claim to fear harm in China arising from his alleged involvement with the pro-democracy movement in Beijing in 1989. The Tribunal accepts that the applicant commenced Falun Gong in the first place to assist in the rehabilitation of an injured arm. It accepts that he seeks to undertake at least part of an exercise regime and accepts that he does this because he finds that the exercises assist his health and in particular his injured arm. Before he entered Villawood the Tribunal notes that he was having conventional physiotherapy treatment. It finds that the applicant has exaggerated his commitment to Falun Gong to the Tribunal in order to strengthen his claims to refugee status. The Tribunal finds that the applicant may derive therapeutic benefit from a range of traditional and alternate therapies for his hand. He received physiotherapy before he was detained and would no doubt have continued but for his detention. Other forms of qigong might equally be beneficial. The Tribunal finds that the applicant can attempt any of these therapies to improve his manual mobility and dexterity. The Tribunal acknowledges that in so doing the applicant would modify his behaviour but is of the view that, just as he has adopted aspects of the exercise regime of Falun Gong which was conveniently available to him in detention he would adjust this on return to China where Falun Gong is not available, to another kind of therapy. The Tribunal has considered the applicant's claims and evidence and finds that he is not a genuine Falun Gong practitioner. The Tribunal does not accept the claim that he will be returning to China as a known Falun Gong practitioner and faces harm from the Chinese authorities for that reason. Consequently it is not satisfied that he has a well-founded fear of persecution for reasons of his being perceived to be a Falun Gong practitioner by the authorities. ... I am just an elementary stage Falun Gong practitioner. ... Dear most honourable and most respected Federal Magistrate Court Judge(s), please make a decision favourable to me. 19 A directions hearing in the Federal Magistrates Court took place on 4 August 2005 at which time the Court granted leave to the Appellant to file an amended application by 27 October 2005. On 7 September 2005 the Appellant availed himself of the leave so granted by filing an Amended Application in the Federal Magistrates Court, which had been settled for him by counsel who later appeared for him on the hearing in the Federal Magistrates Court and again on the hearing of the appeal in this Court. The Tribunal constructively failed to exercise its jurisdiction in accordance with the Migration Act 1958 by not considering the applicant's claim to fear of persecution by reason of PSB spies infiltrating Australia and informing PSB in China of his Falun Gong activities. The Tribunal constructively failed to exercise its jurisdiction in accordance with the Migration Act 1958 by failing to consider the applicant's claim of persecution by reason of his belonging to a particular social group --- viz. ordinary members of the public previously interrogated by the PSB and who were held in detention and released but who have subsequently taken up the practice of the Falun Gong. The Tribunal committed a jurisdictional error of law by asking itself the wrong question with regards the ability to avoid persecution in circumstances where the Tribunal unreasonably reached a state of satisfaction about the applicant's "genuine commitment to the practice of Falun Gong". The Tribunal committed a jurisdictional error of law by failing to appreciate that in some circumstances persecution may include transgressions on the freedom traditionally associated with democratic societies, including economic discrimination. The Tribunal erred in finding that the Applicant is not a person to whom Australia has protection obligations. A copy of that document had been forwarded by counsel for the Appellant to the solicitors for the Respondent Minister on the evening of 28 November 2005. The proposed Further Amended Application was accompanied by a copy of the Appellant's written submissions in the Federal Magistrates Court, notwithstanding that the directions given by the Court on 4 August 2005 required such written submissions to be provided by 22 November 2005. 22 Absent the provision by the Appellant of his written submissions in the Federal Magistrates Court, the Respondent Minister proceeded to prepare her written submissions in response to the Amended Application filed 7 September 2005, such written submissions being provided on 29 November 2005, in accordance with the directions which had been given on 4 August 2005. 23 On the hearing of the application in the Federal Magistrates Court of Australia on 6 December 2005 the Appellant sought leave to rely upon the Further Amended Application, an unsigned copy of which had been filed on 29 November 2005 (four clear working days before the date fixed for the hearing of the matter) in lieu of the Amended Application filed 7 September 2005. The Respondent Minister by her then counsel opposed the grant of leave due to the 'lateness of the further amended application and also because ... of its tendency to debate the merits rather than to succinctly state something which if made out would be a jurisdictional error' . Counsel for the Respondent Minister expressed concern that difficultly was being experienced in trying to identify precisely what the Appellant was saying constituted the relevant jurisdictional error. The Tribunal failed to act judicially and thereby failed to afford the Applicant procedural fairness in rejecting his claim to fear persecution upon refoulment by reason of information about his Falun Gong practices while in Australia being discovered by Chinese authorities. It was not open to the Tribunal to reject the Applicant's claimed fear of persecution without cogent material supporting a conclusion that the applicant's commitment to Falun Gong was not genuine. The Tribunal constructively failed to exercise its jurisdiction in accordance with the Migration Act 1858 by not affording the Applicant procedural fairness and putting him on notice of critical information from Master Li's book and "about cultivating the heart/mind nature" (CB 116.8) in circumstances where it relied on such information to discredit his claim to be a Falun Gong practitioner and, correspondingly, his claim to fear persecution if returned to China. While acknowledging the applicant is a recent adherent to Falun Gong the Tribunal nevertheless discredited the applicant's claim based on a disproportional interrogation of Falun Gong exercises and philosophy (see further Ground 4 below). The Tribunal found that the Applicant displayed no evidence of the knowledge and understanding of the moral code as this is enunciated by Master Li Hongzhi, and an aspect of cultivation" (CB 123.6). The Applicant consistently claimed Falun Gong was "essential" to his health (CB 44 [37]) and that if he stops doing Falun Gong on return to China and "his health is bad he would do it again because it is beneficial" (CB 117.8). The Applicant maintained that on return to China "he will learn the five exercises ... [and] only do Falun Gong at home" (CB 117.8). The Tribunal committed a jurisdictional error of law in circumstances where it unreasonably found the applicant displayed "no evidence of the knowledge and understanding of the moral code" (See also Ground 2, supra). The Tribunal accepted the Applicant a recent adherent to Falun Gong. The Tribunal further accepted that "the applicant commenced Falun Gong in the first place to assist in the rehabilitation of an injured arm" and that "the exercises assist his health and in particular his injured arm" (CB 122.8). The Applicant said that practitioners are told to be kind and have a merciful heart; to do good deeds and to be tolerant" (CB 116.7). He correctly said that it is called Penetrating the Two Cosmic Extremes " (CB 117.4). He replied that you need commitment and genuineness" (CB 117.5, see also Ground 2(c) above ). The tribunal constructively failed to exercise its jurisdiction and to afford the Applicant natural justice in circumstances where the Tribunal did not consider all the integers of the Applicant's claim. The Applicant claimed "he suffered restrictions in China because of his involvement in the demonstrations in June 1989 and if he is found to be a Falun Gong practitioner in China the penalty he will get will be even worse because of his record. The Tribunal Member failed to deal with the Applicant's above claim in circumstances where "[t]he Tribunal clarified that his current claims for a protection visa are based solely on claims relating to Falun Gong" (CB 118.8). In reaching her Honour's conclusion on the application for leave to amend her Honour had regard to: the non compliance by the Appellant with the timetable which had been the subject of directions given in the Federal Magistrates Court on 4 August 2005, the Respondent Minister's preparation of her submissions in the matter by reference to the Amended Application filed 7 September 2005, the Respondent Minister's concern that it was difficult to see the jurisdictional error which the Appellant was alleging in the Further Amended Application and that the Further Amended Application looked more akin to an attempt at a merits review, the unsatisfactory nature of the explanation proffered by counsel for the Appellant as to the Appellant's delay, the importance of achieving adherence to the fullest possible extent with timetables set by the Federal Magistrates Court in circumstances where adjournments may mean that the Court is unable to deal with matters for many many months thereafter, the interests of the community in having finality to litigation and the review process, the fact that the Appellant had had ample time to prepare the Appellant's case and that preparation of a response to the proposed new grounds in the Further Amended Application, if allowed, would require more than two (sic) full days in which the Respondent Minister could properly consider and seek advice thereon. 26 Before this Court, counsel for the Appellant conceded that the proposed Further Amended Notice of Appeal constituted an abandonment of the grounds proposed in the Amended Application filed 7 September 2005, which he had prepared, and an attempt to substitute fresh grounds. 27 Whilst in her Honour's reasons for judgment she referred to the need for more than two full days' notice, which I understood to be a reference to two clear working days' notice, of the proposed Further Amended Application, she was certainly conscious of the fact that it had been filed on 29 November rather than 1 December 2005. 28 Having declined leave to file the Further Amended Application, the learned Federal Magistrate proceeded to deal with the appeal by reference to the Amended Application filed 7 September 2005. Her Honour's reasons for judgment were delivered on 22 December 2005 whereupon it was ordered that the application be dismissed and that the Appellant pay the Respondent Minister's costs of and incidental to the application fixed in the amount of $5,000. 29 In the course of her Honour's reasons for judgment she referred at [15] to the filing of the unsigned Further Amended Application on 29 November 2005 and at [32] to her refusal of leave to rely upon the Further Amended Application. 30 By a Notice of Appeal filed 11 January 2006 the Appellant appealed to this Court from the whole of the judgment of the learned Federal Magistrate delivered on 22 December 2005. It is clear from the terms of the Notice of Appeal that the Appellant wishes to disturb her Honour's refusal of leave to rely upon the Further Amended Application, even though a formal order setting aside her Honour's decision of 6 December 2005 on the interlocutory application has not been sought. Nevertheless, the Notice of Appeal, as expressed, is, in my opinion, sufficient to entitle the Appellant, if successful, to relief in respect of both the orders made on 6 December 2005 and also those made on 22 December 2005. Were the orders made on 6 December 2005 to be set aside and the appeal otherwise to fail, the appropriate consequential relief would seem to me to be to remit the matter to the Federal Magistrates Court for rehearing upon the grounds raised in the Further Amended Application. Her Honour erred in refusing to allow the Appellant leave to rely on the Further Amended Application filed on 29 November 2005 and served on the First Respondent on 28 November 2005, being at least five clear working days prior to the hearing on 6 December 2005. Her Honour's refusal to grant leave to file the Further Amended Application was misdirected in circumstances where the First Respondent did not establish prejudice or unfairness and her Honour's exercise of discretion was predicated on considerations of strict adherence to Court orders rather than the paramountcy of justice. The First Respondent's solicitors did not object to late service of submissions when advised of the same prior to (sic) Court appointed date for filing and service of Applicant's submissions. 34 Whilst applications for amendment should be made as early as possible, the power is capable of being exercised at any stage in the proceedings. The ultimate consideration for her Honour was what was in the interests of justice. Clearly, leave to amend should not be granted to a party acting otherwise than in good faith, where the proposed amendment would be plainly futile or where injustice to the other party could not be adequately compensated. 35 In doing justice, courts have recognised that the rights of both parties to the litigation must be considered (per Asprey JA in Watson v Watson (1968) 70 SR (NSW) 203 at 206). Justice is the paramount consideration and the interests of case management should not be allowed to prevail over the injustice of shutting out a party from raising an arguable case (per Dawson, Gaudron and McHugh JJ in The State of Queensland v J L Holdings Pty Limited [1997] HCA 1 ; (1997) 189 CLR 146 at 155). 36 In considering whether her Honour fell into error in refusing leave to the Appellant to rely upon the Further Amended Application in the Federal Magistrates Court, it must be recognised that her Honour was exercising a discretion. A court of appeal must guard against reversing a discretionary decision merely because it would itself have decided the matter differently; it is not justified in substituting its own judgment for that of the primary judge unless it is clearly satisfied that the primary judge's judgment was erroneous (per Kitto J in Lovell v Lovell [1950] HCA 52 ; (1950) 81 CLR 513 at 532). 37 The circumstances in which the Court should consider disturbing an exercise of discretion below would include cases where a wrong principle has been invoked, the decision-maker below has been influenced by extraneous or irrelevant matters, the decision-maker has taken a mistaken view of the facts or the decision-maker has failed to take into account some material consideration. If it is unclear how the primary judge reached the result embodied in the primary judge's order but, upon the facts, it is unreasonable or plainly unjust, then an appellate court may infer that in some way there has been a failure to properly exercise the discretion conferred upon the court of first instance (per Dixon, Evatt and McTiernan JJ in House v The King [1936] HCA 40 ; (1936) 55 CLR 499 at 505). 38 Whilst it would have been improper for the learned Federal Magistrate to treat the interests of orderly case management as paramount, I do not consider that she did so. It is clear from her Honour's reasons for judgment that she undertook an appropriate balancing of the interests of the respective parties in determining what she considered justice required. Having said that, it seems to me that her Honour did take a mistaken view of the facts, erroneously concluding that the Respondent Minister only had two clear working days to address the proposed Further Amended Application when, in truth, at least four clear working days were available. In the circumstances, the exercise of her Honour's discretion miscarried and it falls to this Court to determine what, in the circumstances, should have been the appropriate determination upon the application for leave to further amend the appellant's application in the Federal Magistrates Court. The Court may grant leave if some point that was not taken below, but which clearly has merit, is advanced, and there is no real prejudice to the respondent in permitting it to be agitated. Where, however, there is no adequate explanation for the failure to take the point, and it seems to be of doubtful merit, leave should generally be refused. 41 Whilst the question of whether leave should be granted to allow an amendment of an application, late in the day, is not the same as the question whether an appellant should be allowed to raise fresh points on the hearing of an appeal in a migration matter, nevertheless there is sufficient correspondence between the two situations to render the above observations relevant. 42 Whilst case management considerations should never be seen to be paramount when evaluating the competing interests to determine what justice requires, it would not be inappropriate for a court, faced with a late application for leave to amend, to have regard to the consequences of an adjournment that may be necessitated were leave to amend to be granted. Not only might an adjournment lead to considerable further delay in finalising the overall review process, the community interest in the costs thrown away as a result of such an adjournment should not be overlooked where the party seeking the amendment proposes to abandon grounds formulated in an earlier amended application and substitute an entirely new set of grounds. Whilst 'the emollient effect of an order for costs as a panacea' may be a relevant consideration where there is a likelihood that a costs order will be met, it seems to me that in migration cases, where, due to an appellant's impoverished state, proceedings are instituted with a waiver of the relevant filing fees, it is highly unlikely that an attendant costs order associated with an adjournment brought about by a late amendment will provide such a panacea (see per Samuels JA in GSA Industries Pty Limited v N T Gas Limited (1990) 24 NSWLR 710 at 716). 43 I am disposed to accept the submissions of counsel for the Respondent Minister that the points covered by the proposed Further Amended Application are of doubtful merit. Furthermore, I agree with the learned Federal Magistrate's observation that there was no adequate explanation proffered by counsel for the Appellant for the Appellant's failure to raise the new grounds earlier given the very considerable time which had been allowed for the filing of an Amended Application, i.e. approximately 12 weeks. 44 Balancing the interests of the Appellant with those of the community whom the Respondent Minister effectively represents, to which reference was made by the learned Federal Magistrate, and given the doubtful merit of the new grounds contained in the proposed Further Amended Application, leave to the Appellant to rely upon the Further Amended Application in the Federal Magistrates Court should have been refused. Accordingly, the decision of the Federal Magistrate of 6 December 2005 on the amendment application should not be disturbed. 45 In reaching the above conclusion I have had regard, amongst other things, to certain passages from the transcript of proceedings before the learned Federal Magistrate which were placed before the Court, without objection, on the hearing of the appeal. When the learned Federal Magistrate drew attention to the absence of a transcript of proceedings before the Tribunal no application was then made by the Appellant for her Honour to defer her consideration of the amended application until a transcript could be obtained. 47 Whilst the Appellant was granted leave to file in this Court and read an affidavit of Judith Gayton sworn 10 March 2006 which referred to the deponent having made a transcription of two tapes, which one might infer recorded the evidence given before the Tribunal on 7 June 2005, the transcription itself was not appropriately identified and included as an annexure to that affidavit or otherwise put into evidence on the hearing of the appeal. In the circumstances, the Court is in no better position than the learned Federal Magistrate to determine whether or not questions which the Appellant submitted should have been asked of the Appellant were or were not asked of the Appellant by the Tribunal member. Nor incidentally does the applicant alleged (sic) a breach of section 424A and this particular application of course is one which is very recent. Your Honour will see from the, (sic) just from the index to the Court book, how quickly this matter has --- how short the light (sic) of this particular matter has been and section 422B has applied to it and there was nothing in section 424A which would require the tribunal to give information of the teachings in question. 51 It is important to remember that proceedings before the Tribunal are not adversarial. Rather, they are inquisitorial. The Tribunal is not in the position of a contradictor of a case being advanced by an applicant. The Tribunal member conducting the enquiry is not an adversarial cross-examiner, but an inquisitor obliged to be fair. In a case such as the present it was for the prosecutor to advance whatever evidence or argument he wished to advance and for the Tribunal to decide whether his claim had been made out. The Tribunal was not obliged to prompt and stimulate an elaboration which the prosecutor may have chosen not to embark upon (see per Gummow and Heydon JJ in Re RUDDOCK (in his capacity as Minister for Immigration and Multicultural Affairs); Ex parte APPLICANT S154/2002 ('Applicant S154/2002') (2003) 201 ALR 437 at [57]-[58]). 52 In exercising its decision-making function the Tribunal must act rationally, reasonably and not arbitrarily. In other words, the Tribunal cannot determine a matter by 'tossing a coin' or by making a 'snap decision' or by acting on instinct, a 'hunch' or a 'gut-feeling' (see per Lee and Moore JJ in WAIG v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 80 ALD 568 at [21]. 53 In his submissions on the hearing of the appeal in this matter counsel for the Appellant placed reliance upon the judgment of Gleeson CJ, Gummow and Kirby JJ in Applicant S v Minister for Immigration and Multicultural Affairs (2004) 77 ALD 541 at [36] in relation to the determination of whether a group falls within the definition of 'particular social group' in Article 1A(2) of the Refugees Convention. In the present case the 'particular social group' was clearly genuine Falun Gong practitioners and no question of group identification arose. Furthermore, it was accepted by the Tribunal that there was ample evidence of the harsh treatment of Falun Gong practitioners by the Chinese authorities in China. 54 In the Tribunal's reasons mention was made of the Tribunal having asked the Appellant if he could discuss some of the basic teachings of Master Li about Falun Gong. The Appellant responded that the practitioners were told to be kind and have a merciful heart; to do good deeds and to be tolerant of things that other people would not tolerate. The Tribunal asked the Appellant how Master Li teaches that practitioners should do these things and come to this state and how a practitioner goes about cultivating the heart, mind/nature, to which the Appellant responded that he had not come to understand that yet. He said that one has to keep a good heart and mind. 55 At the hearing the Tribunal expressed surprise that the Appellant had only obtained a book on Falun Gong two weeks before the hearing took place before the Tribunal. 56 The Tribunal recorded that it had asked the Appellant about the cultivation of xinxing (the heart/mind nature) to which the Appellant replied that you need commitment and genuineness. When asked by the Tribunal whether the Appellant could speak of the Master's teachings on this, the Appellant was not able to respond to the request. 57 In the ' FINDINGS AND REASONS ' section of the Tribunal's decision, the Tribunal found that the Appellant had exaggerated his commitment to Falun Gong to the Tribunal in order to strengthen his claims to refugee status. It accepted that whilst the Appellant undertook at least some aspects of the exercise regime, he displayed 'no evidence of the knowledge and understanding of the moral code as this is enunciated by Master Li Hongzhi, ... an aspect of cultivation ... at least of equal importance to the exercise regime'. 58 It is clear that in this part of the Tribunal's reasoning it was not seeking to contrast the teachings of Master Li with the Appellant's knowledge of those teachings. Rather, the Tribunal was focussing upon the complete lack of knowledge on the part of the Appellant of those teachings as relevant to whether or not he was a genuine Falun Gong practitioner. The Appellant submitted that the finding that the Appellant displayed 'no evidence of the knowledge and understanding of the moral code' as enunciated by Master Li was inconsistent with the Appellant's evidence to the Tribunal concerning the 'basic teachings of Master Li about Falun Gong' namely that practitioners were told be kind and have a merciful heart, to do good deeds and be tolerant of things that other people would not tolerate. 59 When one has regard to the Appellant's inability to respond to the Tribunal's query as to the Master's teachings upon the cultivation of xinxing (the heart/mind nature), it is evident that there was a proper basis for the Tribunal to find that that the Appellant displayed no evidence of the knowledge and understanding of the moral code as enunciated by Master Li, a different consideration from the basic teachings of Master Li about Falun Gong. 60 The Tribunal found, as it was entitled to do, that the Appellant undertakes at least part of a Falun Gong exercise regime but he had not become a genuine Falun Gong practitioner. Indeed, the Tribunal found that the Appellant exaggerated his commitment to Falun Gong to the Tribunal in order to strengthen his claims to refugee status. 61 In relation to ground 1 in the Amended Application before the Federal Magistrates Court is should be noted that the Tribunal did not acknowledge the Appellant to be a 'recent adherent to Falun Gong'. The Tribunal did not accept the Appellant's claim that he would be returning to China as a known Falun Gong practitioner and face harm from the Chinese authorities for that reason. 62 Given the claims made by the Appellant as to the particular social group of which he claimed to be a member, the Tribunal did not constructively fail to exercise its jurisdiction by failing to consider an inconsistent claim as alleged in ground 2. 63 Ground 3 in the Amended Application is barely comprehensible. It is clear that the Tribunal did not ask itself the wrong question, nor did it carry out its decision-making function otherwise than rationally and reasonably. 64 The Tribunal's unwillingness to accept the Appellant's claim that he would be returning to China as a known Falun Gong practitioner and its unwillingness to accept that he would face harm from the Chinese authorities for that reason, did not demonstrate a failure to appreciate what would amount to persecution within the meaning of the Refugees Convention. 65 The Appellant's submission that it was not open to the Tribunal to find that it was not satisfied that the Appellant had a well-founded fear of persecution for reason of membership of a particular social group in the absence of 'cogent material supporting a conclusion' that the Appellant's commitment to Falun Gong was not genuine is misconceived. As per Gummow and Heydon JJ in Applicant S154/2002 , it is for a prosecutor to advance whatever evidence or argument he wishes to advance and for the Tribunal to decide whether his claim has been made out. 66 Contrary to the Appellant's submission, the Tribunal was not satisfied that the Appellant would only face a 'remote' chance of persecution if he returned to China. Rather, the Tribunal was of the view that the chance that the Appellant would practice Falun Gong if he returned to China was 'remote'. In circumstances where the Tribunal found that the Appellant was not a genuine Falun Gong practitioner it was unnecessary for the Tribunal to make any further finding about whether the Appellant would practice Falun Gong upon his return to China. 67 The submission of the Appellant that the Tribunal was under an obligation to ask questions of the Appellant is misconceived. 68 In the course of his submissions in reply before the learned Federal Magistrate counsel for the Appellant sought to raise a further new claim, i.e., that the Tribunal should have put to the Appellant why he would modify his behaviour were he to return to the People's Republic of China (see [62] of her Honour's reasons for judgment). 69 The Tribunal had no such obligation and her Honour was correct in refusing the Appellant leave to raise such an additional claim on the run at the conclusion of the hearing before her. 70 The grounds contained in the proposed Further Amended Application were without merit as were the grounds contained in the Amended Application. The Tribunal did not commit any jurisdictional error. 71 For the foregoing reasons, the appeal should be dismissed and the Appellant ordered to pay the First Respondent'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 Graham. | tribunal not satisfied that appellant was a genuine falun gong practitioner no jurisdictional error erroneous exercise of discretion in respect of amendment application due to reliance on a mistaken view of facts appellate court substituting its own decision on the application migration federal magistrates court |
The applicants/cross-respondents, Inamed Development Company and Inamed Pty Limited (together called Inamed), oppose leave being granted. I have decided that leave should be granted. However, I will review this ruling in the event that Inamed satisfies me that it has been unable to deal with the evidence, either in whole or in part, prior to the commencement of the hearing. As will appear, leave is not granted in relation to all of the material sought to be adduced. As this is an interlocutory ruling shortly prior to trial, and as the argument has been fully recorded on the transcript, these reasons will be in short form. 2 The deponent is a design engineer who says that, since 1983, he has been working in the medical device design and manufacturing industry. The patent in suit is a gastric band for the treatment of morbid obesity and may be regarded as a medical device in the general sense. Initially, counsel for Inamed submitted that the deponent was not qualified to give any of the evidence sought to be tendered as the field of expertise so far as was relevant to that evidence is the field of bariatric surgery and not medical device design and manufacture. That point fell away for present purposes during the course of argument and no more need be said about it at the moment. 3 It was then contended that none of the evidence of any significance was admissible or, if admissible, was of such little weight that it ought be rejected pursuant to s 135 of the Evidence Act 1995 (Cth). I agree with that submission in relation to a significant portion of the evidence --- namely that relating to construction of both the patent in suit and the priority document. In my opinion, that evidence does not supply technical explanations from the deponent's field of expertise that would assist in placing the Court in the position of a skilled addressee of those documents. Rather, they constitute the reading of the documents by the deponent. ( Jupiters Ltd v Neurizon Pty Ltd (2005) 222 ALR 155 at [67]. ) In my opinion, that evidence is not admissible and, if it were, it would be rejected pursuant to s 135 of the Evidence Act 1995 (Cth) . I do not need to make a formal ruling as to admissibility. I indicate I will not grant leave to read paragraphs 23---39 (inclusive), 46 and 52---56 (inclusive) of the affidavit. 4 Paragraphs 40---44 (inclusive) of the affidavit could conceivably be relevant to the issue of inventive step. Standing alone, they would not be sufficient to establish the point. However, the issues raised by s 7(2) and s 7(3) of the Patents Act 1990 (Cth) involve a number of factual aspects that may be proved from a number of sources. That person is wholly hypothetical. Much evidence is admissible from persons none of whom would precisely answer the statutory description. Some may be more skilled in the relevant art than others. Some may be skilled and inventive; some may be brilliant; some may be plodders; some may be aware of particular pieces of art claimed to be part of the common general knowledge and others not. It is for the Court, having admitted relevant evidence, to come to a conclusion as to the application of the section. ) It is not possible to rule in advance as to that issue. 5 It is arguable that paragraphs 47---51 inclusive and 57---61 inclusive of the affidavit are relevant to infringement. I would not prejudge that issue at this stage. A point was made that, on one view, these are experiments otherwise than pursuant to the applicable Practice Direction and the particular directions in this case. That may be so, but the experimental nature of the evidence is very slight and easily replicated and I doubt that the evidence would be rejected on that basis. 6 The fact remains that the evidence has been produced at a very late stage, contrary to the directions of the Court, and is in a new field. The endeavour to justify the evidence as being in reply to matters raised by Inamed's evidence in reply is unconvincing. The issue goes beyond breach of the orders of the Court. The proceeding commenced in November 2005 and the defence and cross-claim was filed in February 2006. The final hearing has been fixed for 17 September next for some time, with certain witnesses for Inamed to be cross-examined before then. Tender of the disputed evidence will have consequences for Inamed including seeking instructions from and, perhaps, evidence from a similar expert. At the least, cross-examination will have to be prepared. Even if such instructions and evidence can be obtained, there will be a diversion of effort and resources at a critical stage of preparation of the case. I might add that hearing and deciding this application has diverted my attention during a busy Full Court sittings. 7 The role of case management is relevant. The wide scope of O 10 of the Federal Court Rules is well established (eg Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388); see also s 23 of the Federal Court of Australia Act 1976 (Cth). In my opinion, the effect of the decision of the High Court in State of Queensland v JL Holdings Pty Ltd [1997] HCA 1 ; (1997) 189 CLR 146 on case management has been exaggerated. It dealt with a special situation --- prevention of litigating a fairly arguable defence some months before a trial date. Even so, it may prove to be the high water mark of anti case-management philosophy, probably as a reaction to some perceived over zealous case management in New South Wales at the time. The decision in Sali v SPC Ltd [1993] HCA 47 ; (1993) 116 ALR 625; (1993) 67 ALJR 841, still needs to be considered. In any event, the evidence of one expert is not necessary to achieve the attainment of justice. 8 However, on balance, justice to Inamed can be done by reserving its ability to show that it has not been able to satisfactorily deal with all or some of the evidence because of its late filing. If that were established, then the evidence would be rejected. There will also be an order that Morton pay Inamed's costs thrown away by the late filing of the evidence, including costs of and incidental to this application. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | whether leave should be granted to file late expert evidence in patent case whether admissible role of case management proviso to protect other party practice and procedure |
The claimed invention of the Patent relates to the use of the compound known as carvedilol for the manufacture of a medicament for decreasing mortality resulting from congestive heart failure and to a method for decreasing such mortality comprising the administration of carvedilol. The third applicant is the exclusive licensee of the Patent in Australia. I shall refer to the applicants jointly as 'the Patentees'. The Patentees claim that the respondent ('GenRx') is threatening to infringe the Patent and seek interlocutory relief restraining such infringement. 2 GenRx contends that the Patentees' claims of infringement are so weak that there is not even a serious question to be tried as to whether there is an infringement. GenRx puts its contentions on two bases. The first is that the Patent is invalid on several grounds. The second is that their threatened actions would not infringe the Patent, assuming it is valid. Assuming that the Court concludes that there is a serious question to be tried as to whether GenRx's threatened actions would infringe a valid patent, it will be necessary to determine where the balance of the convenience of granting or not granting relief lies. The condition causes congestion in the lungs, veins and liver and other parts of the body. The weakness of the heart muscle, which leads to the condition, is often caused by an insufficient supply of oxygen to the muscles in the heart brought about by one or more underlying heart or blood vessel problems. 4 Congestive heart failure may develop gradually over several years or develop quickly as a result of a heart attack or a disease of the heart muscle. Commonly, patients suffering from congestive heart failure suffer fluid retention. The inadequate blood flow results in the release of hormones that result in the body holding on to sodium and water. In the short term, that leads to an increase in blood volume providing the kidneys with sufficient blood for their normal activity. However, over time, the blood vessels of the body cannot hold all of the extra blood volume and fluid starts to exude out of the blood vessels and into the tissues of the body. Such fluid retention is normally treated with a diuretic drug, which increases urine formation and output. The registration for a pharmaceutical product must include at least one indication for the product within Australia. 6 The Pharmaceutical Benefits Scheme is maintained by the Commonwealth under the National Health Act 1953 (Cth) in order to provide all Australian residents with access to subsidised prescription medicines. The Commonwealth Government will only reimburse retail pharmacies for the difference dispensed price of a product and the patient co-payment if a pharmaceutical product is first listed under the Pharmaceutical Benefits Scheme and is prescribed to the patient in accordance with its listed scheme restriction. 7 An Australian pharmaceutical company that manufactures or distributes pharmaceutical products in Australia, termed a sponsor, may apply for listing of any one or more of its prescription pharmaceutical products under the Pharmaceutical Benefits Scheme. However, a pharmaceutical product must be registered on the Register of Therapeutic Goods before listing can occur under the Pharmaceutical Benefits Scheme. 8 The Schedule of Pharmaceutical Benefits ('the Schedule') is published by the Department of Health and Aging. It lists all of the pharmaceutical products included under the Pharmaceutical Benefits Scheme. The schedule sets out pricing information, product strengths and the indication or restriction for the product. The primary purpose of the Schedule is to indicate how pharmaceutical products are priced. 9 In order to obtain listing under the Pharmaceutical Benefits Scheme of an innovative pharmaceutical product that contains a new chemical entity as the active compound, the sponsor must lodge a submission to the Pharmaceutical Benefits Advisory Committee ('the Advisory Committee'). The Advisory Committee is an independent statutory body with the function of recommending to the Minister the drugs and medicinal preparations for subsidy under the Pharmaceutical Benefits Scheme. Comprehensive guidelines are published for the filing of such a submission, including the information required to support such a submission. 10 Each submission comprises several sections. One of those sections includes a clinical evaluation of the new pharmaceutical product, which considers the relative efficacy and safety of the product, compared with the standard of care. Another section includes an economic evaluation of the new pharmaceutical product, where the cost of treating a patient using the new product is assessed with respect to the benefit gained by treating the patient for that cost. That economic evaluation enables the cost effectiveness of the new product to be assessed. It is mandatory for the submission supporting an application for listing of a new drug or new indication for a currently listed drug to include an economic evaluation. 11 Once a submission for listing of a new pharmaceutical product is lodged with the Advisory Committee, a detailed evaluation of both the clinical benefit and the economic value of the product is conducted. The process for obtaining listing of a new pharmaceutical product takes at least nine months from the date of submission to the time of listing in the Schedule. Approximately 17 weeks of those 9 months are spent on the evaluation of the submission by the Advisory Committee and the provision of responses by the sponsor. 12 However, a submission for listing of a generic brand of a pharmaceutical product already listed in the Schedule in respect of the same indication or restriction is simpler and takes about 10 weeks from lodgement to listing in the Schedule. The sponsor of the generic product does not need to present a full submission to the Advisory Committee. In particular, there is no need for a clinical evaluation and an economic evaluation since that would have been provided in respect of the original product. 13 The information to be lodged by a generic sponsor includes copies of the relevant registration certificates for the generic product issued by the Therapeutic Goods Administration and a copy of the product information sheet approved by the Therapeutic Goods Administration in respect of the generic product. The generic sponsor must also provide a guarantee that it will supply the product by the proposed listing date. 14 The Pharmaceutical Benefits Pricing Authority ('the Pricing Authority') is an independent non-statutory body. It makes recommendations to the Minister for Health and Aging on prices for new items that have been recommended by the Advisory Committee for listing on the Schedule under the Pharmaceutical Benefits Scheme. In addition, the Pricing Authority reviews prices of all items listed on the Schedule at least once each year. The Pricing Authority's objective is to secure a reliable supply of pharmaceutical benefits items at the most reasonable cost to Australian taxpayers and consumers consistent with maintaining a sustainable, viable and responsible pharmaceutical industry in Australia. 15 Following recommendation of products for listing, sponsors are contacted by the Pricing Authority and asked to provide cost information and invited to supply any other data that the sponsor considers relevant for consideration by the Pricing Authority. The cost information data and the advice from the Advisory Committee are evaluated by the Pricing Authority. 16 Price negotiations with the sponsor are then undertaken by the Pricing Authority on behalf of the Minister. Any agreement is subject to Ministerial approval. If a price is not agreed between the Pricing Authority and the sponsor, then the product is not listed. When aspects in relation to a new listing have been finalised, the Advisory Committee informs the company approximately one month before listing in the Schedule. The deadline for finalisation of all details relating to listing is approximately three months before the release of the Schedule, which takes place on 1 April, 1 August and 1 December in each year. There are over 2,600 different branded products listed in the Pharmaceutical Benefits Schedule. 17 Once a patent expires for a medicine, other pharmaceutical manufacturers can produce equivalent products, called generic medicines, and can have them listed in the pharmaceutical benefits schedule under their own brand name. Some of those manufacturers offer a reduction to the price of their medicine, thereby setting a new benchmark price. However, most do not. Therefore, price reductions are usually fewer and less than should be expected. The Government therefore often pays higher prices for medicines than it should need to pay. For that reason, the Commonwealth Government implemented a new policy to reduce the amount it pays for new brands of medicines. 18 In that context, manufacturers seeking to list the first new brand of a medicine already included in the Pharmaceutical Benefits Scheme are required to offer a minimum 12.5 per cent price reduction in the Government price for the medicine. The 12.5 per cent price reduction applies for new brands listed in the Schedule on or after 1 August 2005. The price reduction will apply only to the first new generic brand of any medicine listed on or after 1 August 2005 and applies once only for each medicine. 19 In May 2006, the Pricing Authority published a document entitled ' Policies, Procedures and Methods used in the Pricing of Pharmaceutical Products ' ('the Guidelines'). The Guidelines indicate that drugs that are used to treat the same condition or have similar action are grouped in therapeutic sub groups in the schedule to the Guidelines. The Guidelines deal with, among other things, the pricing of new brands of existing items. 20 The Guidelines provides that the 12.5 per cent price reduction will only be triggered by an application to list a new generic brand of a medicine. The new version of medicine has the same active ingredient as the original medicine. These may be marketed by the patent holder or another sponsor under an arrangement with the patent holder. The new version of medicine has the same active ingredient as the original medicine. That includes contacting the sponsors of other brands of the drug in the reference pricing group that are directly affected by the listing of the generic product at a lower price. Those sponsors are required to indicate either that the sponsor will accept and reduce the price to pharmacist of their own branded pharmaceutical product to equal the price to pharmacist for the generic product or that the sponsor will reduce the existing price but will need to apply a brand premium above the price of the generic brand. 22 Items on the Schedule are divided into therapeutic groups, with drugs that are used for the same purpose being reviewed at the same time. Reference pricing groups are determined by the Pricing Authority, based upon recommendations from the Advisory Committee regarding the cost effectiveness of medicines. Generally, they are groups of medicines that have been recommended for listing on a cost minimisation basis by the Advisory Committee on the basis that they are no worse than their comparator. When a medicine is listed on the basis of such a recommendation it will form part of a reference pricing group with its comparator medicine and any other medicines related to the comparator. Medicines in reference pricing groups are considered to provide similar health outcomes. As such, one of the principles that is applied to those groups is that the Commonwealth will only pay a similar price for similar health outcomes. The level of Government subsidy is set at the price of the lowest priced medicine in the group. That medicine is referred to as " the benchmark medicine ". 23 There are three reference pricing groups under a heading ' BETA BLOCKING AGENTS '. Group 22 consists of bisoprolol fumarate , carvedilol and metoprolol succinate . The fundamentals of the Pharmaceutical Benefits Scheme are not to change. The main changes will be the way in which the Government prices medicines that are operating in a competitive market. Such medicines will take a series of price drops and eventually will move to a system where the price at which they are actually being sold on the market will reflect the price that the Government pays. 25 From 1 August 2007, medicines on the Pharmaceutical Benefits Scheme will be separated into two groups, each subject to different pricing arrangements. The first group will be medicines where there is only a single brand and will contain both on patent and off patent medicines that are not substitutable with other brands or medicines. There will be no mandatory price reductions for those medicines and existing price linkages will be retained within that group. 26 The other group will consist of medicines where there are many brands listed and groups of medicines that are interchangeable between patients. From 1 August 2008, a further reduction in the prices of the medicines that attract the 12.5 per cent price reduction will be required. Where price competition between brands is low, there will be a price drop of 2 per cent a year for three years. Where price competition between brands is high, there will be a one off price drop of 25 per cent. 27 The separating of the second group into those with low competition and those with high competition has already occurred. That was done on the basis of information provided to the Department by persons involved in the selling and purchasing of pharmaceuticals. 28 The Department has released the list of drugs in the two groups and the two sub-groups described above. Group F1 is the medicines where there will be no mandated price reductions. Group F2 is divided into F2A, where there will be mandatory annual 2 per cent price reductions for three years. Group F2(T) is the group that will receive a mandatory 25 per cent price reduction on 1 August 2008. The 12.5 per cent price reduction policy will continue to be triggered by the entry of a new brand of medicine that has not already had a 12.5 per cent price reduction. The list shows carvedilol in F2A group as at 19 December 2006. Those products are marketed, supplied, offered for sale, sold and distributed within Australia under the brand names 'DILATREND' and 'KREDEX'. They are available in a range of strengths. 30 DILATREND was the first of the Patentees' pharmaceutical products containing carvedilol as its active ingredient and was registered on the Register of Therapeutic Goods on 21 January 1998 in strengths of 6.25 mg, 12.5 mg and 25 mg and, on 28 November 2000, in the 3.125 mg strength. Data have not been provided to support the use of this drug in renovascular disease. That listing for DILATREND shows that DILATREND is indicated only for use in relation to the treatment of 'moderate to severe heart failure in patients stabilised on conventional therapy which must include an ACE inhibitor if tolerated . Thus, if a doctor were to prescribe DILATREND 25 mg tablets to a patient in Australia for hypertension, which does not constitute a restriction for that product under the Scheme, the Commonwealth Government would not reimburse a retail pharmacy for the difference and the patient would be required to pay the dispensed price, namely, $106.42. That is to say, a reduction in price to the consumer is only available if the product is prescribed in accordance with the restrictions in the Schedule. 33 The same registrations and listings have been obtained by the third applicant in respect of its KREDEX carvedilol product. The same observations as have been made above concerning DILATREND also applies to KREDEX. 34 Neither DILATREND nor KREDEX has been marketed in Australia for hypertension. Without a listing under the Schedule for hypertension, sales of DILATREND or KREDEX for an indication of hypertension would not be commercially viable. Many different drugs are available for the treatment of hypertension, all of which are included in the Schedule and are therefore subsidised by the Commonwealth. There is no evidence that any medical practitioner would request or prescribe DILATREND or KREDEX for the treatment of hypertension. It claimed that it would supply such products in February 2007. That announcement prompted the present proceeding. 36 After 31 October 2006 and before 27 November 2006, GenRx obtained registration on the Register of Therapeutic Goods of several products containing carvedilol as the active ingredient. Data have not been provided to support the use of this drug in renovascular disease. Carvedilol is indicated for the treatment of patients with symptomatic mild to severe (NYHA class II - IV) congestive heart failure (CHF) as an adjunct to conventional treatments (eg diuretics, digoxin, ACE inhibitors and vasodilators). 37 On 14 November 2006, the Therapeutic Goods Administration approved the proposed product information sheet of GenRx in respect of its carvedilol tablets. That document describes carvedilol as " a non selective beta blocker " and states that each carvedilol tablet is intended for oral administration and contains 3.125 mg, 6.25 mg, 12.5 mg or 25 mg of carvedilol. Other ingredients are also described. Initial effects on cardiac output, stroke volume index and systemic vascular resistance were small and variable. There were many secondary end points specified in these studies, including NYHA classification, patient and doctor global assessments, and cardiovascular hospitalisation. Death was not a specified endpoint in any study, but it was analysed in all studies. Other analyses not prospectively planned included the sum of deaths and total or cardiovascular hospitalisations. In situations where the primary end points of a trial do not show a significant benefit of treatment, assignment of significance values to the other results is complex, and such values need to be interpreted cautiously. A table included in the product information sheet set out adverse events in one of the trials. One of those adverse events was sudden death. The table demonstrated that a percentage of the occurrence of sudden death in patients treated with carvedilol was 3.9 per cent as distinct from a percentage of 6.1 per cent in respect of patients who were not treated with carvedilol but with a placebo. 41 Dosage and administration was dealt with in the product information sheet, both in relation to hypertension and symptomatic congestive heart failure. The recommended starting dose in relation to symptomatic congestive heart failure was stated to be 3.125 mg twice daily for two weeks. If that dose is tolerated, the dosage was to be increased, at intervals of not less than two weeks, to 6.25 mg twice daily, followed by 12.5 mg twice daily, then 25 mg twice daily. Dosing should be increased to the highest level tolerated by the patient. The recommended maximum dose was 25 mg twice daily in patients with mild or moderate CHF weighing less than 85 kg. In patients with mild or moderate CHF weighing more than 85 kg, the recommended maximum daily dose was stated to be 50 mg twice daily. For all patients with severe CHF, the recommended maximum daily dose was 25 mg twice daily. 42 GenRx has sought approval of an amended product information sheet but no approval has yet been given by the Therapeutic Goods Administration. The amended product information sheet deletes the words ' and reduce the risk of death ' under the heading ' CLINICAL TRIALS ' and deletes the detailed description of the results of the trials. However, it retains the general description of the trials set out above and the table of adverse events that occurred in relation to one of the trials. 43 By letter of 14 November 2006 to the Advisory Committee, GenRx requested that its 3.125 mg, 6.25 mg, 12.5 mg and 25 mg carvedilol tablets be listed under the Pharmaceutical Benefits Scheme. While the GenRx brand of Carvedilol will be listed with a bioequivalence indicator as requested below, carvedilol is still the subject of a method of use patent and it has not been listed through agreement with the patent holder. Therefore, neither of the criteria that would trigger the 12.5% price reduction has been satisfied. A copy of the approved product information sheet was attached. 44 On 20 December 2006, the Department informed GenRx that the listing of its product was going ahead ' at the current price '. The communication said that the decision ' not to trigger 12.5% price reductions is based on the information provided in your application '. 45 On 2 January 2007, the Department of Health and Aging informed GenRx that its products would be made available as pharmaceutical benefits as from 1 February 2007. The letter said that the 1 February 2007 edition of the Schedule of Pharmaceutical Benefits would show particular dispensed prices for the GenRx products and would be the same prices for the equivalent products of the Patentees. Therefore, the Patent claims, therapeutic agents that would decrease the mortality resulting from congestive heart failure of patients suffering from that condition would be highly desirable. 47 The human heart muscle and artery walls contain adrenergic receptors. Receptors are structures on surface or inside a cell that selectively receive and bind a specific substance. The binding of such a substance to a receptor is likened to an operation of a lock and a key. The substance is the key and the receptor is the lock. The binding of the substance to the receptor unlocks the cell's response. The adrenergic receptors are classified as α-receptors and [beta]-receptors. 48 US Patent Number 4,503,067 discloses certain compounds including carvedilol. Carvedilol acts on [beta]-receptors and is described as a vasodilating [beta]-blocker. Those actions of carvedilol are said in the Patent to be useful for the treatment of hypertension. The Patent states that the antihypertensive action of carvedilol is mediated primarily by decreasing total peripheral vascular resistance without causing concomitant reflex changes in heart rate commonly associated with other hypertensive agents. 49 The Patent claims that it has recently been discovered in clinical studies that compounds such as carvedilol are effective therapeutic agents for treating congestive heart failure. The Patent claims that such use was surprising because, in general, [beta]-blockers are contraindicated in patients suffering from heart failure because [beta]-blockers are known to have undesirable cardiodepressive effects. The Patent claims that carvedilol was found to decrease the mortality resulting from congestive heart failure by about 67 per cent. 50 The Patent asserts that compounds such as carvedilol, which have the dual properties of being a [beta]-blocker and a vasodilator, are preferably administered following a three stage application scheme: incremental dosages of the active ingredient are administered to patients over a certain period of time until the regular maintenance dosage is received. The Patent asserts that, in the case of carvedilol, dosing for the treatment of congestive heart failure, according to the claimed invention, should not exceed a dosage range from about 3.125 mg to about 50 mg of carvedilol, preferably given twice daily. The Patent asserts that one of ordinary skill in the art would readily comprehend that a patient should be started on a low dosage regimen and monitored for well known symptoms of intolerance. Once the patient was found to tolerate such a compound, the patient should be brought slowly and incrementally up to the maintenance dose . 51 The Patent asserts that the preferred course of treatment is to start the patient on a dosage regimen with formulations that contain either 3.125 mg or 6.25 mg of active compound per single unit, preferably given twice daily, for 7 to 28 days. The choice of the initial dosage is to be determined by the practitioner using ' well known medical principles '. The Patent then asserts that, if the patient exhibits medically acceptable tolerance for carvedilol for two weeks, the dosage should be doubled at the end of the two weeks and the patient should be maintained at the new, higher dosage, for an additional period, preferably two more weeks. If no signs of intolerance are observed, that course would be continued until the patient is brought up to maintenance dose. The Patent asserts that the preferred maintenance dose is 25.0 mg of active compound per single unit, preferably given twice daily, for patients having a body weight of up to 85 kg; for patients having a body weight of over 85 kg, the maintenance dose is between 25 mg and about 50 mg, preferably given twice daily. 52 The complete specification for the Patent contains 26 claims. The first 13 relate to the use of carvedilol for the manufacture of a medicament for decreasing mortality resulting from congestive heart failure in mammals . The other 13 claims are for a method for decreasing mortality resulting from congestive heart failure in mammals comprising the administration of carvedilol to a subject in need thereof. Claims 2 to 13 inclusive are dependent upon claim 1 and claims 15 to 26 inclusive are dependent upon claim 14. All claims refer to either a medicament or a method ' for decreasing mortality resulting from congestive heart failure in mammals '. It is a curious use of language in so far as the word mortality suggests death on a large scale or an abnormal frequency of death, such as from war, pestilence or famine (see Macquarie Dictionary, 4 th ed, Macquarie University, 2005 and Shorter Oxford English Dictionary, 5 th ed, Oxford University, 2002). Indeed, the operation of the alleged invention is not limited to humans but refers to mortality in mammals generally. The curiosity of the language of the claims gives rise to difficulties concerning the allegations of infringement by GenRx. I shall return to those difficulties shortly. GenRx contends that its arguments that the Patent is invalid must be taken into account in assessing the weakness of the Patentees' infringement case. Relevantly, s 7 of the Patents Act provided that an invention is to be taken to be novel when compared with the prior art base, unless it is not novel in the light of prior art information made publicly available in a single document or through doing a single act. The basic test for novelty is whether the alleged anticipation would infringe a patent if the patent were otherwise valid. 57 GenRx alleges anticipation of the claimed invention of the Patent by prior publication. " (Paper presented at EMH Milan, 1991). • Kelly DT, " Carvedilol in Heart Failure ", Cardiology 1993, 82 (Suppl 3). 45-59. • Metra M, Nardi M, Giubbini R, Dei Cas L, " Effects of Short- and Long- Term Carvedilol Administration on Rest and Exercise Hemodynamic Variables, Exercise Capacity and Clinical Conditions in Patients with Idiopathic Dilated Cardiomyopathy " J Am Coll Cardiol vol 24, no 7, 1994. 58 The Olsen publication reports on an evaluation of carvedilol in a randomised placebo controlled trial in 27 patients suffering from idiopathic dilated cardiomyopathy. It reports that the study medication was initiated at a dose of 6.25 mg bi-daily and increased over one month to 25 mg per patient below 75 kg or 50 mg for a patient over 75 kg, twice daily. That dosage was then continued for three additional months. The publication reports that chronic beta-blocker therapy may improve symptoms and hemodynamics in such a condition. 59 GenRx points to the dosage regimen as anticipating the regimen specified in the Patent. It is significant, however, that no mention is made of a decrease in mortality or prolongation of life in patients treated. Rather, the publication refers to improving symptoms of congestive heart failure. 60 The Kelly publication states that sustained oral treatment with beta-blockers has been shown to improve symptoms in patients with chronic heart failure. It states that the rationale for such treatment is the advanced adrenergic stimulation present in heart failure which results in decreased sensitivity and density of myocardial [beta]-receptors. It reports that carvedilol, in addition to its beta-blocking properties, is a vasodilator and is theoretically more suitable than earlier compounds of its potential to decrease left ventricular afterload. It says that recent studies have demonstrated symptomatic improvement with carvedilol with heart failure and refers to the design of a multi-centre trial to evaluate its efficacy and safety. 61 The publication states that a multi-centre trial has been designed and approved, which will involve patients who have ischaemic heart disease as a cause of heart failure. The study will look to see whether beta blockade has the same type of effect in ischaemia as it does in cardiomyopathy. It states that patients would be given a test dose of 6.25 mg of carvedilol and then, if satisfactory, the dosage would be increased to a maximum over a period of two to three weeks. Patients will initially take 3.125 mg twice daily for seven days, in the second week 6.25 mg, then 12.5 mg in the following week 25 mg twice daily, which will be the maximal dose used. It states that carvedilol will be given in the standard dose of 3.125 mg building up to a final dose of between 25 and 75 mg per day. 63 Once again, while the dosage regime of the Patent may be anticipated by the Kelly publication, no mention is made in the Kelly publication of a decrease in mortality or a prolongation of life. Rather it refers to improvements in symptoms. 64 The Metra publication reports on a study to evaluate the effects of short and long term administration of carvedilol in patients with idiopathic dilated cardiomyopathy. It reports that carvedilol or a placebo was added to standard therapy, starting with a dose of 6.25 mg twice a day with weekly increments up to the maximum of 25 mg twice a day. Patients were re-evaluated after four months. The publication reported results showing that, compared with the placebo patients, carvedilol produced a short term reduction in heart rate and pulmonary artery and pulmonary wedge pressure and, after long term administration, increased both rest and peak exercise cardiac, stroke volume and stroke work indexes, with a further reduction in right atrial, pulmonary artery and pulmonary wedge pressures. Long-term carvedilol administration also improved rest left ventricular ejection fraction, submaximal exercise capacity, quality of life and New York Heart Association functional class. The conclusion of the publication is that short-term carvedilol administration reduces heart rate and mean pulmonary artery and pulmonary wedge pressures whereas it improves both long-term rest and exercise left ventricular systolic function, reduces heart failure symptoms and improves submaximal exercise tolerance in patients with idiopathic cardiomyopathy. Once again, there is no mention of decrease in mortality or prolonging life. On the other hand, the dosage regimen can be seen to have similarities with that described in the Patent. 65 GenRx also relies on the acts carried out in the trials described in the publications as anticipating the claimed invention of the Patent. However, that contention stands or falls with the contentions based on the publications. It was not suggested that the actual trials went beyond what was disclosed in the publications themselves. 66 The Patentees point to the absence of any discussion or teaching in any of the publications concerning the use of carvedilol to improve survival or decrease mortality in patients with congestive heart failure. GenRx responds with the proposition that, even if the publications do not expressly refer to a decrease in mortality, if that is the necessary consequence of the administration of carvedilol according to the regimen disclosed, that is sufficient anticipation of the Patent. That contention involves somewhat intricate questions of law. 68 Many of the claims of the Patent are criticised by GenRx for disclosing nothing. Thus, Claim 1 simply refers to the use of carvedilol ' for the manufacture of a medicament for decreasing mortality resulting from congestive heart failure in mammals, alone or in conjunction with one or more other therapeutic agents... '. Nothing is disclosed in that claim as to what particular use is made of carvedilol. For example, no mention is made of dosage. That observation can be made of many of the Claims of the complete specification of the Patent. 69 On the other hand, Claims 8 and 21, as indicated above, set out a specific regimen. Whether or not the Patent is subject to revocation as regards some claims, the criticism presently under consideration is not applicable to Claims 8 and 21. 70 GenRx says that Claims 8 and 21 do no more than describe a mere new use for an old thing. Once a substance is known, its methods of production ascertained, its characteristics and its constituents well defined, the use of that substance for a purpose that was hitherto unknown cannot be patented ( Re BA's Application (1915) 32 RPC 348 at 349). 71 GenRx also contends that none of the Claims can amount to any more than a direction to doctors and pharmacists on how to treat the patients with carvedilol. GenRx says that the only new component of the Claims is the reference to the fact that the treatment is ' for decreasing mortality ' and says that the fact that treatment with carvedilol may decrease mortality is a mere discovery, since it is an inherent feature of carvedilol. GenRx says that the only act apparently done in relation to the invention was to provide some funding for trials that comprised long-term treatment with known compounds in known dosages for a known condition. GenRx contends that, at most, what is disclosed is mere confirmation of the existing properties of carvedilol in known dosages. 72 There is cogency in GenRx's arguments. However, they raise questions of law that it may be inappropriate to resolve in an interlocutory proceeding such as the present. A claim for an invention will not be useful if the invention as claimed, does not meet one or more of the stated objectives of the invention. There will be inutility of a claim if the invention of that claim fails to meet the result promised for it by the Patent ( Rescare Limited v Anaesthetic Supplies Pty Ltd (1992) 25 IPR 119 at 143). 74 GenRx again draws attention to the terms of the Claims that do not disclose a dosage regimen. GenRx says that there is no evidence that carvedilol has any beneficial effect on mortality or otherwise unless it is administered according to the specified regimen over a sufficient period of time. However, it is for GenRx to establish lack of utility. It is not incumbent upon the Patentees to establish that the claimed invention works. GenRx says that the evidence indicates that only administration according to a regimen such as is described in Claims 8 and 21 will have any effect. However, while some claims may be challenged on that basis, Claims 8 and 21 would not be subject to that challenge and would be sufficient to support the allegation of infringement. 75 In relation to Claims 8 and 21, GenRx points out that there is a reference to the final administration as ' a maintenance dose ', the Claims do not specify in terms that the maintenance dose must be continued for a period in the order of 100 days. It points to evidence that such continued dosage is required for effectiveness. However, it is tolerably clear that the reference to maintenance dose means that that dosage is maintained indefinitely. Indefinite maintenance of the dose is shown to have a beneficial effect on mortality. 77 First, GenRx relies upon what it describes as its Gillette defence (see Gillette Safety Razor Company v Anglo-American Trading Co Ltd (1913) 30 RPC 465). That is to say, the dosage regimen for the GenRx products is the regimen disclosed in the Kelly publication and the Metra publication. GenRx says that, if the supply of its products would infringe the Patent, the Patent must be invalid as lacking novelty because that regimen was anticipated in those publications. On the other hand, if the publications do not anticipate the Patent, GenRx is not infringing because it is doing no more than was disclosed in the earlier publications. 78 However, the argument fails to take account of the matter already referred to above concerning the question of whether the publications do, in truth, anticipate the claimed invention of the Patent. That is to say, the element of ' decreasing mortality ' is not present in the publications but it is at least reasonably arguable that it would be an element in the threatened actions of GenRx. I am not persuaded that the so-called Gillette defence is a clear answer to the Patentees' allegations of infringement such that there is not a serious question to be tried. 79 The Patentees contend that the proposed exploitation by GenRx of its carvedilol products is for decreasing mortality in patients suffering from congestive heart failure and that, accordingly, there will be an infringement of Claims of the Patent. They say that listing of the GenRx products under the Pharmaceutical Benefits Scheme for the treatment of mild to severe congestive heart failure was obtained on the basis that the effect of carvedilol in the products on decreasing mortality arising from congestive heart failure was shown to be cost justified having regard to such a clinical outcome. The Patentees contend, therefore, that, since GenRx obtained listing under the Pharmaceutical Benefits Scheme as a bio equivalent of the Patentees' products, they have done so on the basis that the cost-justification for the listing of GenRx's products under the Pharmaceutical Benefits Scheme is a decrease in mortality for patients suffering from congestive heart failure. The Patentees contend that, having regard to the basis upon which GenRx has obtained listing under the Pharmaceutical Benefits Scheme, the GenRx products are medicaments for decreasing mortality resulting from congestive heart failure in humans. Claims 1 to 13 are for the use of carvedilol for the manufacture of such medicaments. 80 Under the Patents Act , it is an exploitation of an invention as claimed to import, sell or otherwise dispose of a product resulting from the method or process for manufacture that is the subject of the claim. Claim 14 is directed to a method of treatment using carvedilol to decrease mortality resulting from congestive heart failure. The dosages for which registration has been obtained for the GenRx products and the listing under the Pharmaceutical Benefits Scheme that has been obtained in relation to those products are clearly in relation to treating human patients suffering from congestive heart failure. The Patentees say that such treatment is clearly ' with the objective of decreasing mortality resulting from such congestive heart failure '. 83 Section 117(1) of the Patents Act provides that, if the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent. Accordingly there is infringement by the operation of ss 117(1) and 117 (2)(a). 85 However, that contention depends upon the conclusion that such a use of the GenRx products is for ' decreasing mortality resulting from congestive heart failure '. The Patentees say that conclusion should be drawn because of the basis upon which the GenRx products have obtained registration under the Therapeutic Goods Act and listing under the Pharmaceutical Benefits Scheme. 86 Whether s 117 can apply to a process or method claim, where no product results from the use of the method or process, may be an open question. GenRx says that the Patentees' rights are restricted by paragraph (b) in the definition of " exploit " referred to above, namely, to use the method or process or do any acts mentioned in paragraph (a) in respect of a product resulting from such use (see Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 50 FCR 1 at 24). 87 In any event, GenRx says, it cannot be said that the GenRx products are capable of only one reasonable use. Carvedilol is indicated for the treatment of hypertension and treatment of patients with symptomatic mild to severe congestive heart failure. That is the claim made by GenRx in the product information document published in respect of the GenRx products. 88 Further, carvedilol is a useful and beneficial medication for treating the symptoms of congestive heart failure itself. One of the major advantages of carvedilol is that a decrease in heart rate may be achieved, which immediately provides a significant symptomatic benefit to the patient. The information published by the Patentees in respect of DILATREND indicates that administration of carvedilol will cause a significant reduction in systematic blood pressure and heart rate and that it has been shown to reduce cardiovascular hospitalisation, improve patient well being and slow the progression of congestive heart failure. GenRx says, therefore, that they are reasonable uses for carvedilol that are not decreasing mortality. 89 GenRx also contends that the Patentees products are staple commercial products within the meaning of s 117(2)(b). However, it is by no means clear that that is so and it is at least reasonably arguable that they are not staple commercial products. Having regard to the basis upon which the GenRx products have been registered and listed as bio-equivalents of the Patentees' products, it is at least reasonably arguable that GenRx has reason to believe that its products will be used for decreasing mortality resulting from congestive heart failure. As I have indicated, the GenRx product information sheet refers to death. 90 The Patentees also contend that, by offering to supply the GenRx products in the dosage forms specifically referable to treatment of congestive heart failure, GenRx is authorising the use of its products for the treatment of congestive heart failure. The Patentees say that it is clear that medical practitioners prescribing the GenRx products must be doing so with the object of prolonging human life and that that is the same as decreasing mortality. Once again, that conclusion is dependent upon the basis upon which the Patentees have obtained registration and listing of their products. As I have indicated above, it is at least reasonably arguable that, in having the GenRx products included in the Schedule of Pharmaceutical Benefits on the basis that they are the equivalent of DILATREND, decreasing mortality is a use for the GenRx products. In the circumstances, I am satisfied that it is reasonably arguable that by supplying its product to pharmacists with the object of its being dispensed to patients suffering from congestive heart failure, GenRx will be authorising that conduct. Rather it says that the strength of its contentions on invalidity should be weighed cumulatively with the strength of its contentions that its actions do not constitute infringement of the Patent, assuming validity. Detailed arguments have been advanced on behalf of GenRx concerning the questions of validity. However, having regard to all the circumstances, I do not consider that it is an appropriate use of the Court's time to examine those issues in any greater detail than I have above. 92 In proceedings in the Court in 2005, the Patentees alleged infringement of the Patent by Hexal Australia Pty Limited and Alphapharm Pty Limited, other threatened suppliers of carvedilol products. Stone J examined grounds of invalidity raised in those proceedings and concluded that there was a serious question to be tried as to whether the Patent is valid and as to whether there was infringement by those parties (see Hexal Australia Pty Limited v Roche Therapeutics Inc [2005] FCA 1218). However, Stone J concluded that there was no likelihood of irreparable injury that could not be adequately compensated by an order form damages or an account and refused interlocutory relief on the basis of the balance of convenience. Those proceedings have now been settled. 93 The grounds of invalidity then relied on do not coincide with the grounds now relied upon by GenRx. Further, the questions of the balance of convenience were of course different, involving different parties at different stages in their preparations for marketing carvedilol products. However, there is a further proceeding currently being conducted in the Court seeking revocation of the Patent (see Arrow Pharmaceuticals Pty Limited v Roche Therapeutics Inc , NSD1203 of 2006). It is desirable, therefore, that no firm view on the question of invalidity be expressed in a proceeding such as the present. 94 A registered patent, although granted following examination by the Office of the Commissioner, is nonetheless liable to revocation. However, until it is revoked, a registered patent stands as a valid patent. There will, of course, be cases where the Court should conclude that a patent is so clearly invalid that there could not be a serious question to be tried concerning infringement of it and GenRx has advanced cogent arguments in support of the invalidity of the Patent. Further, cogent reasons have been advanced on behalf of GenRx in support of its contentions that, even if the Patent is valid, its actions do not constitute infringement. 95 However, notwithstanding the arguments advanced on behalf of GenRx, I am persuaded that I should not conclude, at this stage, that there is not a serious question on infringement to be determined. Having regard to the view I have formed on the balance of convenience, it is not necessary to express a firm view as to the Patentees' prospects of success in the infringement action. Those reasons relate to the inclusion of products to be supplied by GenRx under the Pharmaceutical Benefits Scheme. GenRx proposed to commence marketing of products containing carvedilol on 1 February 2007 on the basis that its products would attract a subsidy under the Pharmaceutical Benefits Scheme. That is a factor to be considered in the balance of convenience. 97 Before the conclusion of the hearing, GenRx proffered further undertakings to the Court in the terms set out in the Schedule to these reasons. The terms of the undertakings are of importance in considering the balance of convenience. In particular, the undertakings would ameliorate much of the possible prejudice that might be suffered by the Patentees if interlocutory relief is refused and they are ultimately successful in establishing infringement of the Patent by GenRx. 98 The first question that arises in balancing the interests of the parties is whether, if the Patentees ultimately succeed in establishing that the Patent will be infringed by the threatened actions of GenRx, they will suffer irreparable injury for which damages or an account will not be an adequate remedy. A significant matter relied upon by the Patentees as giving rise to irreparable injury is the possibility of a decrease in price of its carvedilol products under the Pharmaceutical Benefits Scheme. 99 Under the Guidelines, the circumstances that have arisen in the present case are not covered in express terms. That is to say, on the assumption that the Patent is valid, and the supply of the GenRx products would infringe the Patent, neither of the circumstances for the application of the price decrease described above is applicable: the Patent has not expired and the GenRx products, while " still on patent ", are not marketed by the Patentees or by another sponsor under an arrangement with the Patentees. 100 Notwithstanding correspondence received from the Department, the Patentees are concerned that the listing of the GenRx products could yet result in a 12.5 per cent reduction. If that fear and concern is ultimately shown to be well-founded, and there is a reduction in the price of the Patentees' products of 12.5 per cent, that would cause irreparable injury running into millions of dollars on the basis of its current projected sales. The question depends upon administrative policy and the Guidelines simply do not address the circumstances of this case where, if the Patentees' contentions are ultimately upheld, the GenRx products are covered by the Patent and their listing is without the agreement of the Patentees. Nevertheless, it appears to me to be less than likely, in the light of the correspondence mentioned above, that there will be a 12.5 per cent price reduction. 101 The Patentees are concerned, if the GenRx products are allowed to be marketed, that carvedilol will be moved into the F2(T) group and thereby attract the 25 per cent price reduction rather than the 2 per cent per annum price reduction under the present regime. The manner in which the Government will apply such a reduction, if GenRx is permitted to market its products, must be a matter of some speculation. If that possibility eventuated, the loss to the Patentees could be many more millions of dollars. However, having regard to the approach adopted by the Department in relation to the 12.5 per cent reduction following the entry of the GenRx products, it appears highly likely that the same approach will be adopted in relation to the classification of carvedilol at F2A rather than F2(T). 102 The Patentees point to a number of other factors as indicating irreparable injury that they will suffer, other than the possible price reductions, if the GenRx products enter the market. Thus, the third applicant has expended in excess of $52 million on educational and promotional marketing activities in relation to the Patentees' carvedilol products in Australia, particularly to educate doctors about the efficacy and safety of carvedilol in the treatment of congestive heart failure. A loss of exclusivity in the supply of carvedilol could involve a loss of some part of that investment. The Patentees have also undertaken very substantial investment in research and development prior to the commencement of the commercial supply of their carvedilol products beyond the amount invested in education. 103 However, the only manner in which the Patentees could recover that investment is through the sales of its products. If GenRx is found to infringe on a final hearing, the Patentees would be entitled to damages for lost sales. There would then be no loss of the investment. So long as GenRx mains comprehensive and verifiable records, as it has undertaken to do, any direct loss of sales to GenRx can be accurately quantified. 104 The Patentees' marketing strategy and investment have been based on the assumption that the third applicant is the only supplier of carvedilol in Australia. They are concerned that, if, even for a relatively short time, competition is introduced into the market, the value to the Patentees of the marketing investment would be substantially reduced. Doctors who have not yet been persuaded of the clinical benefits of carvedilol will become aware of the existence of a generic version. They contend that, in those circumstances, such doctors may be likely to assume that the lost exclusivity conferred by the Patent reflects poorly on the clinical claims made by the Patentees. However, there is no evidence to support the assertion as such. Damages for lost sales would appear to me to be adequate compensation. 105 The Patentees also express concern that, if GenRx products enter the market, the Patentees' market share would be eroded by the fact that they will not be able to spend the money they had previously spent on product promotion and other products may be more heavily promoted and therefore gain market share. However, it appears to me that the extent of expenditure on promotion is a matter for the Patentees if it wishes to maintain market share. 106 The Patentees also refer to the possibility that they may elect to increase the price of their products in response to generic listing in the expectation that lost sales will be made up by reason of the price differential, since customers may elect to pay the higher price out of brand loyalty. Current competitors might also elect to do so. The Patentees say that it is impossible to say what effect that might have on market shares. However, while that is a matter that may be difficult to quantify, it is by no means certain that it would be detrimental. In any event, the market share consequences of such elections are measurable at any point by reference to lost sales, prices charged and margins earned. 107 The Patentees assert that it would be difficult to predict the dynamics of the market for the drugs in the price reference group should there be additional competition. They say that the additional competition to be provided by the GenRx products changes the face of the market and exposes the Patentees to an additional risk that is both unpredictable and unquantifiable. Having regard to the speculative nature of the concerns, the more appropriate course would be, if an injunction is refused, to reserve liberty to the Patentees to apply if any of the postulated circumstances arose. 108 At present, the Patentees are the only suppliers of carvedilol in the Australian market. The effect of the GenRx products entering the market will be to introduce a single competitor. The competitor might be in the name of GenRx or brand names of pharmacy groups where GenRx supplies under those brand names. Possible adverse effects can be monitored and the Patentees can apply pursuant to liberty reserved where they think specific detriment can be demonstrated. 109 The Patentees also express concern that any quantification of damage suffered by them might depend upon the way in which GenRx promotes its new range of products. For example, a common marketing technique employed by generic pharmaceutical companies is to offer a " bakers dozen " of generic products, providing volume discounts or other indirect incentives to pharmacies to induce them to order more product from the generic supplier. However, so long as adequate records are maintained by GenRx in respect of its sales and margins, the consequences of such conduct can be quantified. Further, GenRx has proffered an undertaking that it will not " bundle " in that way. That would eliminate the risk for practical purposes. 110 The Patentees presently have licence arrangements with Alphapharm and Sandoz for those organisations to market the Patentees' products. The Patentees fear that, if GenRx is allowed to enter the market, the licensees may terminate their licences and enter as competitors. Once again, that possibility is speculative. If the possibility eventuates, it will be open to the Patentees to apply on the basis of changed circumstances for further consideration of the possibility of interlocutory relief. 111 The Patentees also point to the possibility that GenRx could, at any stage, make an application to reduce the price of its carvedilol products. That would trigger a price reduction in the Patentees' products and other drugs within this price reference group. GenRx claims that it has no intention to request such a price decrease and such a possible concern can be dealt with by undertakings not to do so. It has proffered an undertaking not to do so. 112 If GenRx were to be restrained from entering the market, the quantification of its loss of market share during the operation of an interlocutory injunction would be very difficult to evaluate. It may be possible to wait for the period during which the interlocutory injunction operated and assess the position of the market at the end of that time. It might then be possible to demonstrate that that result would have been achieved in the preceding period but for the interlocutory injunction. That, however, would be a much less certain assessment than would be involved in quantifying sales of its products by GenRx during that period on the assumption that no interlocutory injunction is granted. 113 Carvedilol is a key part of GenRx's strategy in tendering for State hospital supply contracts. The tender cycles in various States mean that, if GenRx is restrained from entering the market, it will have to wait several years before it can tender in some States. It says that hospital tenders are not only of financial importance but they also represent an important strategic aspect of its business in boosting its reputation and business momentum. Such matters are not readily calculable by reference to any monetary sum. Further, the inherent uncertainty of the tender process may mean that GenRx will have lost forever the opportunity of entering into arrangements in one or other of the States whose tender cycles fall due during the period of any interlocutory injunction. 114 The vast majority of GenRx's supply to pharmacists is by way of pharmaceutical wholesalers. GenRx supplies pharmaceuticals under its own brand, but it also packages and supplies private label pharmaceutical products to Symbion Health Limited under contractual arrangements. Those private labels are " Terry White Chemists " and " Chemart " pharmacy brands owned by Symbion Health Limited. If GenRx is unable to supply Symbion with carvedilol, its reputation with Symbion and its pharmacists could be irreparably harmed at an early and critical stage in the development of a new, long-term commercial relationship. 115 If GenRx is unable to launch carvedilol as planned, its reputation generally will suffer a serious blow. There is a very significant advantage to generic pharmaceutical companies in being the first to market with a generic pharmaceutical product. The first generic product to be marketed obtains, and to a large extent retains, the greatest market share amongst generic competitors. If GenRx were restrained from entering the market, other generic companies could come in and obtain that commercial advantage. The damage to GenRx in those circumstances would be very difficult to measure. 116 Alphapharm and Sandoz have entered into arrangements with the Patentees to distribute the Patentees' carvedilol products. If GenRx is restrained from entering the market, it may be open to Alphapharm and Sandoz to terminate their arrangements with the Patentees and launch their own generic versions of carvedilol, thereby depriving GenRx of the opportunity of obtaining the benefit of being first to launch. 117 GenRx has a paid up capital of $2 and its holding company has a paid up capital of $2. Its ultimate holding company, however, is a Canadian corporation with substantial assets. While the financial position of GenRx by itself would have been a very significant factor in the balance of convenience, one of the undertakings proffered is to provide a bank guarantee in the sum of $3 million. I am satisfied that that guarantee would cover prospective losses on the part of Patentees in the short-term, so long as they are able to monitor sales by GenRx. It would be open to the Patentees to make a further application if it appeared that the level of sales would justify damages in excess of the amount of the proposed guarantee. 118 The primary answer proffered by GenRx to the allegation of infringement, assuming that the Patent is valid, is the additional element in the claims of the Patent relating to the decreasing of mortality. GenRx eschews any intention to supply its products for purposes other than ameliorating the symptoms of congestive heart failure. The Patentees, on the other hand, rely on the absence of decrease in mortality in the prior art publications as justifying the novelty of the claimed invention of the Patent. 119 On the other hand, in the product information sheet for GenRx products that has been approved by the Therapeutic Goods Administration, there are references to reduction in death in the studies that are described in it. GenRx proposes to seek approval by the Therapeutic Goods Administration of an amended product information sheet that omits the detailed description of the studies and the reference to the reduction of the risk of death under the heading "CLINICAL TRIALS". GenRx has proffered an undertaking to prosecute its application for the approval of its product information sheet in the amended form expeditiously and to inform the Patentees of its progress with that application. However, GenRx does not propose to delete the reference to death in the general description of the studies in the product information sheet. Nor does it propose to delete the table to which I have referred. 120 GenRx has undertaken not to advertise, or otherwise promote, carvedilol for decreasing mortality except that it will not be a breach of that undertaking to supply copies of the product information sheet in the unamended form. I consider that that undertaking affords a sufficient degree of protection to the Patentees, when coupled with the undertaking to keep proper records of sales of the GenRx products, to justify refusal of interlocutory injunctions. Having regard to the matters considered above in deciding where the balance of convenience lies, I consider that it is appropriate to accept the undertakings proffered by GenRx and refuse any further interlocutory relief. However, the Patentees should have liberty to apply on reasonably short notice if, having regard to information furnished pursuant to the undertakings, it wishes to contend that there has been a sufficient change in circumstances to justify revisiting the question of further interlocutory relief. 122 Upon GenRx giving to the Court the undertakings referred to above, the Patentees' application for interlocutory relief beyond those undertakings should be refused. Some undertakings had been proffered prior to the commencement of the hearing but others were only proffered in the course of argument. In the circumstances, I consider that it would appropriate for GenRx's costs of the interlocutory application to be GenRx's costs of the proceeding and that there be no other order as to the costs of the interlocutory application. (b) To prosecute its application for the approval of its Product Information Sheet in the form of Exhibit AMK-2 expeditiously and to inform the applicants at the end of 21 days of the progress of the application. (c) Not to provide any discount or material benefit to purchasers of carvedilol which is tied to the purchase of any other medicament which is also supplied by any of the applicants in Australia. (d) Not to provide any discount or material benefit to purchasers of any other medicament which is also supplied by any of the applicants in Australia which is tied to the purchase of carvedilol. (e) To provide for the benefit of the applicants a guarantee issued by National Australia Bank Limited in the form of Exhibit 10R. (f) To maintain accounts and records of its carvedilol sales until judgment on a final hearing, in the manner described in paragraphs 16 to 19 of the affidavit of Roger Millichamp sworn 9 January 2007. (g) Commencing 30 days after the expiry of the first reporting period (as defined hereafter), to report to the applicants every three months as to the number of units of carvedilol sold in the preceding reporting period and to provide access to the Applicants' independent legal or accounting representatives to inspect the accounting records referred to in (e), such access to be on reasonable notice and upon the receipt of confidentiality undertaking from those representatives to the effect that they will not disclose to any other person, including the applicants, any information obtained by such inspection other than the number of units of carvedilol sold in the preceding reporting period. The first reporting period expires at the end of the third calendar month following the first supply of carvedilol. (h) Not to seek a decrease in the price at which its carvedilol products are listed on the Schedule of Pharmaceutical Benefits. (i) Within 14 days of the date of this undertaking to request the Pharmaceutical Benefits Advisory Committee to give it and the applicants 14 days' notice of the imposition of any price reduction for carvedilol and to serve the applicants with a copy of any reply. (j) Not to rely on any commitment to third parties to whom the respondent supplied or intends to supply carvedilol to resist final injunctive relief at a final hearing. Yates SC, Mr S.C.G. Burley and Mr A. | pharmaceutical patent interlocutory hearing seeking injunctions to prevent alleged infringement whether serious question to be tried as to whether there will be infringement whether patent is invalid whether impugned products would infringe patent even if valid where balance of convenience lies intellectual property |
Nonetheless, I invited the parties to put on submissions as to costs. They did so voluminously, save for Mr Bell who indicated he would abide by the orders of the Court. Having considered the parties submissions and having reviewed the costs issues in light of what are well accepted principles that properly inform the exercise of my discretion under s 43 of the Federal Court of Australia Act 1976 (Cth), I am satisfied that to deny the successful respondents any costs at all would, in the circumstances, be punitive. It is not a proper use of the power to award costs to punish either a successful or an unsuccessful party: cf Latoudis v Casey [1990] HCA 59 ; (1990) 170 CLR 534 at 566-567. In this sense "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or law. Ruddock v Vadarlis [2001] FCA 1865 ; (2001) 115 FCR 229 at [11] approving Hughes v Western Australian Cricket Association (Inc) (1986) 69 ALR 660; ATPR 40-748 at 48,136. See generally Dal Pont, Laws of Costs , ch 8 (2003). 3 What can constitute "special circumstances" capable of disentitling a successful party from a costs award has been the subject of helpful consideration by Nicholson J in Instant Colour Pty Ltd v Canon Australia Pty Ltd [1996] FCA 1097. Such conduct would also be included in (3) which, I think, further extends to cases where the facts complained of, though they do not give the plaintiff a cause of action, disclose a wrong to the public: King v Gillard [1905] 2 Ch 11, by which I understand some criminal or quasi criminal misconduct, eg a fraud or crime or preparation for a fraud or crime, or possibly some act of serious oppression. Such conduct must, however, be in the course of the transaction complained of. As Viscount Cave LC formulated it, the discretion cannot be exercised against a successful party 'except for some reason connected with the case': Donald Campbell (supra). This is so for the reason the proceedings are initiated by the plaintiff and the plaintiff fails to gain the relief which he sought: Verna Trading at 154. This may extend to any matter relating to the litigation and the parties conduct in it, and also to the circumstances leading to the litigation, but no further. The nature of those proceedings are outlined (in the Rawley matter) at [30]-[35] of my reasons and (in the Chehade matter) at [281]-[286]. As each matter raises different considerations in relation to the award of costs, it will be necessary to deal with them separately. 6 The claims made against Bell were (i) for misleading or deceptive conduct contravening, ultimately, s 995 of the Corporations Law when making representations to investors and for non-disclosure in relation to their proposed acquisition of shares; (ii) in negligence; and (iii) for breach of fiduciary duty as a promoter. He was in the event successful in his defence of all of these claims. 7 While I found that he had made representations which contravened s 995, I also found that they had not been relied upon by the investors, hence they were not causative of any actionable loss: see generally [209] ff. The various alleged non-disclosure claims either were not pressed or were not made out: see [198]-[208]. The negligence claim similarly failed [243]-[245]. As to the fiduciary/promoter claim, I held it was difficult to comprehend and had no proper basis: [246]-[279]. 8 Similar, partially overlapping, claims were made against Sladojevic (save in negligence) and I reached like conclusions in relation to them including, importantly, that while he was guilty of contraventions of s 995, the misrepresentations he made were not relied upon by the investors in making their investment. 9 I am satisfied that, in relation to the non-disclosure claims actually pressed, the fiduciary claims and, in Bell's case, the negligence claim, the ordinary rule of costs following the event should apply in favour of Sladojevic and of Bell (to the extent, if at all, he incurred costs in relation thereto). 10 I am not so satisfied that the same follows as of course in relation to the misrepresentation claims that were ultimately pressed or to the abandoned non-disclosure claims to the extent that they were founded on the Georgiadis letter employed in the "second Vinet strategy": see reasons [61]. Are there special circumstances? I do so for two reasons. First, as Bell appears to have been unrepresented throughout (he has not suggested to the contrary and has not made submissions on costs) his costs in any event will be limited to out-of-pocket expenses: cf Cachia v Hanes [1994] HCA 14 ; (1994) 179 CLR 403; and see generally Dal Pont, Law of Costs , [7-24] ff. In these circumstances, the issue of ouster of the ordinary rule of costs following the event is of no marked significance in his case. Secondly, the conduct said to give rise to "special circumstances" was, primarily, that of Sladojevic. 12 I should preface what I have to say with the observation that I do not consider that the applicants acted unreasonably in continuing to prosecute the proceedings notwithstanding that Sladojevic's legal representatives had asserted to them from as early as March 2004 that they would fail, in what were their then claims, on the grounds of reliance and causation for reasons similar to those informing my ultimate findings in this matter. The applicants' lighting upon what was referred to as the Georgiadis letter in 2005 (a Sladojevic strategy letter: see reasons [61]) --- it was not apparently discovered by Sladojevic --- led to a significant enlargement of their claim. Notwithstanding that both Sladojevic and his legal representatives asserted at the time that its contents were fiction --- they would have been damning if true --- I am satisfied that in the circumstances the applicants unwillingness to accept those assertions at face value was not unreasonable. Such facts as had been pleaded by Sladojevic in his 2002 amended defence were calculated to put his credibility in issue from the outset. The letter could only have compounded the applicants' suspicions. 13 I do not intend to reiterate in any detail the findings I have made, and the basis thereof, in relation to Sladojevic's evidence generally, to his strategies, to false denials given (e.g. on the provenance of the "Tiltform Australia" proposal of 25 June 2000) and false assertions made, and to their respective affects on and in the conduct of the proceeding. Suffice it to say I found that he engaged in opportunistic and self serving behaviour and resorted to falsehood: cf reasons [56]. Far from being honest and open, such were the doubts his conduct and evidence raised about his credibility, that the applicants were, in my view, entitled to treat his assertions with suspicion. As I held, "his evidence on any subject not corroborated by independent documentary evidence or a reliable third party ought be regarded with caution": [56]. Equally, his abandoning of parts of his affidavit evidence in the face of clear contrary evidence was opportunistic. It merely added to the sum of misinformation, confusion or time wasting in the trial for which he was responsible. And there was a deal of this. As I said of the Vinet strategies, "documents created for the purposes of them have added very significantly to misinformation relied upon the conduct of this proceeding. Amendments were made to the pleading and cross-examination conducted on the premise that the information conveyed in such documents was correct. This resulted both in time wastage and quite a deal of confusion and contradiction for which Sladojevic principally ... bear[s] responsibility": reasons [62]. 14 Mr Sladojevic did more than simply put the applicants to their proof. He contrived and/or occasioned difficulties and diversions. Contrary to what is asserted of his behalf, his conduct did unreasonably impact on the economy and efficiency of the proceedings. It is, in my view, unsurprising that the non-disclosure claims prompted by the Georgiadis letter were not withdrawn until the end of the trial and after Sladojevic's cross-examination. 15 I do not consider it profitable or appropriate to attempt to apportion costs by reference to the applicants' success or lack of success on the misrepresentation and non-disclosure issues --- the more so as those issues were not separable in any event from the issues of reliance and causation: cf Instant Colour Pty Ltd , at 18. 16 As I have earlier indicated, there are parts of the applicants' claims for the costs of which Sladojevic is entitled to be paid. For example, the fiduciary claim, as I foreshadowed at the very beginning of the trial was quite misconceived. Its failure was inevitable. This said, I am satisfied that because of his conduct in connection with the litigation or with what reasonably was litigated by the applicants in the circumstances (e.g. the Georgiadis letter), I am satisfied he should incur a significant abatement of the costs to which he would otherwise be entitled as a successful defendant in respect of the claims based on misrepresentation and those relating to non-disclosure which were abandoned. Sladojevic's conduct permeated this part of the Rawley litigation. 17 As I indicated at the beginning of these reasons, punishment is not a permissible purpose in the exercise of my discretion to deny a successful party his or her costs in whole or in part. I am particularly conscious of that in this matter. I am also conscious that, in apportioning costs to reflect consequences occasioned by a successful defendant's disentitling conduct, I can only proceed by way of impression having regard to how the litigation itself unfolded and of the conduct of the parties in it. There can be no "mathematical precision" in the resultant allocation of costs: cf Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119 at [13] . 18 In the circumstances I consider that appropriate costs orders in the Rawley matter would be that the applicants (i) pay 50 per cent of the second respondent's costs of the application; and (ii) pay Mr Bell's costs. 20 I will not outline again the claims made by Chehade other than to say that the conduct of Sladojevic and Bell relied upon to found them did not replicate that in the Rawley matter, though the wrongs alleged to have been committed were similar. I, equally, will not repeat what I said of him as a witness: see reasons at [289]; other than to say that I concluded that his evidence should be treated with real caution, absent independent documentary corroboration. 21 Chehade's case failed comprehensively --- I found him to be the author of his own harm. The case, furthermore, was relatively unaffected by the disentitling conduct of Sladojevic. While the submissions made on his behalf on the costs issue have sought to coat-tail those made in the Rawley claim, I am satisfied that a quite different order as to costs should be made against him. 22 There is no reason demonstrated for departing significantly in his case from the ordinary rule of costs following the event. This said, I accept that the preparation and conduct of his trial was affected in some degree by the reasonable view of his advisers to prosecute claims based on non-disclosure of matters linked to the Georgiadis letter. Beyond this though, I do not consider any further abatement should be made of the costs order to be made in Sladojevic's favour as a successful defendant. Accordingly I will order that Chehade (i) pay 90 per cent of Sladojevic's costs of the application; and (ii) pay Bell's costs. 23 While I consider that the costs to be attributed to the Chehade matter ought be significantly smaller than those attributable to the Rawley matter, I am not in a position informedly to make an appropriate apportionment between them. Therefore, in each matter I must leave the quantification and fixing of costs to taxation in default of agreement between the relevant parties. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | applicants succeeded in proving misleading and deceptive conduct at trial but failed to prove causation and reliance applicants failed in other claims whether there were "special circumstances" so as to depart from ordinary rule that costs follow the event disentitling conduct of a successful respondent costs |
A significant contribution to the business has been made by Mr Avo Vardanian, the second respondent. He wrote the software on which the machines run and continued to do so until 2008. For almost a decade he was an employee of the business as he wrote the software. For the past thirteen years he has not been an employee of the business but of a company he controls. That company is the second respondent, Controlmech Pty Ltd which has provided the software written by Mr Vardanian since 1996. Mr Vardanian is married to Mr Dilanchian's sister. Notwithstanding a formerly close working and family relationship between them, Mr Dilanchian and Mr Vardanian are unable to resolve a dispute about the ownership of the copyright in the software and its use. This judgment addresses that question. With some exceptions, the facts were not in issue. To expedite the production of this judgment, I have adopted and adapted the accounts of the facts in the written submissions of counsel. I have done so to expedite the publication of this judgment as Mr Vardanian is gravely ill. I have not adopted this course uncritically and I have satisfied myself that the accounts adopted reflect what I view are the findings which should be made on the evidence. I have also addressed a number of areas where there was a controversy about what the facts were. If I repeat evidence given by a witness without critical comment, I am accepting that evidence. Evidence was given by four witnesses. One was Mr Dilanchian who is the controlling shareholder and managing director of Intelmail Explorenet which was incorporated on 30 July 1999. Another was Mr Vardanian who is the sole director and shareholder of Controlmech which was incorporated on 19 September 1996. Mr Dilanchian and Mr Vardanian share Armenian heritage. A third was Mr Joseph Malouf who is the deputy managing director of Intelmail Explorenet, and its accountant and that of Mr Dilanchian. The fourth was Mr Rafik Kocharians who is a senior software engineer employed by Intelmail Explorenet. Only two witnesses were cross-examined, Mr Dilanchian and Mr Vardanian. Mostly I thought both appeared to attempt to give an honest account of events. However on two occasions I was inclined to think Mr Vardanian gave evidence which he may have contrived to assist his case. This was his oral evidence concerning first, the reason why dongles were introduced (I explain what this means later) and secondly, his account of a conversation which took place in 2003 in which his interest in the business would be bought out. The Intelmail business was conducted through a number of corporate vehicles. They were the Mailmachine Pty Ltd (which remains registered), Intelmail Pty Ltd (which was deregistered on 8 December 1995), Mailmachine Australia Pty Ltd (which was deregistered on 1 May 2005) and Intelmail Australia Pty Ltd which was incorporated in September 1994 and was deregistered on 1 May 2005 and the current applicant, Intelmail Explorenet from 1999. As noted earlier, Intelmail Explorenet was incorporated on 30 July 1999. The computer programs in issue were written by Mr Vardanian in a period commencing in about 1988. It is convenient, at this point, to mention two critical dates. The first is August or September 1996 when Mr Vardanian ceased to be an employee of Intelmail Australia. In due course it will be necessary to address the terms of any agreement entered into at that time concerning the ownership of the copyright in the software and its use. The second is August 1999, or shortly after, when Intelmail Explorenet came into existence and began conducting the Intelmail business. It will be necessary to address the terms of any agreement between Intelmail Explorenet and Controlmech concerning the ongoing provision of software and the ownership of copyright in it. Before dealing with events as they unfolded, it is appropriate to describe the software. In the application and the statement of claim the software is defined as consisting of "pre-1996 works" and "post-1996 works". (h) As asserted by the respondents, dongle software. All of these programs are components of intelligent mailing systems manufactured and sold by the Intelmail business. Mr Vardanian deposed in his affidavit of 19 December 2008 that he had been developing these programs since 1988, and had updated them from time to time since then. The changes were made by him in the following circumstances. It is apparent from the list that most changes were made to the feeder software and the inserter software. Changes to the remaining (Buhrs) inserter software programs are extremely limited. The VDU iTrack software is a Windows based software that operates to track and reconcile mail pieces. Mr Vardanian began writing the software in July 2000. It is probably important to identify the works created by Mr Vardanian after July 1999, that is, after the incorporation of Intelmail Explorenet and after it began to conduct the Intelmail business. Mr Vardanian said in an affidavit sworn 19 December 2008 that the VDU(iTrack) software began development in July 2000, the BB600/700 software began development in mid 2004, the BB300 software began development in mid to late 2004, and the I-Mail 300 inserter software was completed in December 2006. Mr Vardanian gave evidence that he began to write the ILCom software in mid 2000, though Mr Dilanchian thought it was earlier. I accept Mr Vardanian's account. He also said in the same affidavit that he began developing the feeder and inserter software in 1988. Since that time this software has been continuously developed. Both parties agreed that it is impossible to separate the software as it existed at various times in the past twenty years from the software as it exists at the present time. The question becomes what proportion of the software as it exists at the present time was developed after 1999? Mr Vardanian was cross-examined on this point, and gave evidence that he estimated the proportion of the existing feeder and inserter code that was developed before 1996 was "likely to be less than 30%". His cross-examination by reference to the year 1996 rather than 1999 reflected issues as they appeared at the beginning of the trial. I will explain this later in these reasons. I accept Mr Vardanian's evidence and I infer that a large proportion of the feeder and inserter software as it presently exists was written after 1999. All of the programs were written in source code by Mr Vardanian. The source code is compiled into object code which is executed by the computer. The parties were content to adopt the description of source code given by Gibbs CJ in Computer Edge Pty Ltd v Apple Computer Inc (1986) 161 CLR at 178-9, and applied by Sundberg J in Centrestage Management Pty Ltd v Riedle [2008] FCA 938 at [41] in the following terms. A computer program is a set of instructions designed to cause a computer to perform a particular function or to produce a particular result. A program is usually developed in a number of stages. First the sequence of operations the computer will be required to perform is commonly written out in ordinary language. Next a source program is prepared, usually in a source code which is human-readable. The source code cannot be used directly in the computer, and must first be converted into an object code, which is machine-readable. The program is executed by the computer's central processing unit. Mr Vardanian did not keep discrete copies of any of the source codes in the course of their progressive development. Rather he kept one file of source code and simply made progressive changes to it. This practice meant that it is not now possible to identify the inserter and feeder programs as they were in 1996 or indeed 1999. The software Mr. Vardanian commenced writing in about 1988 was DOS-based software. DOS, and the program which Mr Vardanian used to write the DOS source code (assembler) are antiquated. The advent of Windows means that the software programs, in particular the source code for them, is of no real utility other than in relation to the supply and maintenance of the intelligent mail systems supplied by the Intelmail business. For many years the Intelmail business and Mr Dilanchian in particular, was requesting Mr Vardanian to write new software in Windows. That never happened. Mr Dilanchian has worked in the bulk mailing industry from the late 1960s, for all of his working life. By 1982 he decided to establish his own mailing business and incorporated BPSM Pty Ltd, BPSM being an acronym for Bulk Pre Sorted Mail. As well as operating a mailing business, Mr Dilanchian began selling and maintaining mailing machines. As noted earlier, in 1984 he incorporated The Mailmachine to conduct this business, while continuing to also conduct the mailing business through BPSM. During the early 1980s Mr Dilanchian became interested in improving the way these machines operated, by integrating them into one continuous mailing process rather than a series of separate processes. He sought to integrate mailing machines into a continuous process from about 1984. Mr Vardanian immigrated to Australia in 1981. Before that he had been employed by KLM Airlines in Holland and through that employment, had gained considerable experience in computing and its application to technology. He was an electronics engineer by training. From 1981 to 1986 he worked as a quality assurance manager with Ainsworth Technologies Pty Ltd, a company which manufactured poker machines. In 1986 Mr Vardanian became an employee of BPSM, shortly before marrying Mr Dilanchian's sister in early 1987. Mr Vardanian's prior computing experience enabled him to recognise that the integration of mailing machines into one continuous process could be achieved by adding intelligence to the machines, through PC technology. The parties agree that this step transformed this process and that it was Mr Vardanian's idea. From about 1987 onwards Mr Dilanchian and Mr Vardanian worked together on the common enterprise of developing and manufacturing intelligent mailing machines which included PC technology. It is clear that the two men had a close working relationship over many years. Mr Dilanchian accepted that Mr Vardanian was a business confidante who had made a very significant contribution to the business. They had very regular discussions about the business. It is also clear that the business of developing and manufacturing intelligent mailing systems involved, on the one hand, the development of the software written by Mr Vardanian and, on the other, the mechanical systems developed by Mr Dilanchian. The intelligent mailing machines developed were single products incorporating both of those elements. As noted earlier, the Intelmail business was conducted through a number of corporate vehicles. Neither Mr Vardanian nor Mr Dilanchian attributed significance to these corporate changes, apparently because they saw themselves as working for the development of a single continuing business of developing, manufacturing, selling and maintaining intelligent mailing machines. Once the intelligent machines were successfully developed the whole of the Intelmail business was concerned with their manufacture, sale and support. Their intelligence was what gave the business such advantage as it enjoyed in the market for mailing machines. This business had initial success in the late 1980s when intelligent mailing machines were sold to the card company, John Sands Pty Ltd, and to Telecom (now Telstra). Some of the mailing machines sold to Telecom are still in use today by Telstra. They are machines with a long operating life but which require ongoing servicing. That ongoing servicing or maintenance includes changes to the incorporated software from time to time. Those changes can involve reinstalling the whole of the software to the machines. During the 1990s the business grew rapidly and achieved considerable success. It expanded within Australia and overseas, developing markets in Asia, Europe and North America. The business incorporated an American company in 1997 to separately conduct its North American operations. It also grew in size from around 10 employees in the mid 1980s to a much larger organisation. In June 1997 the company had 70 employees spread across at least 13 operational departments. Mr Vardanian began working from his home in Sydney in 1991 in order to devote himself to the development of the software that was an integral part of the intelligent mailing machines manufactured by the business. This move appears not to have caused concern to either party. They appear to have continued to enjoy a close and harmonious working relationship. A critical event in these proceedings is Mr Vardanian's decision to leave Sydney and relocate and live on the Gold Coast. Following a number of conversations between Mr Vardanian and Mr Dilanchian during 1996, Mr Vardanian relocated to the Gold Coast in August 1996. In July 1996, Mr Vardanian made the decision to move to the Gold Coast, and purchased a home there in September 1996, in which he still lives. As with Mr Vardanian's working from home from 1991, his relocation to the Gold Coast was not a matter of disagreement between them. It is tolerably clear that Mr Dilanchian was prepared to set Mr Vardanian up on the Gold Coast so that he would continue to work as he had when in employment in the Intelmail business at least from 1991. Mr Vardanian said in evidence that "[w]e did not ever have any discussion about the effect that my move to the Gold Coast would have on our working relationship". Mr Dilanchian agreed. Mr Vardanian took an Intelmail company computer and other equipment he had been using since 1991 to undertake programming work from his home, and, as he said, he "understood that this equipment was provided to me to enable me to develop the software needed to grow the business". Mr Dilanchian agreed, saying that they had had discussions that Mr Vardanian would move to the Gold Coast and "continue everything as it was and to create a bigger team". They both had in contemplation, at this time, engaging additional personnel drawn from Bond University to assist Mr Vardanian but that never eventuated. At the time of the move, the Intelmail business furnished Mr Vardanian with more than simply a computer and equipment. At Mr Vardanian's request, the Intelmail business also contributed $300,000 to the purchase of Mr Vardanian's home on the Gold Coast. Also the Intelmail business contributed $360,000, again at Mr Vardanian's request, for the subsequent purchase of another house in which he was to work, which came to be described as The Greenhouse. The total purchase price of the Greenhouse was around that figure. In the result, the computer equipment owned by the Intelmail business on which Mr Vardanian worked along with the only copy of the source code went with him to the Greenhouse and were thereafter used by him. Sample mechanical systems, also owned by the business, were sent to the Greenhouse so Mr Vardanian could test new versions of the software. Mr Dilanchian twice visited the Gold Coast at the time of the move to assist Mr Vardanian select the houses ultimately purchased. While there was a personal dimension to Mr Dilanchian assisting his sister and husband to relocate, there was equally a business dimension as well. Mr Dilanchian gave evidence, which I accept, that while Mr Vardanian was living on the Gold Coast, the nature of their business relationship was such that in "majority of cases, they were new application, new requirement, new modification, enhancements - I would have personally discussed with Mr Vardanian on the phone, and in cases I would have asked the timeframe that it would take that we could commit to it". Mr Dilanchian accepted in cross-examination that he would "specify the mechanical outcome that [he] required... and left it entirely up to Mr Vardanian as to how the software would achieve what [he] wanted". Mr Vardanian developed software for the mailing machines and sent it to Sydney to be tested by Mr Vartanian, the only other employee of Controlmech, working in Intelmail's Lane Cove factory. Mr Vardanian relocated to the Gold Coast without any disruption to the working practice between himself and Mr Dilanchian. Mr Vardanian continued to write software which was incorporated into the intelligent mailing machines that were manufactured and sold to customers. Immediately after August 1996 the business continued to expand. The only change in the working arrangement between the parties was that Mr Vardanian was now paid through Controlmech. Mr Dilanchian gave evidence that Mr Vardanian explained to him that change was for tax reasons. This was disputed by Mr Vardanian. I accept Mr Dilanchian's evidence. It is inherently likely. Thereafter Controlmech was paid on a regular basis without Mr Vardanian necessarily requesting that a payment be made. His evidence was that he did not greatly concern himself with these payment arrangements. His evidence also was that Mr Malouf would arrange for these payments, which were sometimes made following a request by him to Mr Malouf but on other occasions simply made by Mr Malouf without any communication between them. Mr Vardanian's evidence was that he was happy with these payments which were able to support his "daily necessities". Obviously they did at least that having regard to the sums involved. These variations reflected the business's capacity to pay. When Mr Vardanian was paid lower amounts from the 2003 financial year, he accepted the explanation given to him by Mr Malouf, namely that the business had a reduced capacity to pay him. When Intelmail Explorenet commenced to conduct the Intelmail business can not be identified with precision. Having regard to evidence given by Mr Delanchian (see [70] post) it was probably about the beginning of 2000. The first invoice in evidence in July 2000 from Controlmech to Intelmail Explorenet would, I infer, have related to work done by Mr Varandian for Intelmail Explorenet before July 2000. Mr Vardanian said in oral evidence dongles were introduced in 1997 into the intelligent mailing machines because he (or more precisely his company) owned the copyright in the software. That is, they were introduced by him to protect his (and his company's) intellectual property rights in the software. Dongles are devices with a function which was described by Mr Vardanian in his evidence. I accept this description. A dongle is a small device that has an integrated circuit within it, which can retain a small amount of code. The device is inserted into the printer port of the computer that is used to operate a mailing machine. The software that is loaded onto the computer will only run if a dongle that is compatible with the software is connected to the computer. Mr Vardanian said that resetting or renewing a dongle for a particular system did not involve any changes to the source code. The dongle software created perhaps during the period 1997 to 2005 did not have any use limits (the evidence about when dongles of this type were first introduced was generally imprecise). Accordingly, if a machine was fitted with a compatible dongle, it would continue to operate indefinitely. However, sometime around November 2005 Mr Vardanian created cycle-based dongles. As noted earlier, he contends that he did so to protect his copyright. The applicants put this proposition in issue. In his oral evidence, Mr Vardanian said that he began buying dongles in 1996, as "it was my decision, when I moved to the Gold Coast, to protect the software exactly for these cases". However, while Mr Vardanian's affidavit of 19 December 2008 contains a discussion about the implementation of dongle functionality, there is no suggestion in that affidavit that the dongle functionality was implemented in order to protect his copyright in the software. This is extremely surprising having regard to the subject matter of the litigation. Indeed this affidavit evidence was responsive to the initial affidavit of Mr Dilanchian in which, as a matter of fact, Mr Dilanchian asserted that dongle functionality was created by Mr Vardanian at his direction. While the words "at my direction" were objected to and not admitted, it is nonetheless the fact that Mr Vardanian did not join issue with that specific asserted fact (though objectionable) in his responsive affidavit though he did reject a more general contention by Mr Dilanchian that he developed the operating software under Mr Dilanchian's direction. Indeed, in relation to cycle-based dongles, Mr Vardanian accepted in his responsive affidavit they were developed at Mr Dilanchian's request. These matters suggest, in my opinion, that the explanation in the oral evidence was given simply to bolster the respondents' case. While I accept it is not a matter on which I should place undue weight, at the time Mr Vardanian gave this evidence concerning the introduction of dongles, he did not appear to me to be particularly credible. Additionally I accept other reasons advanced by the applicants' counsel that Mr Vardanian's explanation in oral evidence ought to be rejected. Those submissions were, in part, to the following effect. Mr Vardanian's stated purpose of introducing the dongles (to protect what he then perceived to be his copyright in the software) is inconsistent with the fact that he did not care whether dongles were retrofitted to existing machines. Moreover, Mr Vardanian did not have any conversation with Mr Dilanchian in or around 1996 about the introduction of a dongle functionality for this purpose. Given the close working relationship that existed between the two men around that time, the introduction of an important feature such as a dongle for this purpose without any conversation between them concerning the purpose would be surprising. Mr Vardanian's counsel made a submission, as I understood it, that he then (in 1996) believed that he owned the copyright in the software he had by then written. However this submission was based on a passing and ambiguous reference in a paragraph of his affidavit which was responsive to paragraphs in an affidavit of Mr Dilanchian which concerned ownership of copyright in the software in the years following 1996. I do not accept that when Mr Vardanian moved to the Gold Coast he believed he owned the copyright in the software he had, by that point, already written. There is documentary and oral evidence that Mr Vardanian referred to the software as Intelmail software in communications with customers after 1996. He explained in oral evidence that he did so in order to present a united front for marketing purposes. However, Mr Vardanian also described the software in the same way to employees of Intelmail also after 1996. In that context, marketing would not be relevant. On one view, the net effect of this evidence is that in communications with any relevant person in relation to the software (given that Mr Vardanian alone worked on the software assisted by one other), he described the software as Intelmail software. If so, it is a reflection of the way the individuals regarded the business they were building together. It was a business which was the sale and support of unitary products of which the software and mechanical systems were integral parts. Mr Vardanian's attempt to characterise his references to the software as Intelmail software as a marketing device was challenged by counsel for the applicants. But there was some evidence from Mr Dilanchian which supported this contention of Mr Vardanian. Mr Dilanchian gave evidence that in about 2000 he noticed that software which had been provided to him by Mr Vardanian was labelled 'Controlmech'. Do you realise what you are doing? We are so far behind with the delivery of software. We are not in a position to send the wrong message to our customers and give additional ammunition to our competitors. The evidence discloses that the position changed in 2003 when both Mr Vardanian and Mr Dilanchian had to focus on questions of copyright. In that year it came to the attention of the applicants that some ex-employees appeared to be copying the software for the purpose of conducting a business of maintaining Intelmail machines in competition with Intelmail Explorenet. The company (through Mr Malouf) sought legal advice concerning the steps that needed to be taken to enforce its rights. On 18 July 2003 Blake Dawson Waldron provided a short advice on these steps. It can be fairly said, as counsel for the applicants submitted, the advice did not address the question of whether Mr Vardanian owned copyright in the software, but rather the question of what steps the applicants needed to take in order to prove what they regarded as their rights, as against third parties. Thus the covering email containing the advice stated "Once we can clearly establish copyright ownership, we will need to discuss evidence of breach". Mr Malouf reported to Mr Dilanchian that "we needed to get an acknowledgement from Avo that Intelmail owned the copyright". Mr Malouf then visited Mr Vardanian on the Gold Coast. They met twice. Mr Vardanian has no clear recollection of these meetings, while Mr Malouf's evidence is specific and was not the subject of cross-examination. I accept his evidence. It was that Mr Vardanian initially agreed to assist Intelmail in prosecuting its claim against former employees, but in the second meeting decided not to cooperate. It does not matter.... However there is one qualification to this observation which I discuss in the following paragraph. On the accounts of both Mr Vardanian and Mr Malouf, Mr Vardanian did not assert ownership of the copyright in the software during their two meetings in 2003. If he believed that he owned the copyright, one would have expected that he would have stated this to be the case, given that the purpose of the two meetings was to discuss what action should be taken in relation to a third party infringer. However I recognise there is the real possibility that at this time Mr Vardanian was taking a more cautious approach to the question of ownership of the copyright because he did not want to commit to a position in which he acknowledged he was not the owner in the face of the question having arisen about ownership. Mr Malouf gave evidence that was neither objected to nor the subject of cross-examination that he took with him at least to his second meeting with Mr Vardanian a pro forma draft "Software Developer Agreement" which he had obtained from a legal database. Before leaving for the Gold Coast Mr Malouf, on his evidence, had explained to Mr Dilanchian that he proposed to draft such an agreement. Indeed Mr Dilanchian accepted in cross-examination that he understood that the Software Development Agreement provided for the fact Mr Vardanian "agreed the software belongs to Intelmail and that he will authorise that it belongs to Intelmail". However apart from this, there is no evidence about the terms of the agreement nor is the draft in evidence. But it is difficult to escape the inference that it was an agreement in which Mr Vardanian would in some way agree to deal with copyright in the software in a way favourable to Intelmail Explorenet having regard to the draft's description, Mr Dilanchian's evidence, the use to which Mr Malouf proposed to put the agreement and Mr Vardanian's response. It is also difficult to escape the inference, for the same reasons, that it was an agreement which, in relation to copyright, would purport to modify, diminish or extinguish the rights of Controlmech or at least make them subservient to the interests of Intelmail Explorenet. If these inferences are drawn, and I think they should be, then probably Mr Dilanchian and certainly Mr Malouf then had some real reservations about the legal position of Intelmail Explorenet in relation to ownership of the copyright in the software and Mr Vardanian was, at that time, beginning to focus on the question of ownership as well. I should, at this stage, refer to a letter Mr Dilanchian sent to Mr Vardanian in August 2003. It is a contemporaneous record, admitted without objection, which records Mr Dilanchian's perception of circumstances as they then existed. Its contents were not challenged in Mr Dilanchian's cross examination by counsel for the respondents. In the letter, Mr Dilanchian noted that he had perceived that Mr Vardanian had been drifting away from the business in the preceding three to four years. Indeed he said it was obvious to him. His stated understanding of the reason was that Mr Vardanian did not agree with or approve of Mr Dilanchian's management skills. Mr Dilanchian referred to 1999 - 2000 as a tough year for Mr Vardanian but an even tougher year for him. This is probably a reference, at least in part, to what Mr Vardanian said in his affidavit evidence, namely that in mid 1999 "[he was] working around and against the clock to get the Intelmail Explorenet Job Tracking and Data Reconciliation software out by next month... [he was] averaging something like 10 to 12 hours each day for the last two months, 6 to 7 days every week. Only the last 3 weeks [has he] forced myself to do nothing on Sundays". Mr Dilanchian also referred in the letter to Mr Malouf's trip to the Gold Coast to deal with "software copyright issues" and the failure of Mr Vardanian "to contribute to the necessary documentary evidence of the software copyright". Mr Dilanchian concluded by inviting Mr Vardanian to Sydney "to sort things out and discuss what could we do to protect the Intelmail Software". There was a discussion in 2003 about Mr Dilanchian buying Mr Vardanian out of the business. Mr Vardanian said in cross-examination that he thought the discussion took place after Mr Dilanchian sent his letter in August. Probably if the discussion had taken place before Mr Dilanchian sent the letter, it would have been referred to in the letter having regard to its contents more generally. I accept the conversation was probably in the latter part of 2003. There was no dispute that the discussion took place, nor about the essence of what was said. You need to give me $3 - 3.5 million. I am looking for about $3.5 million. I will invest that money and that will see me through to my retirement. I can pay you around $1 million now, and pay you the remaining balance over two years. But I don't want the burden of the software... You need to put the right people in place, and oversee them to make sure they are doing the work. I don't have the time and the patience to deal with that part of the business. I've got enough on my plate to deal with. I accept, as counsel for the applicants submitted, this discussion focused on the proposition that Mr Vardanian would be bought out of the business, rather than seeking to place a value on the software which would be delivered up to Intelmail Explorenet. That is so even though, by then, both had recently had occasion to consider who might own the copyright. I also accept that the conversation is consistent with the manner in which the parties had conducted themselves, namely that the business in which they both had a stake owned the output of their work. Mr Dilanchian gave evidence, which I accept, that he saw a payment to Mr Vardanian as appropriate because of the contribution that Mr Vardanian had made to the business and also because of a prior understanding he believed had been reached by them, that if the United States business became profitable, Mr Vardanian would be given a share in it. I also accept, as counsel for the applicants submitted, that Mr Vardanian's attempts in oral evidence to suggest he said in the buy out exchange that he wanted the business to purchase his software should be rejected. My impression was, as counsel submitted, that he may well have been attempting to put a position he thought suited his case. This conclusion is fortified by the fact, as counsel for the applicants pointed out, that Mr Vardanian failed to give evidence in the affidavit filed before the hearing that the discussion was about the sale of the software. However in rejecting his evidence that the sale of the intellectual property in the software was discussed directly, I have little doubt that by the time the discussion took place Mr Vardanian either knew, or at least suspected, that his company may well have been the legal owner of the copyright in the software which could be traded. It is not difficult to imagine, though I accept this was not put directly to Mr Vardanian in cross-examination, that the conversation with Mr Malouf which had taken place probably no more than a few months earlier, revealed a way in which he could leave the business, obtain what he perceived to be a share of the business to which it is entitled and do other things. It is true that in a letter dated 18 July 2008 from Mr Dilanchian to Mr Vardanian, Mr Dilanchian said "in mid to late 2003, you suggested that 'I buy you out of the software' ". By early 2008, the relationship between Mr Vardanian and Mr Dilanchian had deteriorated to the point where they were unable to communicate directly and Mr Dilanchian's attempts to communicate through other parties were unsuccessful. Mr Dilanchian then sought the assistance of professional mediators through to June 2008, but these attempts to resolve the matter were unsuccessful. His letter dated 18 July 2008 to Mr Vardanian was written by the second of the mediators for with his input and must be seen in the light that it was written for Mr Dilanchian by the mediator for the purpose of facilitating discussion between the parties, rather than attempting to "stake out" a legal claim. Mr Dilanchian's oral evidence, at one point, as to the content of this 18 July 2008 was to the effect that the letter was cast in the terms it was as a mechanism to induce Mr Vardanian to negotiate. I accept this evidence. By 2008 Mr Dilanchian knew that Mr Vardanian was asserting ownership of the software and he was trying to establish a minimum common position from which discussions could ensue. What was written in 2008 about events in 2003 was coloured by intervening events. There are other passages in Mr Dilanchian's cross examination which might be viewed as him accepting that the letter did record what had been said in 2003. But, viewed in context, he was not accepting, in my opinion, the propositions that were being put to him. Mr Dilanchian also gave evidence that sometime after the events in 2003 just described, when he was in the United States, he visited Mr Vardanian's son whom Mr Vardanian had lost contact with. Mr Dilanchian telephoned Mr Vardanian to inform him that his son was fine. According to Mr Dilanchian, Mr Vardanian said to him upon his return from the United States: "I really appreciate what you did for me. I will give the software to you" . Mr Dilanchian gave evidence in cross-examination that he understood this to mean that Mr Vardanian was going to co-operate and give the software to the people that he, Mr Dilanchian, employed, and assist them examining the software. I accept this evidence. The deteriorating relationship in 2008 ultimately culminated in a solicitor's letter on behalf of the respondents to the applicants dated 13 October 2008. I refer to this letter in more detail later in these reasons. As noted earlier, these proceedings were commenced on 11 December 2008. Wider issues raised in the proceedings including a contractual claim in the respondents' cross claim were not pursued at the trial. If Intelmail Explorenet's rights are as licensee, there is a subsidiary question as to the terms of that licence. The applicants contend that Intelmail Explorenet owns, beneficially, the copyright in the software or, in the alternative, it has an implied licence which is irrevocable, royalty-free, capable of being assigned or sub-licensed, is exclusive to the licensees and sub-licensees and entitles the licensee and any sublicensee to use, reproduce and adapt the works the subject of copyright for the purpose of the ongoing conduct of the applicants' business. The respondents accept that Intelmail Explorenet has been a licensee but dispute the terms of the licence propounded by the applicants. The resolution of these questions turns on the terms of the agreement made between the Controlmech and Intelmail Australia in 1996 and the later agreement between Controlmech and Intelmail Explorenet. During the course of the trial, the issues raised by the pleadings were not the issues pressed by the parties and, in particular, did not reflect the case as finally advanced by the applicants. However, the respondent consented to this departure from the pleadings. Generally, it is preferable that particulars be amended, "particularly is this so when the action finally determines the rights of the parties in the cause of action", as in the instant case: Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 at 446 per Stephen, Mason, Jacobs JJ; Australian Medic-Care Co Ltd v Hamilton Pharmaceutical Pty Ltd (No 5 ) [2008] FCA 1979 at [15] per Finn J. However, judgment can be given on the facts as they have emerged during the trial, despite a failure to amend pleadings, where the new issue or new way of particularising the existing issue emerges at the trial and is litigated: Water Board v Moustakas (1988) [1988] HCA 12 ; 180 CLR 491 at 497 per Mason CJ, Wilson, Brennan and Dawson JJ; Dare v Pulham [1982] HCA 70 ; (1982) 148 CLR 658 at 664 per Murphy, Wilson, Brennan, Deane and Dawson JJ; North East Equity Pty Ltd v Proud Nominees Pty Ltd (No 3) [2008] FCA 1430 at [4] per Rares J . It is common ground between the parties that the computer programs in question are copyright works in which copyright subsists under the Copyright Act 1968 (Cth) (the Act). It is also common ground that as the programs were written by Mr Vardanian, he is the author of them. Before considering the specific facts of this case, I should refer to some basic principles. In 1996 and later in 2000 neither Mr Vardanian (on behalf of Controlmech) nor Mr Dilanchian (on behalf of Intelmail Australia in 1996 and on behalf of Intelmail Explorenet in 2000) made any express agreement about who would own the copyright in software Mr Vardanian would, in the future, write for the Intelmail business nor did they make any express agreement about the legal basis on which the Intelmail business would use the software and authorise others to use it. A not dissimilar issue arose in a case determined by Crennan J in 2005: Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd [2005] FCA 1521 , 225 ALR 57 , though, in this matter unlike the present, aspects of some of the contractual arrangements were express. Nevertheless the process involved is of interpreting the meaning of the contract as a whole : South Australia Asset Management Corp v Montague Ltd [1997] AC 191 at 212 per Lord Hoffmann. As his Honour noted, such implication might arise to address the failure of parties 'to direct their minds to a particular eventuality and to make explicit provision for it'. It is, of course, necessary to clarify that it is not appropriate to imply a term because it may be reasonable to do so, but rather to give business efficacy to contracts. In this kind of case all that is necessary is to show that the term to be implied is necessary for the reasonable or effective operation of the contract in all the circumstances. It is orthodox and I will apply them. Justice Crennan also discussed the application of these principles in a specific area of copyright between [81] and [85]. This can arise when there is a commissioning arrangement for the preparation of copyright material. (ii) If there is a lacuna in the contract and it is necessary to imply the grant of some right to fill the lacuna involving a choice between possible alternative rights, the choice should be of that right which does not exceed what is necessary in the circumstances. This principle is one of a number identified by Lightman J in Robin Ray v Classic FM Plc (1998) 41 IPR 235 in a lengthy passage quoted by Crennan J. In particular, if the need can be satisfied by the grant of licence or an assignment of the copyright, the implication will be of the grant of licence only. (iii) The circumstances may require the implication of a right for the assignment of the copyright, for example when the party commissioning the creation of the work should be able to exclude the author from using the work and also to enforce copyright against third parties. Again this emerges from the judgment of Lightman J. One matter that received limited attention in the submissions of the parties was the relevance, if any, of post-contractual conduct in determining what the terms of the contract are when they are not in writing. If they are in writing the common law of Australia is comparatively clear: see the observations of Heydon JA in Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 ; (2001) 53 NSWLR 153 at [26] and more recently the judgment of the High Court in Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57 ; (2008) 251 ALR 322 per Gummow, Hayne & Kiefel JJ at [36] and [163]. The post-contractual conduct is irrelevant. However the position is less clear in relation to contracts which are not in writing. This question was comparatively recently addressed by Finkelstein J as a member of a Full Court in Seven Network (Operations) Ltd v TCN Channel 9 Pty Ltd [2005] FCAFC 144 ; (2005) 146 FCR 183 at [83] . The fear is that this approach could result in a contract having different meanings on different days. The rule does not, however, prevent the reception of pre-contract conduct (White v Australian and New Zealand Theatres Limited [1943] HCA 6 ; (1943) 67 CLR 266 ) or post-contract conduct (Australian Estates Ltd v Palmer (unreported, New South Wales Court of Appeal, Kirby P, Samuels and Meagher JJA, 22 December 1989 )) to identify the things with which the contract does deal. However the rationale for having regard to post-contractual conduct when the contract is not in writing seems of limited relevance in circumstances where a term is to be implied in the way discussed in some of the authorities referred to by Crennan J in Gold Peg , namely Hospital Products Ltd v United States Surgical Corporation , Hawkins v Clayton and Byrne & Frew v Australian Airlines Limited being cases where it is necessary is to show that the term to be implied is necessary for the reasonable or effective operation of the contract in all the circumstances. The implication of the term arises because the parties have not addressed the subject matter to which the term relates. It is difficult to see how subsequent conduct can, as a matter of common sense, be taken to be a manifestation of the parties acting conformably with the term. They had not earlier turned their minds to the way the contract would operate at the time it was made. That is not to say that evidence of conduct surrounding the formation of the contract would be irrelevant in determining what term might be implied. Context, including the manifestation of subjective intention, can be important in determining what objectively may have been agreed or what might be implied: see Kovan Engineering (Aust) Pty Ltd v Gold Peg International Pty Ltd [2006] FCAFC 117 per Heerey and Weinberg JJ at [105] and per Allsop J at [118]. What the evidence discloses, at a high level of generality, is that two individuals developed, collaboratively, a business which was dependent on the significant contribution of both but which has always been owned and substantially controlled by only one of them. The individual who has owned the business is now resisting attempts by the other to assert a right which is very narrowly focused on a statutory right said to arise from authorship of computer software. It is difficult to avoid the conclusion that the legal controversy this judgment addresses may not explore and resolve all bases on which the rights of the parties might be determined. However forensic decisions have been made for what probably is a mix of legitimate reasons including the personal and financial circumstances of the parties, to invite adjudication only on the copyright issue. As noted at the beginning of this judgment, the second respondent is gravely ill and having regard to matters raised in interlocutory proceedings, it appears the first applicant which is the present manifestation of the business, is in comparatively straightened financial times. One possible consequence of the narrow focus of the litigation on the copyright issue is that it has created a prism through which the parties have sought to establish the facts but which has led to distortions of what in truth happened. Broadly described, the evidence at this high level of generality points to one of at least three possibilities. The first is that Mr Vardanian was generally aware that copyright attached to the programs he was writing and always and genuinely believed that he owned it both before and after August 1996. Perhaps that was because he did not view himself as an employee at least after his initial years working in the business. If so, it is difficult to understand why he never discussed ownership of the copyright with Mr Dilanchian during the many years they worked closely and collaboratively together to develop the business in circumstances where they had close family ties. I have no doubt at all, having regard to the evidence, Mr Dilanchian never turned his mind to the question of ownership of the copyright before probably 2003. The second possibility is that Mr Vardanian was generally aware that copyright attached to the programs but understood, perhaps in a vague and imperfect way, that while an employee of the Intelmail business it was owned by his employer but that his move to the Gold Coast and the new arrangements associated with it would alter that position to his benefit. If so, moving and not discussing the consequences with Mr Dilanchian would suggest some measure of deception on his part, which would have been curious given the way they had worked together and their family ties. The third possibility is that Mr Vardanian never really considered the question of ownership of the copyright in the software until 2003 when it came into comparatively sharp focus because of the activities of the former employees of the Intelmail business. It was then that he began to appreciate that he (or his company) might own a valuable intellectual property asset which he could retain or endeavour to sell. Selling the asset to the Intelmail business would provide him with what he considered was an appropriate capital return for the time, energy and skill he had invested in the business. On the facts, as I view them, this third possibility most closely aligns with what happened. What then is the answer to the question concerning ownership of copyright? Mr Vardanian conceded that, at the time he moved to the Gold Coast in 1996, he was employed by Intelmail Australia and had been an employee of the various companies running the Intelmail business since 1986. This led to the apparent concession that each of those various companies owned the copyright in the software written by him when an employee of the company. In particular, Intelmail Australia would have been the owner of the copyright in at least some of the software then being deployed to operate machines being sold by Intelmail Australia at that time, namely such software which may have been developed in the short period that company had been running the business since its incorporation in September 1994. It was not asserted by the respondents that in 1996 Mr Vardanian held, or Controlmech acquired, any interest in the copyright of the then subsisting software. However the respondents disputed that Intelmail Australia owned the copyright in software developed by the other companies which had earlier run the Intelmail business. The legal foundation for this submission was that there was no evidence of any assignment of the copyright as required by the Act. But I doubt that this matters. The declarations sought by both parties concern, in the main, software written after 1996. I will return to questions of detail later. The critical question is what term, if any, is to be implied in the contract between Intelmail Australia and Controlmech in 1996 in relation to the ownership of the copyright in the software to be developed by Mr Vardanian in the ensuing years and later, when Controlmech contracted with Intelmail Explorenet to continue to provide the software. There was plainly a strong and positive personal relationship between Mr Vardanian and Mr Dilanchian rooted in the family connection, cultural ties (they were both Armenian) and the fact that Mr Vardanian had contributed significantly to the growth of Mr Dilanchian's business. In those circumstances it is unlikely that either Mr Dilanchian or Mr Vardanian would have agreed to an arrangement that imperilled the rights of either or would have put at risk the continued growth or at least prosperity of the business. At this time, Mr Vardanian had no interest (in any relevant legal sense) in the copyright in the software. It is improbable they would have agreed to an arrangement which would, over time, invest in Controlmech copyright in the software over which Mr Dilanchian would have no control other than as a licensee and deny it the opportunity to control the source software. It is true that, at the time, there would have been no apprehension that, in the future, Mr Vardanian might behave in a way that might damage the interests of the business of Intelmail Australia. But the copyright would survive Mr Vardanian as the author: see s 33 of the Act, and his personal commitment to the business of Intelmail Australia could not be assured by anyone who succeeded to any interests he may have had in the copyright including anyone who might come to control Controlmech. I accept that from Mr Vardanian's perspective he would not have been intending to relinquish any rights he then had. But in relation to the copyright of the then existing software, he had none. Mr Vardanian's interests were to be protected into the future, both in a practical and commercial sense, by his personal relationship with Mr Dilanchian and the symbiotic relationship between him and his company and Intelmail Australia's business arising from him writing the software essential to the successful operation of the intelligent machines which were at the heart of the business and on which it was very substantially dependent. Those two circumstances dictated, as a practical matter, that Mr Vardanian's position would continue to be protected and he would continue to be retained to write the software and be remunerated appropriately for doing so. In addition, the 1996 contract may well have contained other implied terms relating to Intelmail Australia continuing to procure software from Mr Vardanian through his company Controlmech as the sole supplier and to pay Controlmech a reasonable amount for doing so having regard to the profitability, from time to time, of the Intelmail business. The pleadings (both the statement of claim and the cross claim) touched upon other aspects of the contract (beyond the ownership of the copyright) but they were not the subject of submissions by the parties or otherwise pursued. It is unnecessary, and probably inappropriate, to express a view about what those terms may have been. It is against this background that it is necessary to determine what, if any, term should be implied in the 1996 agreement about ownership of the copyright in the software to be written thereafter. There is little room to doubt that there was at least a licence agreement to be implied in all circumstances. That proposition was not seriously resisted by the respondents. But was it a licence terminable on reasonable notice or was it something more? It seems to me that it must be something more in the circumstances just discussed for the reasonable and effective operation of the contract between Controlmech and Intelmail Australia. Was it a licence of the type advanced by the applicants as their subsidiary position or was it equitable ownership as advanced as their primary position? I am conscious of the observations of Lightfoot J referred to in (ii) in [52] above. However it seems to me that the parties would have, as a matter of imputed intention, agreed that Intelmail Australia would retain equitable ownership of the copyright in the software notwithstanding that legal ownership would, by operation of the Act, vest in Controlmech because of the new arrangements associated with Mr Vardanian's move to the Gold Coast. With Intelmail Australia armed with an equitable interest Controlmech could be required, if circumstances ever rendered it necessary, to transfer legal ownership to Intelmail Australia so that Intelmail Australia could protect the interests of the Intelmail business in the face of third-party infringement: see Acorn Computers Ltd v MCS Micro-Computer Systems Pty Ltd [1984] FCA 339 ; (1984) 6 FCR 277. Also, if circumstances ever rendered it necessary, Controlmech could be required to hand up the source code which would be essential to the capacity of Intelmail Australia to modify or rewrite programs in the event that Mr Vardanian no longer could do so through death, disability or other circumstances. In my opinion, a term should be implied into the 1996 agreement that Intelmail Australia would retain the equitable ownership of the copyright in any programs written by Mr Vardanian from that time on. Such a term, in my view, was necessary for the reasonable and effective operation of the contract in all the circumstances. This leads to a consideration of the contract arising between Intelmail Explorenet and Controlmech when the former commenced to conduct the Intelmail business. Firstly, and fundamentally, there is no reason, in my opinion, to proceed on the basis that the term in the 1996 agreement would not also have been a term in the later agreement. Nothing had materially changed. While, at that time, Mr Vardanian's company would have become the legal owner of such software as had been written in the preceding three years or so, that ownership would have been subject to the equitable ownership of Intelmail Australia. One issue, which is convenient to address here, concerns the question of assignment. The respondents point to the absence of evidence of any assignment in writing of either the legal (pre 1996) or equitable (post 1996) ownership in the copyright from one to the other of a succession of companies which have, from time to time, conducted the Intelmail business. The applicants conceded that there was no transfer of the legal interest under s 196 of the Act from The Mailmachine to Intelmail Australia in the copyright in the software created before September 1994 or, as I apprehend it, the subsequent transfer of any legal interest of the pre 1996 works from Intelmail Australia to Intelmail Explorenet works or any equitable interest in the work created in the period 1996 to 1999 ('the 1996 to 1999 works') from the former to the latter. Mr Dilanchian gave evidence, which I accept, that on incorporating Intelmail Australia in 1994, he arranged "the transfer of all staff and assets from The Mailmachine to Intelmail Australia... on a book entry basis, without any other documentation recording the transfer". He proceeded to give evidence, which was admitted over objection, that shortly after incorporating Intelmail Explorenet in 1999, "[i]n around 1999 to 2000, I... transferred the assets of Intelmail Australia to Intelmail Explorenet... on a book entry basis, without any other documentation recording the transfer". These book entries are not in evidence. At common law, the voluntary assignment of an equitable interest merely requires a clear expression of intention: Comptroller of Stamps (Vic) v Howard-Smith [1936] HCA 12 ; (1936) 54 CLR 614 , and requires no consideration: Norman v FCT [1963] HCA 21 ; (1963) 109 CLR 9 at 30 . It seems clear to me that there was a clear intention on behalf of Mr Dilanchian, the sole owner of both companies, to transfer the equitable ownership of the copyright held by Intelmail Australia to Intelmail Explorenet. However "where an interest to be transferred is, as here, a creature of equity, equity requires a clear expression of intention to make an immediate disposition; that, in the absence of an applicable statutory requirement, suffices": Halloran v Minister Administering National Parks and Wildlife Act 1974 [2006] HCA 3 ; (2006) 229 CLR 545 at 569 per Gleeson CJ, Gummow, Kirby and Hayne JJ. That is because the software that presently exists including the source code which underlies it was mostly written after 1999. It is true that the feeder and inserter software contains remnants of the software written before 1999 including software written before 1996. However having regard to the evidence of Mr Vardanian the relevant works for the purposes of the Act came into existence after 1999. I act on the basis that a declaration can be made, as I have concluded it should, that Intelmail Explorenet is the beneficial owner of the software in its most recent iteration (its 2008 form) and an order made requiring the respondents to deliver up to the applicants the associated source code. The final issue concerns the letter that was sent to the applicants by the respondents' solicitors on 13 October 2008. The applicants contend that the letter contained an unjustifiable threat within the meaning of s 202(1) of the Act and seek damages under that section. Feeders, Dual-Accumulator Feeders (DAF-s), Vertication Divert Units (also known as iTrack) (VDU Software) and the ILCom system that is used in conjunction with the machines (jointly referred to as "our clients' software" ). We are instructed, by our clients, that the subject matter of the patents is the same as the VDU software. The contracts purport to grant a licence of our clients' software to the Third Parties without any authorisation from our clients. Additionally, we are instructed that you are also attempting to break the code in the "dongle" that facilitates use of the software on the mailing machines. These softwares and codes are literally works for the purposes of the Copyright Act 1968 (Cth). Section 44 of the Copyright Act provides that it is an infringement of copyright in a work to reproduce, or authorise the reproduction of, a substantial part of the work, without the authority of the copyright owner. Accordingly, it is clear that Intelmail has infringed copyright in that software. Our clients view this conduct very seriously and will not hesitate to enforce their legal rights against Intelmail and its director. To that end, we have received instructions to commence legal proceedings against Intelmail and its director if this matter is not resolved to our clients' satisfaction. No contact should be made direct to our clients. It was not suggested in the judgment in the High Court in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55 ; (2006) 231 ALR 663 was wrong. Indeed it must have been approved having regard to the orders the High Court made. It may not be necessary for there to be an explicit reference to enforcement proceedings. It is not necessary that there be direct words that action would be taken... It is a threat to sue for infringement if the Respondent is so minded on a future occasion. I have never discussed these arrangements with Mr Dilanchian or Mr Malouf". Mr Vardanian later gave oral evidence that he intended for the letter to be a catalyst to "start negotiations". In his cross-examination, he said that his position in the negotiations he envisaged was that he had "no problem" with the fact the machines were being sold with the installed software: He simply wanted royalties from the licensing fee income that the applicants were charging customers. However, counsel for the applicants correctly, in my opinion, submitted that neither the letter nor any of the subsequent correspondence from the respondents' solicitors said that. Indeed, far from wishing to negotiate, during the course of the subsequent correspondence, Mr Vardanian's solicitors sent a letter on 8 December 2008 which actually said "[p]oints one to three are not open for negotiation". It was the applicants who volunteered to amicably resolve the matter in the letter sent on 10 November 2008 by their representatives Blake Dawson. The letter relevantly stated: "[f]inally, we are instructed to note that Mr Dilanchian continues to have respect and affection for Mr Vardanian and therefore wishes for this matter to be amicably resolved". I am presently dealing only with the question of liability. Some of the submissions of the parties concerning the circumstances in which this letter was sent and, in particular, the financial circumstances of Intelmail Explorenet appear to me to be relevant to what damages might be ordered if they are. I am satisfied that the letter contained unjustifiable threats for purposes of s 202. I propose to order that the parties bring in short minutes of order to reflect these reasons. The matter will be listed for directions at 9:30 on Thursday 24 September 2009 for that purpose. I certify that the preceding seventy-eight (79) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | ownership equitable owner or licensee terms of oral contract implied terms necessary for reasonable and effective operation of contract unjustified threats oral contract terms post contractual conduct assignment statutory requirement of writing pleadings departure from pleadings during trial copyright contract equity practice and procedure |
2 I was assisted considerably by thoughtful submissions from both counsel and in particular, the correctness of Dr O'Hare's submission that there is a difference between the question of appropriateness as between two State Supreme Courts, each of which might be said to have a "natural", geographical claim to certain kinds of work, and the same question as between any such Supreme Court and this Court, where there is no such geographical claim. In the latter case the nature and importance of questions of federal law is more likely, in most cases, to be of importance. 3 Among other things, here the questions of federal law appear to me to be of lesser importance than the questions of general law and, in particular, possible questions of the application of relevant State laws such as those regulating and controlling the proceedings at arbitration. I certify that the preceding three (3) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick. | federal court procedure and evidence transfer to other courts high court and federal court |
By the orders made on 6 December 2005, the Federal Magistrate dismissed an application for judicial review of a decision of the Refugee Review Tribunal ("the Tribunal") of 23 December 2003. The Tribunal had affirmed a decision of 14 February 2003 of a delegate of the Minister for Immigration and Multicultural Affairs ("the Minister") refusing to grant the appellant a protection visa. The appellant is a citizen of India and of the Muslim faith. He claimed a well founded fear of persecution on the grounds of religion and political opinion, namely, that he was a Muslim (which were a minority in India) and a member of the Samajwadi Party ("SP"), which is a Muslim-based party. 3 The appellant claimed a fear of harm from the Bharatiya Janata Party ("BJP") and the Hindu nationalist organisations, the Rashtriya Swayamsevak Sangh ("RSS") and Vishwa Hindu Parishad ("VHP"). The appellant claimed those parties and organisations wanted to kill him because they mistakenly believed he had been involved in a terrorist attack on pilgrims at the Akshardham temple in the state of Gujarat in September 2002. The appellant also claimed he was on the "hit list of extremists" of the BJP, RSS, VHP and the Shiv Sena because of his membership of the SP. Further, the appellant claimed he and other members of the SP been beaten by extremist members of the BJP, RSS and VHP. This had occurred while they were in Gujarat organising a relief camp. As a result, he had been hospitalised for almost a week. He had been on the hit list since that time. He had also received threats to his life, and had recently escaped an attempt on his life while in Bombay. He claimed the authorities were not able to protect him as they were biased and did not support Muslims and that the nation was ruled by Hindu parties. By letter dated 22 August 2003, the Tribunal invited the appellant to attend a hearing before the Tribunal on 13 October 2003. On 1 October 2003, the Tribunal received from the appellant a completed "Response to Hearing Invitation" form indicating the appellant did not want to attend the hearing and consenting to the Tribunal making its decision based on the material before it. The Tribunal proceeded on the material before it to make its decision, which was unfavourable to the appellant. These were firstly, that the Tribunal erred in relying on media information, secondly, the Tribunal's decision was unjust and against the principles of natural justice, and thirdly, the Tribunal failed to properly interpret and apply the correct definition of a refugee. 6 The Federal Magistrate found that there was no substance to any of these grounds. As to the first ground, his Honour found the Tribunal had not relied on media information but rather had relied on material provided by the appellant and was not satisfied on the basis of that material that the protection visa should be granted. As to the second ground, the Federal Magistrate noted the appellant was invited to attend a hearing before the Tribunal, and that both the appellant and his authorised recipient had been informed by letter of that hearing invitation. Further, the Tribunal had noted the authorised recipient had responded on behalf of the appellant, declining the invitation to attend. The Tribunal had also advised the appellant by letter that it was unable to make a favourable decision on the material before it. The Tribunal had not received any further submissions or evidence in support of the application. In relation to the third ground, the Federal Magistrate concluded that the Tribunal had properly applied the definition of refugee. 7 The Federal Magistrate went on to consider whether there was any breach of s 424A of the Migration Act 1958 (Cth) ("the Act "). His Honour noted that while the Tribunal referred to the claims made in the original application for a protection visa, the appellant had adopted those claims in writing for the purposes of the application for review before the Tribunal. This adoption had arisen through the appellant's statement asking the Tribunal to refer to the departmental file, under the section "Your reasons for making this application" in the application form seeking review by the Tribunal. 8 His Honour concluded on that basis that the Tribunal had not been obliged to give notice under s 424A of any adverse material derived from the original application, and s 424A had not been breached. As no jurisdictional error had been made out, his Honour dismissed the application. The Federal Magistrate erred in finding that the Tribunal had not made an error of law; 2. The Federal Magistrate erred in finding that the Tribunal did not deny natural justice; and 3. The Federal Magistrate erred in failing to find that the Tribunal was biased and not interested in making its decision. The appellant claimed that he had not been informed that the Tribunal would rely upon the information which he had provided in his original application for the purpose of rejecting his claim, and was not given an opportunity to provide any submissions on this information. 11 The first respondent submitted that the Federal Magistrate should have held that the information it relied on from the appellant's original application did not form the reason or part of the reason for the Tribunal's decision, and therefore that s 424A of the Act did not apply. Also, the appellant had plainly and expressly invited the Tribunal to refer to the documents held on his Departmental file, and by doing so, the information in his protection visa application was brought within the exception in s 424A(3)(b) , namely that the appellant gave the information for the purpose of the application. 12 The first respondent submitted that this Court should apply SZEZI v MIMIA [2005] FCA 1195. In that case, the applicant failed to attend the hearing, and the only information which the Tribunal had before it came from the original application, Allsop J held that the reason for the decision was simply the evaluative conclusion founded on the perceived inadequacy of information, in the sense of the absence of detail and extrinsic explanation. It is apparent that the RRT relied on the applicant's original protection visa claims in making its decision. However, it is also tolerably clear that the applicant adopted those claims in writing for the purposes of his application to the RRT. Page 46 of the court book contains a statement from the applicant inviting the RRT to refer to the departmental file which would have included his protection visa claims. In these circumstances, the material put forward by the applicant in support of his original protection visa was adopted by him for the purposes of his review application to the RRT. Therefore, the RRT was not obliged to give notice under s.424A of any adverse material derived from the protection visa application. As noted earlier, the appellant did not appear before the Tribunal. In his application for review when answering a question, "Please tell us why you consider yourself a refugee? " he wrote, "Please refer to above departmental file CLF2002/6362B. A detailed submission will be filed later. " No such submission was filed and the appellant did not appear at the hearing. 15 The analysis undertaken by the Tribunal was based on the facts derived from the Departmental file to which the appellant had invited the Tribunal to have regard. The effect of the appellant's invitation to the Tribunal was, in substance, the same as if he had resubmitted to the Tribunal the material that had been advanced in support of his original application for the protection visa. 16 The appellant gave all information contained in the Departmental file to the Tribunal for the purpose of the application. Accordingly, the contents of the Departmental file was information comprehended by the exception in s 424A(3)(b). As indicated earlier, I agree with the Federal Magistrate's analysis. No error attended his Honour's consideration of the issue raised in this appeal. 17 I order that the appeal be dismissed with costs, and also that the Tribunal be joined as second respondent. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | no point of principle migration |
2 I have had the benefit of both written and oral submissions by the parties in relation to the appropriate form of orders. From these submissions, several matters have arisen which require determination. 3 The first point of dispute between the parties concerns the definition of the term "Infringing Articles", which is used in both competing Short Minutes of Order. The definition proposed by the applicants was that "'Infringing Articles' means the Hensley System, the PAC Mining System, the CQMS System and the CQMS Lower Wing System (and any other wear assembly that contains the essential integers of claim 1 of Jones III). " The definition proposed by the respondents was that "'Infringing Articles' means the Hensley System, the PAC Mining System, the CQMS System and the CQMS Lower Wing System". My reasons for judgment of 12 May 2008 refer to and explain the meaning of most of these "systems". 4 The respondents say that the applicants' definition is unnecessarily wide, and that there was no evidence of or findings about any "other wear assemblies", and no specific findings as to what constitutes the "essential integers of claim 1 of Jones III". They point out that the applicants' use of the present tense in the declaration is inappropriate. The respondents also say that the breadth of this definition, and its usage in Order 1 proposed by the applicants, invites further litigation due to the uncertainty inherent within it. 5 I agree with the submissions of the respondents on this point. I consider that the definition of "Infringing Articles" should be limited. I consider that it is not necessary to include the words in parentheses in the applicants' Short Minutes of Order. I shall make Order 1 proposed by the respondents (with the modification I discuss at [9] below). 6 The second area of dispute concerns the reference to "any components of each of the Infringing Articles" contained in Order 2 proposed by the applicants. This proposed order, in effect, declares that the making, hiring, otherwise disposing etc. of the components of the "Infringing Articles" is an infringement of claim 1 of Jones III. 7 The respondents argue that there are a number of components contained within the "Infringing Articles" which are not essential parts in the sense that they can be used for other purposes. Accordingly, they say, the proposed order is too wide. 8 The applicants contend that it is important to ensure that all components of the "Infringing Articles", as well as the "Infringing Articles" themselves, are subject to the declaration and restraint. The applicants also say that the respondents have admitted on the pleadings that the relevant components in the respondents' wear assemblies have only one reasonable use respectively. 9 As a matter of construction, I do not agree that any such admission has been made by the respondents in their pleadings. However, in any event, I am not persuaded that the declaration should include every component of each of the "Infringing Articles". Rather, it should be confined to only those components which can be shown to have only one reasonable use. Accordingly, I shall make Order 1 proposed by the respondents, with the modification that the declaration shall encompass both the "Infringing Articles" and their component parts which have no reasonable use other than as component parts. 10 Another dispute concerns the language of Order 4 proposed by the applicants. That order seeks a declaration that "in respect of the said infringements of claim 1 of Jones III from 6 June 2000, the First and Second Applicants are entitled to any damages suffered by it and interest thereon, or, at the First and Second Applicants' election, an account of any profits made by the First and Second Respondents (and each of them) by reason of these said infringements and payment of the amount found to be due on the taking of such account and interest thereon. The respondents say that this is a matter which should be left to the Court when it investigates the question of damages --- it is at that stage when the Court should decide whether, in what amount and over what period of time the account should be taken and damages calculated. The respondents say that the appropriate order is that there be an inquiry as to damages or profits in relations to the manufacture and sale by the respondents of the "Infringing Articles". 12 I agree with this submission of the respondents. I do not make Order 4 proposed by the applicants. Instead, I shall make Order 4 proposed by the respondents. 13 I turn now to Orders 5, 6 and 7 proposed by the applicants. These seek to obtain from the respondents affidavits setting out certain details in relation to the "Infringing Articles", their individual components and the assemblies in which they are contained. These details concern, among other things, quantities manufactured, price of sale, destination of sale, the profit made, methods of allocating overheads and the mechanics by which the amount of profit is calculated. 14 In my view, these proposed orders are premature, and it is not appropriate to determine these questions and make such orders at this stage. The preferable course is to simply have, as the respondents propose and I have accepted above, an order that there be inquiry as to damages or profits in relation to the manufacture and sale of the "Infringing Articles". The procedural nature of the orders means that they are not appropriate at this stage of the proceeding when the orders giving effect to my judgment of 12 May 2008 are being settled. 15 Another dispute relates to Order 11 proposed by the applicants. The order requires the respondents to destroy or deliver up for destruction all of the "Infringing Articles" or any components thereof. The respondents object to this on the basis that the definition of "Infringing Articles" is too broad. I accept this view, and I consider that the applicants' suggested order should not be adopted. Specifically in respect of the reference to "components" in proposed Order 11(a) and (b), I reiterate my conclusion above that only the "Infringing Articles", and their component parts that have no reasonable use other than as component parts, fall within the definition of the term (and correspondingly should be delivered up for destruction). Moreover, it follows that the applicants' proposed Order 11(c) need not be made as it requires an assurance that each of the obligations under proposed Order 11(a) and (b) have been satisfied. Accordingly, I make Order 3 proposed by the respondents. 16 There is also a dispute in relation to costs. The respondents concede that they are bound to pay the costs of the applicants in relation to the cross-claim, on which the applicants were successful. In relation to the applicants' claim of infringement, the Court found there was infringement, but in so doing only accepted one of the applicants' three arguments on construction. The general rule is that costs should follow the event, although the Court has a discretion to award costs on an issue-by-issue basis where a litigant has succeeded only in a portion of its claim: Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 ; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107. I think this principle should be applied in the present case, so that the applicants receive their costs with some allowance made for the fact that they succeeded only in respect of one of the three claims in dispute. Accordingly, I consider that the respondents should pay 80% of the applicants' costs. 17 Finally, the respondents seek a stay of certain orders pending determination of an appeal from my judgment of 12 May 2008. As a condition of this stay, the respondents are willing to give undertakings that they shall keep accurate records of sales, shall not destroy any records in relation to their business, shall not dispose of or encumber any assets otherwise than in the ordinary course of business, and shall execute any application for leave to appeal and appeal with due expedition: cf Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 at 67. In addition, the respondents undertake to pay to the applicants such amount as the Court thinks fit as compensation for any damage that the applicants may suffer as a consequence of a stay being granted, and to provide, if required by the Court, a bank guarantee in the sum of $500,000 as security for this undertaking as to compensation. 18 Relevant to the application for a stay, the respondents adduced evidence from Mr Meyers to the effect that the respondents employ about 400 people in Australia. He says that the manufacture and supply of wear assemblies is an important part of the respondents' business and a significant revenue contributor. Some of the relevant assemblies, he notes, have been supplied by the respondents for more than ten years, and that supply currently goes to every major coal producer in Australia. Mr Meyers says that if a stay is not granted, customers using the respondents' dragline and excavator lips will not be able to source alternative wear assemblies to fit their existing buckets and lips; the delay in supply of wear assemblies will have consequences for the respondents' customers' capacity to meet their contractual obligations; the employment of the 10% of the respondents' employees who are involved in the manufacture and sale of the respondents' wear assemblies may be jeopardised; and the respondents' relationship with customers will be damaged. There was some cross-examination of Mr Meyers, but it did not materially diminish the content or effect of his evidence. 19 Under O 52 r 17 of the Federal Court Rules , the Court has the power to stay the execution of a judgment pending an appeal from that judgment. There is a prima facie assumption that the judgment the subject of the appeal is correct and that the Court should not deprive a person of the fruits of victory by granting a stay. It is not necessary for the party seeking the stay to show that special or exceptional circumstances exist, but the Court must be satisfied that a sound reason has been presented to warrant exercise of the discretion: see Powerflex 67 FCR at 66; Re Middle Harbour Investments Ltd (In liq) (unreported, New South Wales Court of Appeal, 15 December 1976). 20 I am satisfied that the balance of convenience in the application for a stay falls in favour of the respondents. I am satisfied that the evidence of Mr Meyers demonstrates several sound reasons to warrant my exercise of discretion to grant the stay sought by the respondents. That stay will affect Orders 2, 3 and 4 which I make today. In addition, notwithstanding the submissions of the applicants to the contrary, I am satisfied that the undertakings proffered by the respondents are sufficient to reasonably protect the position of the applicants in this case. Since I shall grant liberty to apply to the parties, there will be an opportunity for the applicants to revisit not only the question of quantum at a later stage if evidence is obtained to show that the bank guarantee is inadequate, but also the question of any damages or loss of profits to which they are exposed. 21 Accordingly, I am satisfied that the present case is an appropriate one in which to grant the stay sought, particularly in circumstances where the respondents have proffered the above undertakings and will pursue any appeal process with due expedition. 22 As the respondents have been substantially successful on this application, I consider that the applicants should bear the costs of the dispute presently before me. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | orders stay of execution pending appeal balance of convenience in light of undertakings given. practice and procedure |
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